HomeMy WebLinkAboutReso 2021-127RESOLUTION NO. 2021-127
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA AUTHORIZING THE EXECUTION AND
DELIVERY BY THE CITY OF A FACILITY LEASE,
SUBLEASE AGREEMENT, PROJECT IMPLEMENTATION
AGREEMENT, MUTUAL LEASE AND SUBLEASE
ENFORCEMENT AGREEMENT, AMENDMENT NO. 1 TO THE
AMENDED AND RESTATED JOINT EXERCISE OF POWERS
AGREEMENT AND BOND PURCHASE AGREEMENT IN
CONNECTION WITH THE ISSUANCE OF CHULA VISTA
BAYFRONT FACILITIES FINANCING AUTHORITY
REVENUE BONDS MAKING REQUIRED FINDINGS UNDER
GOVERNMENT CODE SECTIONS 6586 AND 52201(B) AND
AUTHORIZING THE EXECUTION OF NECESSARY
DOCUMENTS AND CERTIFICATES AND RELATED
ACTIONS
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”); and
WHEREAS, the City and the San Diego Unified Port District (the “Port District”), are
undertaking a collaborative planning process with the community to develop a comprehensive
Chula Vista Bayfront Master Plan (the “CVBMP”); and
WHEREAS, to further the objectives of the CVBMP, the City and the Port District have
established the Chula Vista Bayfront Facilities Financing Authority (the "Authority"), a joint
exercise of powers entity created pursuant to Articles 1, 2, 3 and 4 of Chapter 5 of Division 7 of
Title 1 of the California Government Code (as amended from time to time, the "Act") and the Joint
Exercise of Powers Agreement, dated as of May 1, 2014, by and between the City and the Port
District, as amended and restated by the Amended and Restated Joint Exercise of Powers
Agreement, dated and effective as of July 25, 2019 (the "JEPA Agreement"), b y and between the
City and the Port District; and
WHEREAS, the City desires to assist the Authority in financing of certain public capital
improvements related to the CVBMP through the issuance of one or more series of bonds of the
Authority (the “Authority Bonds”) pursuant to the Act; and
WHEREAS, the public capital improvements to be financed with proceeds of the Authority
Bonds consist of public infrastructure improvements as described in Exhibit A hereto (the “Phase
1A Infrastructure Improvements”) and an approximately 275,000 square foot convention
center(the “Convention Center”) (together, the “Project”); and
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WHEREAS, the City is a member of the Authority and the Project will be located within
the boundaries of the City and, as a result, the City is authorized to conduct the public hearing
required by Section 6586.5 of the Act as a precondition to the issuance of the Authority Bonds;
and
WHEREAS, notice of the public hearing related to the proposed financing of the Project
was published in a newspaper of general circulation within the City at least five days prior to the
public hearing as required by Section 6586.5 of the Act; and
WHEREAS, the City Council held a public hearing regarding the Project and the proposed
financing of the Project by the Authority through the issuance of the Authority Bonds; and
WHEREAS, the City Council has determined that it would be in the best interests of the
City and residents of the City to approve the financing of the Project with proceeds of the Authority
Bonds and that such financing will provide significant public benefits of the type described in
Section 6586 of the Act; and
WHEREAS, in order to provide a portion of the revenues needed to repay the Authority
Bonds, the Port District and the Authority intend to enter into a Site Lease between the Port
District, as lessor, and the Authority, as lessee (the “Site Lease”) pursuant to which the Port District
will lease certain real property and existing improvements described therein (together, the “Site”)
to the Authority, and the Authority and the City intend to enter into a Facility Lease between the
Authority, as sublessor, and the City, as sublessee, (the “Facility Lease”), pursuant to which the
City will sublease the Site and lease the Convention Center (together, the “Facility”) from the
Authority, and pay certain Lease Payments (as defined in the Facility Lease), which will be
pledged to the owners of the Authority Bonds pursuant to an Indenture of Trust by and between
Wilmington Trust, National Association (the “Trustee”) and the Authority (the “Indenture”); and
WHEREAS, to provide the additional revenues needed to repay the Authority Bonds,
concurrent with the issuance of the Authority Bonds, the Authority and the Bayfront Project
Special Tax Financing District (the “Bayfront Financing District”), which has been established by
the City pursuant to Chapter 3.61 of the Chula Vista Municipal Code, will enter into a Loan
Agreement (the “Loan Agreement”) pursuant to which the Bayfront Financing District will agree
to make loan payments to the Authority which will be pledged to the Trustee under the Indenture,
and the Authority and the Port District will enter into a Support Agreement (the “Support
Agreement”) pursuant to which the Port District will make certain payments to the Authority
which will be pledged to the Trustee under the Indenture; and
WHEREAS, in furtherance of the CVBMP, the City, as sub-sublessor, and RIDA Chula
Vista, LLC (“RIDA”), as sub-sublessee, will enter into a Sublease Agreement (the “Sublease
Agreement”) pursuant to which the City will sublease the Facility to RIDA and RIDA will operate
and maintain the Facility; and
WHEREAS, to address certain interests of the City and the Port with respect to the Sublease
Agreement and the Ground Lease between the Port and RIDA (the “Ground Lease”) with respect
to the construction of a resort hotel (the “Hotel”) adjacent to the Convention Center, the City and
the Port desire to enter into that certain Mutual Lease and Sublease Enforcement Agreement (the
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“Enforcement Agreement”) and to make certain modifications to the JEPA Agreement
(“Amendment No. 1 to the JEPA Agreement”); and
WHEREAS, the Convention Center will be owned by the Authority and is to be constructed
for the Authority by RIDA as further set forth in the Project Implementation Agreement (the
“Project Implementation Agreement”) to be entered into by and among the Authority, the City, the
Port District, RIDA and the Bayfront Financing District; and
WHEREAS, the Project Implementation Agreement will set forth certain provisions
regarding the construction of the Convention Center by RIDA on behalf of the Authority and the
construction of the Phase 1A Infrastructure Improvements by RIDA which will be conveyed to the
City and the Port, as applicable, as described in the Project Implementation Agreement; and
WHEREAS, the Authority Bonds will be sold to J.P. Morgan Securities LLC (the
“Underwriter”) pursuant to the terms of a Bond Purchase Agreement (the “Bond Purchase
Agreement”) by and among the Underwriter, the City, the Port, the Authority and the Bayfront
Financing District; and
WHEREAS, prior to or in connection with the issuance of the Authority Bonds, a number
of documents will be executed and delivered including the Ground Lease, the Site Lease, the
Facility Lease, the Sublease, the Bond Purchase Agreement, the Authority Indenture, the Loan
Agreement, the Project Implementation Agreement, the Support Agreement, the Enforcement
Agreement, the Amendment No. 1 to the JEPA Agreement, the Third Amended and Restated
Revenue Sharing Agreement and the Amended and Restated Joint Community Facilities
Agreement and any exhibits thereto, such as the Completion Guaranty (as defined in the Project
Implementation Agreement) (collectively, the “Chula Vista Bayfront Documents”); and
WHEREAS, the City’s obligation to pay Lease Payments under the Facility Lease is
limited to certain Lease Revenues (as defined in the Facility Lease), which include certain transient
occupancy tax, property tax, and sales and use tax revenues generated by the Hotel, the Convention
Center and the RV Park Lease (as defined in the Facility Lease), and an amount equal to the MSA
Revenue (as defined in the Facility Lease) which is based on an amount paid to t he City by the
Port District pursuant to that certain Municipal Services Agreement No. 88-2012 between the City
and the Port District; and
WHEREAS, the City has prepared and made available to the public prior to the date of the
public hearing regarding the Project and the Authority Bonds an Economic Opportunity Report
and an Economic Development Subsidy Report containing the information required by pursuant
to Government Code Sections 52201(a)(2)(B) and 53083(a), respectively; and
WHEREAS, the City made the information required by Government Code Section
53083(a) available to the public in written form and on the City’s website and such information is
set forth in the Economic Development Subsidy Report; and
WHEREAS, the City has held a noticed public hearing regarding the City’s Lease
Payments, the Facility Lease, the Sublease, and the Project, as required by Government Code
Sections 52201(a) and 53083(b); and
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WHEREAS, the reports prepared and presented to the City Council and the public pursuant
Government Code Sections 52201(a)(2)(B) and 53083(a) disclose that:
(a) The estimated value of the leasehold interest to be conveyed to RIDA pursuant to
the Sublease, determined at the use and with the conditions, covenants, and
development costs required by the Sublease, is $97,057,000, consisting of the
City’s share of RIDA’s scheduled lease payments under the Sublease, Advance
Rent, and Additional Rent, as such terms are defined in the Facility Lease.
(b) Development of the Convention Center at the Site in accordance with the Facility
Lease, the Sublease and the Project Implementation Agreement qualifies as an
“economic opportunity” under Government Code Section 52200.2(b) because as a
result of the Convention Center development the property tax revenues to all
property tax collecting entities generated by the Site at full implementation will far
exceed a 15 percent increase above total property taxes generated the year prior to
the City’s lease acquisition of the Site. The Site currently generates no or nominal
property taxes, as it is publicly-owned and only nominally improved. The
estimated property tax to be generated in the first year following the opening of the
Project is approximately $2.28 million.
(c) The Project will generate substantial benefits to the local and regional community
in the form of increased tax and land lease revenues, permanent and temporary jobs,
and the provision of significant public amenities and public infrastructure.
(d) The Project is also anticipated to be the development catalyst for the CVBMP and
is consistent with the policies outlined in the City’s Economic Development
Element of the General Plan in order to achieve its economic development goals
and objectives. These policies include:
i. Promote economic development that fosters job availability, economic
revitalization, and tax revenues.
ii. Pursue actions to support development of tourism in the City.
iii. Develop and promote various portions of the City, such as the Chula
Vista Bayfront, as regional visitor destinations that could include hotels,
meeting spaces, and conference facilities.
iv. Encourage the opportunity for employment of local residents.
(e) The operation of the Project will serve the City and the surrounding community by
providing commercial facilities that are not currently available in the community.
No luxury, AAA Four Diamond (or similar) hotel currently operates in the City.
Further, the City currently lacks large, luxury conference facilities similar to the
Convention Center component of the proposed Project that will accommodate
community events and gatherings such as high school dances, meetings of local
trade organizations, fundraisers, and other community events. The nature of the
Project as a high-end, luxury resort is expected to bring a demand for additional
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luxury facilities and services in the community, encouraging related investment and
development in the City and surrounding areas. The development, opening, and
operation of the Project will be of material benefit to the City and to the citizens of,
and property owners in, the City and surrounding areas, because construction and
operation of the Project will encourage and foster the economic revitalization of the
City for the people in the area and the general public as a whole; provide
commercial facilities and services not currently available in the City; increase tax
revenues available to the City and other taxing agencies; increase sales tax revenues
available to the City; increase Transient Occupancy Tax revenues available to the
City; generate Additional Rent to the City; generate Parking Rent (defined in the
Sublease) to the City; generate Ground Lease and Sublease lease payments, a
portion of which will be retained by the City; and create jobs within the City.
WHEREAS, good faith estimates of certain information relating to the Authority Bonds
are set forth in Exhibit B attached hereto as required by California Government Code Section
5852.1; such estimates were provided by Harrell & Company Advisors, LLC, the City’s Municipal
Advisor based on interest rates and financing assumptions provided by the Underwriter; and
WHEREAS, the City Council has been presented with the form of each document referred
to above 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 be
entered into by the City with respect to the financing of the Project; and
WHEREAS, the proposed approvals described herein with respect to the Project have been
analyzed for compliance with the California Environmental Quality Act (CEQA) and the City has
determined that the activities involved with such approvals are covered in the previously adopted
Environmental Impact Report UPD#83356-EIR-65B/SCH#2005081077 related to the CVBMP,
and the addendums thereto (collectively, the “Project EIR”) and that the proposed City Council
actions included herein are merely a step-in furtherance of the original project for which
environmental review was performed and that no circumstances have arisen triggering the
requirement for any supplemental or subsequent CEQA analysis as a result of the adoption of this
Resolution and the actions approved herein in that: 1) no substantial changes are proposed to the
project analyzed in the Project EIR and no substantial changes have occurred that require major
revisions to the Project EIR due to the involvement of new significant environmental effects or an
increase in severity of previously identified significant effects; 2) no new information of
substantial importance has come to light that (a) shows the Project will have one or more
significant effects not discussed in the Project EIR, (b) identifies significant impacts would not be
more severe than those analyzed in the Project EIR, or (c) shows that mitigation measures or
alternatives are now feasible that were identified as infeasible and those mitigation measures or
alternatives would reduce significant impacts, and 3) no changes to mitigation measures or
alternatives have been identified or are required, and, accordingly, pursuant to CEQA Guidelines
§15162(b), the City Council finds that no further analysis or environmental documentation is
necessary; and
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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 undertake the
actions described herein related to 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. In accordance with the
provisions of Section 6586.5 of the Act, the City Council hereby approves the financing of the
Project with proceeds of the Authority Bonds in an amount not to exceed $400,000,000 and further
finds and determines that (a) having the Authority assist the City in the financing of the Project
through the issuance of the Authority Bonds pursuant to the Act will result in significant public
benefits of the types described in Section 6586 of the Act, including, but not limited to,
demonstrable savings in interest rate, bond underwriting and bond issuance costs, employment
benefits from undertaking the Project in a timely fashion and more efficient delivery of local
agency services to residential and commercial development in the area of the CVBMP, (b) the
execution and delivery of the Facility Lease and Sublease will assist in the creation of economic
opportunity, and (c) the consideration to be received by the City under the Sublease is not less than
the fair reuse value at the use and with the covenants and conditions and development costs
authorized by the Sublease. The foregoing findings and determinations are based on the
information set forth in the foregoing recitals and all evidence, documentation, and testimony in
the record before the City Council.
SECTION 2. The forms of the Facility Lease, Sublease Agreement, Project
Implementation Agreement, Enforcement Agreement, Amendment No. 1 to the JEPA Agreement
and the Bond Purchase Agreement (the “City Agreements”) presented to the City Council at this
meeting, are hereby approved, and, subject to the limitations in the following sentence, each of the
Mayor of the City (the “Mayor”), the City Manager of the City (the “City Manager”), any 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 City Agreements in substantially said forms, with such changes as may be
made in accordance with the delegation authority provided in the following paragraph. The
authorization to execute the City Agreements is contingent upon the approval by the Authority of
a resolution authorizing the issuance of the Authority Bonds and approving the City Agreements
to which it is a party, and the term of the Facility Lease and Sublease Agreement shall terminate
no later than June 1, 2058 (provided that such term may be extended as provided therein to a
maximum of sixty-six years from the date of issuance of the Authority Bonds). Based on the cost
of constructing the Convention Center, the expected useful life of the Convention Center and other
information known to the City regarding the public benefits to be provided by the Facility to the
City and the general public, the City Council hereby finds and determines that the Maximum Lease
Payment due in each fiscal year under the Facility Lease as set forth in Exhibit C on file in the
Office of the City Clerk, thereto will not exceed the fair rental value of the Facility in such fiscal
year.
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The City Council hereby delegates to the Authorized Officers the authority to make and
consent to changes to one or more of the Chula Vista Bayfront Documents to facilitate the
financing and construction of the Hotel, the Phase 1A Infrastructure Improvements, and the
Convention Center which an Authorized Officer determines are needed (i) to eliminate any
inconsistencies among any of the Chula Vista Bayfront Documents; (ii) to cure any ambiguity or
defective provision in any of the Chula Vista Bayfront Documents; (iii) to respond to market
conditions related to the structuring and marketing of the Authority Bonds as identified by the
Underwriter, including, but not limited to, rating requirements; (iv) to reflect the final terms of the
sale by the Underwriter of the Authority Bonds; and (v) to facilitate the required private financing
for the Hotel and Convention Center or otherwise necessary to facilitate the issuance of the
Authority Bonds and the construction of the Hotel, Phase 1A Infrastructure Improvements, and
the Convention Center; provided, however that such changes shall not (x) increase the
indemnification obligations of the City; (y) result in an additional contribution of funds by the City
(except to a de minimis amount (not to exceed $500,000 in total)); or (z) materially increase the
obligations of the City, which changes shall be based on the advice of the City Attorney, and
approved by an Authorized Officer through the Authorized Officer’s execution (or as to documents
to which the City is not a party, such Authorized Officer’s written consent) of the Chula Vista
Bayfront Documents incorporating the changes proposed, and shall be conclusively evidenced by
the delivery by the City of the executed Chula Vista Bayfront Documents with the changes or its
written consent to such changes, as applicable.
SECTION 3. The Authorized Officers and the City Attorney are authorized to take
whatever steps are necessary and appropriate for a judicial validation action to be filed pursuant to
Code of Civil Procedure Section 860 et seq. to obtain a court ruling on the validity of some or all
of the City Agreements, the Loan Agreement, the Support Agreement, the Authority Indenture and
the Authority Bonds.
SECTION 4. The Authorized Officers, and other 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 easement agreements related to the
Facility, a Tax Certificate for any of the Authority Bonds and other certificates or agreements
required pursuant to the terms of the Bond Purchase Agreement or by the Authority or the Port
District as a condition to their consummating the transactions described herein related to the
Project and the Authority Bonds. In addition, following the issuance of the Authority Bonds, each
of the Authorized Officers, acting alone, is authorized to take any and all actions required of the
City under the City Agreements including, but not limited to, executing required certificates,
granting consents, filing reports and sending notices on behalf of the City. All actions heretofore
taken by the Authorized Officers and other officers, employees and agents of the City with respect
to the CVBMP and the matters described herein are hereby approved, confirmed and ratified.
SECTION 5. This Resolution shall take effect immediately upon its passage.
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Presented by Approved as to form by
Tiffany Allen Glen R. Googins
Director of Development Services City Attorney
PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista,
California, this 15th day of June 2021 by the following vote:
AYES: Councilmembers: Cardenas, Galvez, Padilla, and Casillas Salas
NAYS: Councilmembers: None
ABSENT: Councilmembers: McCann
Mary Casillas Salas, Mayor
ATTEST:
Kerry K. Bigelow, MMC, City Clerk
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO )
CITY OF CHULA VISTA )
I, Kerry K. Bigelow, City Clerk of Chula Vista, California, do hereby certify that the foregoing
Resolution No. 2021-127 was duly passed, approved, and adopted by the City Council at a regular
meeting of the Chula Vista City Council held on the 15th day of June 2021.
Executed this 15th day of June 2021.
Kerry K. Bigelow, MMC, City Clerk
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EXHIBIT A
DESCRIPTION OF PHASE 1A INFRASTRUCTURE IMPROVEMENTS
Description
Developer's Phase 1A Infrastructure Improvements
1 E Street (G Street to H Street)
2 G Street Connection
3 H Street (Bay Blvd to Street A)
4 H Street (Marina Pkwy to E Street)
5 H-3 Utility Corridor
6 H-3 Site Prep
7 Harbor Park (Initial)
Phase 1A Infrastructure to be Constructed by City
8 G Street Sewer Pump Station
Phase 1A Infrastructure to be Constructed by Port
9 S-2 Sweetwater Signature Park (Initial)
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EXHIBIT B
SB 450 GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Authority Bonds
in accordance with California Government Code Section 5852.1. Such good faith estimates have
been provided to the City Council of the City of Chula Vista (the “City”) by Harrell & Company
Advisors, LLC, the municipal advisor (the “Municipal Advisor”), based on interest rates and
financing assumptions provided by J.P. Morgan Securities LLC (the “Underwriter”).
Principal Amount. The Municipal Advisor has informed the City that, based on the
financing plan and current market conditions, its good faith estimate of the aggregate principal
amount of the Authority Bonds is $353,000,000 (the “Estimated Principal Amount”).
True Interest Cost of the Bonds. The Municipal Advisor has informed the City that,
assuming that the Estimated Principal Amount of the Authority Bonds is sold, and based on market
interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the
true interest cost of the Authority Bonds, which means the rate necessary to discount the amounts
payable on the respective principal and interest payment dates to the purchase price received for
the Authority Bonds, is 5.00%.
Finance Charge of the Bonds. The Municipal Advisor has informed the City that,
assuming that the Estimated Principal Amount of the Authority Bonds is sold, and based on market
interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the
finance charge for the Authority Bonds, which means the sum of all fees and charges paid to third
parties (or costs associated with the Authority Bonds), is $8,821,000, of which $3,400,000 is
allocable to the Loan.
Amount of Proceeds to be Received. The Municipal Advisor has informed the City that,
assuming that the Estimated Principal Amount of the Authority Bonds is sold, and based on market
interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the
amount of proceeds expected to be received by the Authority for sale of the Authority Bonds, less
the finance charge of the Authority Bonds, as estimated above, and any reserves or capitalized
interest on the Authority Bonds paid or funded with proceeds of the Authority Bonds, is
$286,500,000, of which $102,600,000 is allocable to the Loan.
Total Payment Amount. The Municipal Advisor has informed the City that, assuming that
the Estimated Principal Amount of the Authority Bonds is sold, and based on market interest rates
prevailing at the time of preparation of such estimate, its good faith estimate of the total payment
amount, which means the sum total of all payments the Authority will make to pay the Authority
Bonds, calculated to the final maturity of the Authority Bonds, is $832,000,000 and the annual
cost to administer the Authority Bonds, not paid with the proceeds of the Authority Bonds, is
$25,000.
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The foregoing estimates constitute good faith estimates only and are based on market
conditions prevailing at the time of preparation of such estimates on May 11, 2021. The actual
principal amount of the Authority Bonds, the true interest cost thereof, the finance charges thereof,
the amount of proceeds received therefrom and total payment amount with respect thereto may
differ from such good faith estimates due to (a) the actual date of the Authority Bonds being
different than the date assumed for purposes of such estimates, (b) the actual principal amount of
the Authority Bonds being different from the Estimated Principal Amount, (c) the actual
amortization of the Authority Bonds being different than the amortization assumed for purposes
of such estimates, (d) the actual market interest rates at the time of sale of the Authority Bonds
being different than those estimated for purposes of such estimates, (e) other market conditions, or
(f) alterations in the Authority’s financing plan, or a combination of such factors. The actual date
of sale of the Authority Bonds and the actual principal amount of the Authority Bonds will be
determined by the Authority based on various factors. The actual interest rates borne by the
Authority Bonds will depend on market interest rates at the time of sale thereof. The actual
amortization of the Authority Bonds will also depend, in part, on market interest rates at the time
of sale thereof. Market interest rates are affected by economic and other factors beyond the control
of the City or the Municipal Advisor.
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