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HomeMy WebLinkAboutRDA Packet 2000/08/15 Notice is hereby given that the Chair af the Chula Vista Public Financing Authority has called and will convene a special meeting of the Public Financing Authority, Tuesday, August 15, 2000 at 6:00 p.m., immediately following the City Council meeting in the Council Chambers, located in the Public Services Building, 276 Fourth Avenue, Chula Visfa, California to consider, deliberate and act upon the following: REVISED ~V~ ii!I!iiii ~~=-= elN OF CHUlA VISTA rUISDAT, AUGUST 15, 2000 6:00 ML (IMMEDIATlLT 'OLLOMNG TNI CITY COUNCIL MIniNG) COUNCIL CHAMBIRS PUBLIC 51RY1CD BUILDING JOINT MEETING OF THE REDEVELOPMENT AGENCY / CITY COUNCIL AND PUBLIC FINANCING AUTHORITY (SPECIAL MEETING) OF THE CITY OF CHULA VISTA CALL '0 ORDER ROLL CALL Agency/Council/Authority Members Davis, Moot, Padilla, Salas, and Chair/Mayor Horton CONSENT I'EMS (Item I and 2) The staff recommendations regarding the following item(s) listed under the Consent Calendar will be enacted by the Agency/City Council by one motion without discussion unless an Agency/Council member, a member of the public or City staff requests that the item be pulled for discussion. If you wish to speak on one of these items, please fill out 0 "Request to Speak Form" available in the lobby and submit it to the Secretary of the Redevelopment Agency or the City Clerk prior to the meeting. Items pulled from the Consent Calendar will be discussed after Action Items. Items pulled by the public will be the first items of business. 'T AGENDA 1. AGENCY RESOLUTION COUNCIL RESOLUTION 2. AGENCY RESOLUTION -2. AUGUST 15, 2000 APPROVING THE 2000 HOLIDAY LIGHTING PROGRAM; AUTHORIZING WAIVING THE FORMAL BIDDING PROCESS AND AWARDING A PURCHASE AGREEMENT TO DEKRA-L1TE INDUSTRIES; APPROPRIATING 520,848 FROM THE RESIDENTIAL CONSTRUCTION TAX FUND (RCT) AND $18,076 FROM THE FINE ARTS FUND; AND DIRECT STAFF TO IMPLEMENT THE 2000 HOLIDAY LIGHTING PROGRAM-In 1998, the City initiated the Haliday Lighting Pragram. A Request for Proposals was issued. From the respondents, a selection committee and interview panel selected DEKRA-L1TE Industries due to their ability to meet the RFP's program goals, the excitement and quality of their design, and proiect cost. In 1999, due to the limited market for this type of service, their past performance, and because they had supplied the original holiday lights, displays, and banners, the City waived the formal bidding process and issued a purchase agreement to DEKRA-L1TE. [Community Development Director] 4/5TH5 VOTE REQUIRED STAFF RECOMMENDATION: Agency/Council adopt the resolution. APPROVING $73,000 TO PARTIALLY COVER THE COST OF THE PUBLIC IMPROVEMENTS ASSOCIATED WITH AN ELEVEN (11) UNIT TRANSITIONAL HOUSING PROJECT KNOWN AS, TROLLEY TRESTLE, AND APPROPRIATING SAID AMOUNT FROM THE REDEVELOPMENT AGENCY'S LOW AND MODERATE INCOME HOUSING SET-ASIDE FUND-On 6/22/99, the Agency approved a Disposition, Development and Housing Cooperation Agreement with South Bay Community Services (SBCS) for the development of an 11 unit Transitional Housing Development for Foster Care Graduates, known as Trolley Trestle, located at 746 Ada Street. The proiect is currently under construction and is scheduled to be completed by 10/1/2000. The public improvement costs are higher than anticipated and SBCS is requesting Agency financial assistance. [Community Development Director) 4/5TH5 VOTE REQUIRED STAFF RECOMMENDATION: Agency adopt the resolution. ORAL COMMUNICATIONS This is an opportunity for the general public to address the Redevelopment Agency/City Counci/fAuthority on any subject matter within the Agency/City/Authority's jurisdiction that is not on item on this agenda. (State law, however, generally prohibits the Redevelopment Agency/City Council/Public Financing Authority from taking action on any issues not included on the posted agenda.) If you wish to address the Agency/City/Authority on such a subject, please complete the "Request to Speak Under Oral Communications Form" available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to the meeting. Those who wish to speak, please give your name and address for record purposes and fof/ow up action. PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES The following items have been advertised and/or posted as public hearings as required by law. If you wish to speak to any item, please fill oul the "Request to Speak Form" available in the lobby and submit it to the Redevelopment Agency or the City Clerk prior to the meeting. ., AGENDA 3. JOINT REDEVELOPMENT AGENCY CITY COUNCIL PUBLIC HEARING a) COUNCIL ORDINANCE b) COUNCIL ORDINANCE c) COUNCIL ORDINANCE ACTION ITEMS -3- AUGUST 15,2000 ON THE PROPOSED AMENDMENTS TO THE REDEVELOPMENT PLANS FOR THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT, THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT AND THE SOUTHWEST REDEVELOPMENT PROJECT-The purpose of the proposed Amendments to the Project Areo Pions is to merge the Project Areos. The Amendments will not enlarge the Project Areos, nor will the Amendments offect ony of properties in the proposed Merged Project Area differently than if the Project Areas remained separate. The proposed Amendments do not change any of the existing tax sharing agreements between the Agency and the taxing entities within the affected Projects Areas. The main purpose of the proposed merger of the Project Areas would be for efficiency of administration and financing. STAFF RECOMMENDATION: 1) Agency/Council conduct the public hearing 2) Council place Ordinances a), b), and c) on first reading APPROVING AND ADOPTING THE FOURTH AMENDMENT TO THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT AREA PLAN AND THE MERGER OF THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT AND THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT, AND THE SOUTHWEST REDEVELOPMENT PROJECT PURSUANT TO THE PROVISIONS OF THE COMMUNITY REDEVELOPMENT LAW, HEALTH AND SAFETY CODE SECTION 33485 et seq. APPROVING AND ADOPTING THE SECOND AMENDMENT TO THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT AREA PLAN AND THE MERGER OF THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT AND THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT, AND THE SOUTHWEST REDEVELOPMENT PROJECT PURSUANT TO THE PROVISIONS OF THE COMMUNITY REDEVELOPMENT LAW, HEALTH AND SAFETY CODE SECTION 33485 et seq. APPROVING AND ADOPTING THE THIRD AMENDMENT TO THE SOUTHWEST REDEVELOPMENT PROJECT AREA PLAN AND THE MERGER OF THE SOUTHWEST REDEVELOPMENT PROJECT AND THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT, AND THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT PURSUANT TO THE PROVISIONS OF THE COMMUNITY REDEVELOPMENT LAW, HEALTH AND SAFETY CODE SECTION 33485 et seq. The items listed in this section of the agenda ore expected to elicit substantial discussions and deliberations by the Council, Public Financing Authority, staff, or members of the general public. The items will be considered individually by the Council and Public Financing Authority and staff recommendations may in certain cases be presented in the alternative. Those who wish to speak, please fill out a Request to Speak form available in the lobby and submit it to the City Clerk prior to the meeting. -r AGENDA 4. a) AGENCY RESOLUTION .4. AUGUST 15, 2000 AMENDING VARIOUS AGENCY PROJECT AREA FISCAL YEAR 2001 BUDGETS IN ACCORDANCE WITH THE APPROVED AGENCY FINANCIAL PLAN AND AUTHORIZING THE VARIOUS INTER-PROJECT AREA ADVANCES AND ADVANCE REPAYMENTS RELATED THERETO, AND AUTHORIZING THE EXPENDITURE OF LOW AND MODERATE INCOME HOUSING FUNDS OUTSIDE THE PROJECT AREA-Subject to the odoption of the Ordinonces providing for the Merged Redevelopment Project, the Agency wishes to authorize at this time the issuance and sale of a single series of tax allocation bonds for the purpose of poying and repaying costs of redevelopment activity within the Merged Redevelopment Project. Proceeds of the Bonds will be used to 1) payor repay costs of redevelopment activity of the Merged Redevelopment Project; 2) establish a reserve account for such Bonds; and 3) pay a portion of the costs of issuing such Bonds. STAFF RECOMMENDATION: 1) Agency adopt Resolutions a) and b) 2) Council adopt Resolutions c) and d) 4/5THS VOTE REQUIRED ON al b) AGENCY AUTHORIZING AND DIRECTING THE ISSUANCE AND SALE OF NOT-TO- RESOLUTION EXCEED $17,000,000 PRINCIPAL AMOUNT 2000 TAX ALLOCATION BONDS FOR THE MERGED REDEVELOPMENT PROJECT AND APPROVING AN OFFICIAL NOTICE OF SALE, A CONTINUING DISCLOSURE CERTIFICATE, A PRELIMINARY OFFICIAL STATEMENT AND FINANCING DOCUMENTS, AUTHORIZING THE SALE OF THE BONDS ON CERTAIN TERMS AND CONDITIONS, AUTHORIZING CERTAIN OTHER OFFICIAL ACTIONS AND PROVIDING FOR OTHER MATTERS PROPERLY RELATING THERETO c) COUNCIL APPROVING THE SALE OF REDEVELOPMENT AGENCY OF THE CITY OF RESOLUTION CHULA VISTA 2000 TAX ALLOCATION BONDS FOR THE MERGED REDEVELOPMENT PROJECT d) COUNCIL AUTHORIZING THE EXPENDITURE OF LOW AND MODERATE INCOME RESOLUTION HOUSING FUNDS OUTSIDE OF THE PROJECT AREA 5. COUNCIL RESOLUTION WAIVING THE COMPETITIVE BIDDING PROCESS AS IMPRACTICAL, AUTHORIZING THE MAYOR TO EXECUTE A SOLE SOURCE CONTRACT WITH MOTOROLA FOR 800 MHZ INFRASTRUCTURE COSTS, EQUIPMENT AND RELATED TRAINING, AND APPROPRIATING FUNDING THEREFORE FROM VARIOUS SOURCES-On March 7, 2000, Council approved joining the Regional Communication System and directed staff to return to Council with the associated infrastructure and equipment costs required to convert to this system. Staff is recommending approval of a sole source agreement with Motorola for equipment, installation and training to support rodio operations for police, fire, public works, parks, recreation, building and housing, and other related users, and an appropriation of the necessary funding from various funding sources, including the proceeds from a long-term AGINDA .5. AUGUST 15, 2000 debt issue. (Police Chief, Fire Chief, Deputy City Manager Powell, Director of Management and Information Services) 4/5THS VOTE REQUIRED STAFF RECOMMENDATION: Council adopt the resolution. 6. a} COUNCIL AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RESOLUTION RELATING TO THE SALE AND DELIVERY OF NOT-TO-EXCEED $27,000,000 CERTIFICATES OF PARTICIPATION, SERIES A OF 2000 (2000 FINANCING PROJECT), AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION THEREWITH-Council has previously opproved a capital project to acquire and construct a new corporation yard and a second project to upgrade the existing 800MHz Communication System. Council directed stoff to return with recommended financing for these projects. Staff is recommending approval of long-term borrowing by issuing Certificates of Participation in on amount not-to-exceed $27 million for the portion of these project that will not be funded with existing resources. [Deputy City Manger Powell] 4/5THS VOTE REQUIRED ON (bl b) COUNCIL RESOLUTION APPROPRIATING $21,447,577 TO THE CORPORATION YARD PROJECT (GG131) AND $1,500,000 TO THE 800MHz COMMUNICATION PROJECT BASED ON ANTICIPATED PROCEEDS FROM THE ISSUANCE OF CERTIFICATES OF PARTICIPATION, APPROPRIATING AN ADDITIONAL $2,503,636 TO THE CORPORATION YARD PROJECT FROM UNANTICIPATED REVENUES IN THE TRANSIT FUND ($999,022) AND AVAILABLE FUND BALANCES IN THE TRANSIT FUND ($1 MILLION) AND THE SEWER SERVICE REVENUE FUND ($504,614), APPROPRIATING $454,438 FOR THE FIRST SEMI-ANNUAL DEBT SERVICE PAYMENT FOR THE CORPORATION YARD PROJECT FROM THE AVAILABLE BALANCE IN THE PUBLIC FACILITIES DEVELOPMENT IMPACT FEE (PFDIF) FUND, AND $26,539 FOR THE FIRST SEMI-ANNUAL DEBT SERVICE PAYMENT FOR THE 800 MHz PROJECT FROM THE AVAILABLE BALANCE IN THE RESIDENTIAL CONSTRUCTION TAX FUND c) PUBLIC FINANCING AUTHORITY RESOLUTION APPROVING A LEASE/PURCHASE AGREEMENT WITH THE CITY OF CHULA VISTA AND CERTAIN OTHER DOCUMENTS IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THE CERTIFICATES OF PARTICIPATION, SERIES A OF 2000 (2000 FINANCING PROJECT) IN A PRINCIPAL AMOUNT NOT-TO-EXCEED $27,000,000 STAFF RECOMMENDATION: 1) Council odopt resolutions (a) and (b) 4/5THS VOTE REQUIRED ON (b) 2) Public Financing Authority adopt resolution (c) 'r AGENDA -6- AUGUST 15, 2000 OTHER BUSINESS 7. DIRECTOR'S REPORT(S) 8. CHAIR'S REPORT(S) 9. AGENCY COMMENTS ADJOURNMENT The meeting will adjourn to a closed session and thence to an adjourned meeting of Redevelopment Agency an August 22, 2000 at 6:00 p.m., immediately fallowing the City Council meeting, in the City Council Chambers. CLOSED SESSION Unless Agency Counsel, the Executive Director, or the Redevelopment Agency states otherwise at this fime, the Agency will discuss and de/iberafe an the fallowing item(s) of business which are permitted by law to be the subject of a closed session discussion, and which the Agency is advised should be discussed in closed session to best protect the interests of the City. The Agency is required by law to return to open session, issue any reports of final action taken in closed session, and the votes taken. However, due to the typical length of time taken up by closed sessions, the videotaping will be terminated at this point in order to save costs sa that the Agency's refurn from closed session, reports of final action taken, and adjournment will not be videotaped. Nevertheless, the report of final action taken will be recorded in the minufes which will be available in the Office of the Secretary to the Redevelopment Agency and the City Clerk's Office. 10. CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION -- Pursuant to Government Code Section 54956.9(a) a. Agency vs. Rados Bras. [Case No. GIC734557 - 1] 11. CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION -- Pursuant to Government Code Section 54956.9(a) a. Agency vs. Shinohara [Case No. GIS002460] "T JOINT REDEVELOPMENT AGENCY / CITY COUNCIL AGENDA STATEMENT ITEM NO.: I MEETING DATE: 08/15/2000 ITEM TITLE: JOINT AGENCY/COUNCIL RESOLUTION APPROVING THE 2000 HOLIDAY LIGHTING PROGRAM; AUTHORIZING WAIVING THE FORMAL BIDDING PROCESS AND AWARDING A PURHASE AGREEMENT TO DEKRALlTE, INDUSTRIES; APPROPRIATING $20,848 FROM THE RESIDENTIAL CONSTRUCTION TAX FUND (RCT) AND $18,076 FROM THE FINE ARTS FUND; AND DIRECTING STAFF TO IMPLEMENT THE 2000 HOLIDAY LIGHTING PROGRAM SUBMITTED BY: COMMUNITY DEVELOPMENT DIRECTOR 4l-fe-'l << .----.. REVIEWED BY: CITY MANAGER l" 4/STHS VOTE: YES 0 NO D BACKGROUND In 1998, the City initioted fhe Holiday lighfing Progrom in response to the end of fhe holiday lighfing and decorative displays fhot took ploce for many years on Candy Cane lane (Guava Avenue). The idea of dawntown holiday lighting was originally proposed to the downtown business merchonts. Concerns raised by fhe merchants resulfed in the City Council directing City staff fo work with fhe Downtown Business Association (DBA) in developing a festive holiday lighting program for fhe downtown area. A Request for Proposal (RFP) was subsequently prepared to solicit bids from specialty lighting and decorafion companies. A selection committee and inferview panel consisting of downtown merchants and City staff selected DEKRA-L1TE Industries, a holiday lighting and decorafion company based in Santo Ana. The committee selected DEKRA-L1TE due to their ability fo meet the RFP's program goals, the excitement and quality of their design, and project cost. In 1999, fhe City issued a purchase order fo DEKRA-L1TE for confinuing fhe Holiday Lighting Program. Additional business with DEKRA-L1TE requires City Council and Redevelopment Agency approval. Therefore staff is requesting that the City Council and Redevelopment Agency waive the formal bidding process and award a purchase agreement to DEKRA-L1TE fo implement the 2000 Holiday lighting Program, wifh an option to renew for subsequent holiday seasons. This recommendation is based on fhe limited market for this type of service, DEKRA-L1TE'S past satisfactory performance, and because they had supplied fhe originol holiday lights, displays, and banners. Staff will continue to monifor market conditions to assess fhe cost effectiveness of proposed option renewals. / - ( "T PAGE 2, ITEM NO.: I MEETING DATE: 08/15/2000 RECOMMENDATION The City Council and Redevelopment Agency adopt a resolution to: 1. Approve the Holiday Lighting Program; and 2. Aufhorize waiving fhe formal bidding process and awarding a purchase agreement to DEKRALlTE Indusfries; and 3. Appropriate $20,848 from the Residenfial Construction Tax (RCT) Fund and $18,076 from the Fine Arts Fund; and 4. Direct staff fo implement fhe 2000 Holiday Lighting Program. BOARDS/COMMISSIONS RECOMMENDATION On July 11, 2000, fhe Downtown Business Association (DBA) voted to support the 2000 Holiday Lighting Program. On July 12, 2000, the Town Centre I Project Area Commiffee (PAC) vofed 5-0 (with one PAC member absent) to support 2000 Holiday Lighfing Program. DISCUSSION The Holiday Lighting Program is a continued effort undertaken by the City to celebrate the holiday season. During the first two years of this program, DEKRA-L1TE adorned the downtown area with an array of colorful holiday lights, displays, and thematic banners. The program also provided lively holiday lighting beginning in 1999 for two freeway overpasses (H Street at 1-5 & J Sfreef at 1-805) thot provide direct access to the downtown area. The 2000 Holiday Lighting Program is identical fo last year's Holiday Lighting Program except for several add-ons. New to this year's program is the lighting of an addifional 15 trees (for a total of 90 trees) in the downfown area and fhe lighfing of an additional freeway overpass af H Sfreet at 1_ 805. The total cost to implement fhe 2000 Holiday Lighting Program is discussed in the fiscal impact section of the report. Installation of the downtown free lights will occur in mid-October and will remain installed until April to correspond to daylight savings time. The 2000 Holiday Lighfing Program will officially commence wifh 0 holiday tree lighting ceremony following fhe conclusion of the Downfown Storlight Yule Parade, which usuolly takes place on the first Saturday of December. Due to DEKRA-L1TE'S business centering on the holidays and their customers requiring the same insfallation dates, DEKRA-L1TE accommodotes requests on a firsf come, first serve basis. As a result, DEKRA-L1TE has requested thaf the City provide fhem with a purchase order by August 2000 to secure insfallotion dafes. /-d.- -r PAGE 3, ITEM NO.: MEETING DATE: ( 08/15/2000 FISCAL IMPACT The total cost to implemenf the 2000 Holiday Lighting Program is $83,657. It will cost $29,927 to provide electricity and to install holiday lights for the three freeway overpasses. The holiday lighting, disploys, and decorations for downtown will cost $53,730. Funding from last year's Holiday lighting program included Residenfial Construction Tax (RCT) funds for the freeway overpasses ond Fine Arts funds for the downtown lighting, displays, and decorations. Sfaff hos identified $9,079 of RCT funds remoining from last year's project (RD231) which can be used to offset the cost for fhe overpasses, and $35,654 of Fine Arts funds (RD228) from last year which can be used fo offset fhe cost for downtown. After utilizing those funds, there remains a funding gap of $38,924 to implement the 2000 Holidoy lighting program. Staff recommends thaf fhe Redevelopmenf Agency and City Council appropriate $20,848 from the Residential Construction Tax (RCT) Fund and $18,076 from fhe Fine Arts Fund to implement this year's program. 1-3 ., PAGE 4, ITEM NO.: MEETING DATE: I 08/15/2000 The following provides a breakdown of the costs associated with implementing fhe 2000 Holiday Lighfing Program. Freeway Overpass Lighting (3) Tree Lighting (includes 15 new trees) Third Avenue Displays and Decorations Memorial Pork Displays and Decorations Public Parking Lot Banners and Decorotions SUBTOTAL DEKRA-L1TE PROPOSAL PRODUCT LABOR/ TOTAL SERVICES COSTS COSTS COSTS $909 $2,700 $3,609 6,552 21,600 28,152 581 13,286 13,867 984 4,960 5,944 2,659 2,659 $9,025 $45,205 $54,230 DEKRA-L1TE PROPOSAL: MISCELLANEOUS: Electrician for installation Three replacement bonner brackets Cleaning of parking lot and Third Avenue banners Replacement computers for animated arch and drumming elf SUBTOTAL - MISCELLANEOUS 285 $1,600 $1,600 285 285 285 240 $1,885 $2,410 240 $525 SIERRA ELECTRIC INC.: New electrical service for H Street at 1-805 freeway overpass Repair and electrical service for J Street at 1-805 freeway overpass $18,747 $18,747 7,500 7,500 $26,247 $26,247 $770 $770 $10,320 $47,090 $83,657 (9,079) (35,654) $38,924 SUBTOTAL - SIERRA ELECTRIC INC. APPLICABLE SALES TAX AND SHIPPING TOTAL COSTS FOR 2000 HOLIDAY LIGHTING PROGRAM LESS REMAINING RCT FUNDS LESS REMAINING FINE ARTS FUNDS FUNDING GAP FOR 2000 HOLIDAY LIGHTING PROGRAM ATTACHMENTS Holiday Highlights from 1999 H,\HOME\COMMDEV\STAFF.REP\08-01-00\holidoy I;ght;ng.doc /- 4 ., AGENCY RESOLUTION NO. AND COUNCIL RESOLUTION NO. JOINT RESOLUTION OF THE CITY COUNCIL AND THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA APPROVING THE 2000 HOLIDAY LIGHTING PROGRAM; AUTHORIZING WAIVING THE FORMAL BIDDING PROCESS AND AWARDING A PURHASE AGREEMENT TO DEKRALlTE, INDUSTRIES; APPROPRIATING $20,848 FROM THE RESIDENTIAL CONSTRUCTION TAX FUND (RCT) AND $18,076 FROM THE FINE ARTS FUND; AND DIRECTING STAFF TO IMPLEMENT THE 2000 HOLIDAY LIGHTING PROGRAM WHEREAS, the City of Chula Vista initiated the Holiday Lighting Program in 1998 in response to the end of the holiday lighting and displays on Candy Cane Lane; and WHEREAS, a Request for Proposal was prepared to solicit bids from specialty lighting and decoration companies; and WHEREAS, in October 1998, a selection committee and interview panel consisting of downtown merchants and City of Chula Vista staff selected DEKRA-L1TE Industries due to their ability to meet the Request for Proposal's program goals, the excitement and quality of their design, and project cost; and WHEREAS, in 1999, the City issued a purchase order to DEKRA-L1TE to continue the Holiday Lighting Program due to the limited market for this type of service, DEKRA-L1TE'S past satisfactory performance, and because they had supplied the original holiday lights, displays, and banners; and WHEREAS, additional business with DEKRA-L1TE requires City Council and Redevelopment Agency approval; and WHEREAS, staff is requesting that the City Council and Redevelopment Agency waive the formal bidding process and award a purchase agreement to DEKRA-L1TE to implement the 2000 Holiday Lighting Program, with the option to renew for subsequent holiday seasons; and WHEREAS, On July 12, 2000, the Town Centre I Project Area Committee (PAC) voted 5 to 0 with one PAC member absent to support the 2000 Holiday Lighting Program; and WHEREAS, On July 11, 2000, the Downtown Business Association (DBA) voted to support the 2000 Holiday Lighting Program; and WHEREAS, the City Council and the Redevelopment Agency have reviewed the proposed 2000 Holiday Lighting Program as presented in the Joint Redevelopment Agency/City Council Agenda Statement dated August 15, 2000. NOW, THEREFORE, BE IT RESOLVED that the City Council and the Redevelopment Agency of the City of Chula Vista does hereby: 1. Approve the 2000 Holiday Lighting Program; and 2. Authorize waiving the formal bidding process and awarding a purchase agreement to DEKRA-L1TE Industries; and 3. Appropriate $20,848 from the Residential Construction Tax Fund and $18,076 from the Fine Arts Fund to fund the program; and 4. Direct staff to take all necessary and appropriate measures to implement the 2000 Holiday Lighting Program. Presented by Approved as to form by ~.~ Chris Salomone Director of Community Development H:IHOMEICOMMDEVlRESOSlholidaylighting2000.doc /-s- "T City of ChulLl Vi<;tLl HolidLlY Highlighh from 1999 pre$ented by DekmLite I ndust-ries SC1ntC1 AnC1, CA / G, T~.' -.......,.... -_.- Third Avenue ""T--- - +-....,.... ...._- Memuriell park /- 7 T-.' ...--...,.,.- -..-. -,- Third Avenue ~elli<; Di<;pIClY<; (- ?? - ---r-.'-'" .-....-....,...... ..---.. -- REDEVELOPMENT AGENCY AGENDA STATEMENT ITEM NO.: d- MEETING DATE: 08/15/00 ITEM TITLE: RESOLUTION APPROVING $73,000 TO PARTIALLY COVER THE COST OF THE PUBLIC IMPROVEMENTS ASSOCIATED WITH AN ELEVEN (11) UNIT TRANSITIONAL HOUSING PROJECT KNOWN AS TROLLEY TRESTLE, AND APPROPIATING SAID AMOUNT FROM THE REDEVELOPMENT AGENCY'S LOW AND MODERATE INCOME HOUSING SET -ASIDE FUND. SUBMITTED BY: COMMUNITY DEVELOP~T DIRECTOR ~ e..5 REVIEWED BY: EXECUTIVE DIRECTOR ~ 4/5THS VOTE: YES 0 NO D BACKGROUND On June 22, 1999, fhe Agency approved a Disposition, Develapment and Housing Cooperotion Agreement with South Bay Community Services (SBCS), for the development of an eleven (11) unit Transitional Housing Development far Foster Care Groduafes, known as, Trolley Trestle, located at 746 Ada Street. The Project is currenfly under consfruction, and is scheduled to be completed by October 1, 2000. However, this project is currenfly faced with higher thon anficipated public improvement costs, and SBCS is requesting Agency financial assistance in the amount of $73,000 to portially cover fhese costs. RECOMMENDATION Staff recommends fhat the Agency approve and appropriate $73,000 from the Low and Moderate Income Housing fund fo help cover fhe public improvemenf costs of the Trolley Tresfle Proj eel. BOARDS/COMMISSIONS RECOMMENDATION On December 9, 1998, the Housing Advisory Commission vofed fo recommend the developmenf by South Bay Community Services of fhe 11 unit transitional housing project for young adulfs who have complefed the County of San Diego Foster Care Program fo be located af 746 Ada Street. On May 26, 1999, the Planning Commission adopted a resolufion recommending that the City Council and Redevelopment Agency granf a thirty-eight percent (38%) density bonus ond 0 reduelion in required parking for the project. c2 - / -r PAGE 2, ITEM NO.: d- MEETING DATE: 08/15/00 DISCUSSION The Proiect Trolley Tresfle is a transitional housing project of 11 apartment unifs (6 one-bedroom and 5 fwo- bedroom units), a common area meeting room, computer room, and parking for 12 vehicles, including one hondicapped space. Total development cost of this project is approximately $1,323,000 which is being paid by numerous funding sources including the State of California, the County of San Diego, the City of Chula Visfa, ond private foundations. The residents will have completed the San Diego County Foster Care Progrom and the transitional living program will be fheir first step towards self-sufficiency and independent living. The residents will stay for a maximum of fwo years, consisfent with the definition of transitional housing. During fheir residency, they will be required fo continue their educafion or obfain employment with a career path. No social services will be provided at the site. This housing project is targefed to extremely low-income young adults, many of who will be employed part time while attending school or just starting employment. Extremely low income is defined os a maximum of 30 percent of the Area Median Income (AMI) as determined by HUD, currently $11,300 for a single person household. Residents will contribute 0 percentage of their income towards rent. Based upon SBCS' past experience with of her transitional housing programs and fhe population income and ability fo pay, rents are expected to be no more than $100 a month for a one bedroom unit and $140 for a fwo bedroom unit. Public Improvement Costs After mony months of deloys due to budget constraints, SBCS finally began construction in January 2000. The project is currently under construction and is proceeding smoathly. The rough framing is finished and has passed inspection. The Project is now proceeding with siding, sfucco, finished carpentry, interior plumbing and electricol, and installotion of dry utilifies on site. The public improvements are scheduled fo occur during fhis same time period in order to meet the scheduled completion date of October 1, 2000. SBCS and its civil engineer hove submitted the required materials and plans to the City's Engineering Department, who has approved the plans and issued a construction permit for the required work. When this project was originally planned, fhe City only required that SBCS perform minor public improvements, including curb & gutter, driveway approach, one streeflight, new sidewalk and handicap ramps. The totol cost for this work was budgefed at $10,000. After the project got started, it was defermined fhat the project also had fo perform streef widening and underground storm-drain improvements, in addition fo whot wos originally required. These ifems were never in SBCS' budget for fhis project. The estimated cosf for this odditional work is over $100,000. The fotol cost for the required public improvemenfs is $127,927. A detailed cost breakdown IS enclosed (Exhibit I). c1-~ '; PAGE 3, ITEM NO.: MEETING DATE: J..--. 08/15/00 Consisfent with City recommendotions, SBCS hos made significant efforts to obtoin funds from other entities so as to overcome its budgetary constraints. Other funds obtained for fhese public improvements include $45,000 from the County of San Diego. In addition, SBCS was successful in receiving approximately $10,000 from the Son Diego Foundafion Price-Weingart fund. This was an additional funding source not originally contemplated. These funds helped to pay for increased construction-related costs, but were not enough fo close fhe gap in fhe public improvements budget. Also, SBCS researched the possibility of CDBG funding through the County's Department of Housing and Community Development to cover a portion of the public improvement expenses. After severol discussions with County HCD staff, it was determined thaf it wos not a realistic funding source. The Stafe of California recently allocafed a significant amount of funds in its new 2000/01 budget for offordable housing production. SBCS has researched these new opportunifies, buf has concluded thaf because it is such a recent development, these funds will not be available within the necessary project completion time period. Fundina Mechanism Upon the proposed public improvemenf funding request being approved, City staff will prepare an agreement with South Bay Community Services to implement this approval. The ogreement will be prepared by the Agency Attorney which will require fhe establishment of a fund confrol account, fhe dispersal of Agency funds only after other funds are spenf ond the safisfoction of prevailing woge requirements. FISCAL IMPACT Total development cost of this 11 units housing project is approximately $1,323,000 involving numerous funding sources including $536,000 from the County of San Diego, $247,000 from the Stafe of California, a $300,000 development loon from the Agency and a land confribution from fhe City valued at $167,000. The $73,000 financial assistance requesfed to help pay for part of fhe public improvement costs can be provided from the Redevelopment Agency's Low and Moderate Income Housing Fund which currently has a balance of $3.0 million. ATTACHMENTS EXHIBIT 1 - Trolley Tresfle, Public Improvements Budget - June 20,2000 H,\HOME\COMMDEV\STAFF.REP\OB-15-00\ Tcolley Trestle.DOC 02 -3 "T RESOLUTION NO. RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA APPROVING $73,000 TO PARTIALLY COVER THE COST OF THE PUBLIC IMPROVEMENTS ASSOCIATED WITH AN ELEVEN (11) UNIT TRANSITIONAL HOUSING PROJECT KNOWN AS TROLLEY TRESTLE, AND APPROPRIATING SAID AMOUNT FROM THE REDEVELOPMENT AGENCY'S LOW AND MODERATE INCOME HOUSING SET-ASIDE FUND. WHEREAS, On June 22, 1999 the City Council and Redevelopment Agency of the City of Chura Vista approved a Disposition, Development, and Housing Cpoperation Agreement, and related documents with South Bay Community Services for the development of an eleven (11) unit Transitional Housing Development fpr Foster Care Graduates, known as Trolley Trestle, located at 746 Ada Street; and WHEREAS, The provision of affordable housing units like the project is consistent with and called for by the City's General Plan Housing Element, Consolidated Plan, and California Health and Safety Code, and because it will increase the City's supply of Transitional Housing for the near homeless or potentially homeless populations; and WHEREAS, The proposed Project is consistent with the Southwest Redevelopment Plan and Implementation Plan and shall assist in the elimination of blighting influences by putting a vacant parcel to a higher and better use and will provide quality housing for low income residents, and thus contribute to satisfy the needs and desires of the community and meet the requirements of State law. NOW, THEREFORE, BE IT RESOLVED based on the findings and determinations set forth above, the Redevelopment Agency of the City of Chula Vista does hereby approve and appropriate $73,000 from the Low and Moderate Income Housing Set-Aside Fund to partially pay for the public improvements associated with the Project on the terms presented; BE IT FURTHER RESOLVE that staff is authorized and directed to prepare an agreement with SBCS to implement this approval in a final form approved by the Agency Attorney. PRESENTED BY APPROVED AS TO FORM BY &,~ Chris Salomone Director of Community Development [H:HOME\COMDEVlTROLLEY TRESTLE] d-~ .,. .,. TROLLEY TRESTLE 20-Jun-00 Public Improvements Budget Item '. . . Descriotion . Quantitv 1 Curb/Gutter and Sidewalk 7,777 2 Sawcuttlng/Demolltion 6,468 3 PavinglPatch.ing/Berm 15,688 4 250 Watt - HPSV'Street Light 3,680 5 Type A. ped. Ramp 645 6 Curb Outlet D-25 Type A 4,005 7 CurblnletD-2 Type B 3,995 8 S.D. Ctean Out D'9Type A (2 each) 9,996 9 6" Sewer Lateral' 14,800 10 1B"RCP 35,200 11 subtotal 102,256 12 contractor's fee 12,271 TOTAL public improvements 114,627 Design Wor1l by FlolllS, Lund & Mobayed 13,400 GRAND TOTAL $121,927 ~ .- SOURCES OF FUNDS' County of San Diego (Community Projects program) South Bay Community Services City of Chula Vista $45,000 $10,000 $72,927 "Ii - c:2-~ "T EXHIBIT 1 () -/ ~, ~?11 -:5 SUMMARY OF ORDINANCES 2817, 2818, AND 2819 ADOPTING AMENDMENTS TO REDEVELOPMENT PLANS PROVIDING FOR THE FINANCIAL MERGER OF THE TOWN CENTRE NO II, OT A Y VALLEY ROAD, AND SOUTHWEST REDEVELOPMENT PROJECT AREAS The Chula Vista Cjty Council and the Redevelopment Agency of the City of Chula Vista, at a meeting held August 15, 2000, conducted a public hearing to consider amendments to the Town Centre /I, Otay Valley Road, and Southwest Redevelopment Project Area Plans in order to merge the Project Areas for financial purposes. The merger of the Project Areas allows for the allocation of tax increment revenues from each of the three Project Areas to the entire Merged Project Area for the purpose of payjng the principal of and interest on indebtedness incurred by the Redevelopment Agency to finance or refinance the Merged Project Area. The Chula Vista City Council, at a meeting on August 22, 2000, adopted: Ordinance 2817 approving the Fourth Amendment to the Town Centre /I Redevelopment Project Area Plan, Ordinance 2818 approving the Second Amendment to the Otay Valley Road Redevelopment Project Area Plan, and Ordinance 2819 approving the Third Amendment to the Southwest Redevelopment Project Area Plan. The Amendments adopted in Ordinances 2817,2818, and 2819 will merge the Town Centre /I, Otay Valley Road and Southwest Project Areas. The Amendments will not enlarge the Project Areas, nor will the Amendments otherwise affect any of the properties in the proposed Merged Project Area differently than if the Project Areas remained separate. The Amendments do not modify any of the existing tax sharing agreements between the Redevelopment Agency and the taxing entities within the affected Project Areas. The main purpose of the merger of the Project Areas is for efficiency of administration and financing. A complete copy of the ordinances and legal descriptions of the affected Project Areas and the Amendments to the respective Redevelopment Plans may be revjewed in the Office of the Cjty Clerk of the City of Chula Vista at 276 Fourth Avenue, Chula Vista, CA. Dated this 30th day of August, 2000. Susan Bigelow City Clerk DOCSOC\ 763590v2\242 t 2.0003 '~" /1'- 'r i I : ~;L/n\ ~.2 -..J NOTICE OF JOINT PUBLIC HEARING NOTICE OF A JOINT PUBLIC HEARING OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AND THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ON THE PROPOSED AMENDMENTS TO THE REDEVELOPMENT PLANS FOR THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT, THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT AND THE SOUTHWEST REDEVELOPMENT PROJECT. NOTICE IS HEREBY GIVEN that a joint public hearing will be held by the City Council of the City of Chula Vista (the "City") and the Redevelopment Agency of the City of Chula Vista (the "Redevelopment Agency") at the City Council Chambers, City of Chula Vista, City Hall, 276 Fourth Avenue, Chula Vista, California, on August 15, 2000 at 6:00 p.m. or as soon as possible thereafter, to consider approval and adoption of the proposed amendments ("Amendments") to the Redevelopment Plans for the Town Centre No. II Redevelopment Project, the Otay Valley Road Redevelopment Project and the Southwest Redevelopment Project, (the "Project Areas"). The purpose of the proposed Amendments to the Project Areas Plans is to merge the Project Areas. The Amendments will not enlarge the Project Areas, nor will the Amendments affect any of the properties in the proposed Merged Project Area differently than if the Project Areas remained separate. The proposed Amendments do not change any of the existing limitations continued in the Project Area Plans, nor do they change any of the existing tax sharing agreements between the Agency and the taxing entities within the affected Project Areas. The main purpose of the proposed merger of the Project Areas would be for efficiency of administration and financing. The Redevelopment Agency's Report to the City Council on the proposed Amendments will be presented at the hearing. The Report includes all documentation required by the Community Redevelopment Law being Section 33000 et seq. of the California Health and Safety Code. The Report is available for public inspection at the City Clerk's Office, Chula Vista City Hall, 276 Fourth Avenue, Chula Vista, California, 91910. The City Council and the Redevelopment Agency shall consider all evidence and testimony for and against the adoption of the proposed Amendments. The Redevelopment Agency will undertake the proposed Amendments if, after the public hearing, the City Council approves and adopts the proposed Amendments. All persons having any objections to the proposed Amendments or the regularity of the prior proceedings, may appear before the City Council and the Redevelopment Agency and show cause why the proposed Amendments should not be adopted. At any time not later than the aforesaid hour set for the hearing, any person or organization may file in writing with the City Clerk of the City of Chula Vista a statement of his or her objections to the proposed Amendments. Any person pr organization desiring to be heard will be given an opportunity to be heard. At the aforesaid hour, the City Council and the Redevelopment Agency shall hear all written and oral objections to the proposed Amendments. If no objections are received in writing from an affected property owner or taxing entity prior to or at the hearing, the City Council may consider adoption of the proposed Amendments after the hearing is closed. If any such objections are received prior to or at the hearing, the City Council may adopt the proposed Amendments only after consideration of the objections and the adoption of written findings in response thereto as required by law, at a subsequent date not less than one week after the time this public hearing is commenced in accordance with the law. The legal description of the Town Centre No. II Redevelopment Project Area is presented in a document recorded with the San Diego County Recorder as Document No. 78-370769. The legal description of the Town Centre No. II Redevelopment Project Area - Amendment NO.1 is presented in a document recorded with the San Diego County Recorder as Document No. 87-308578. The legal description of the Otay Valley Road Redevelopment Project Area is presented in a document recorded with the San Diego County Recorder as Document No. 83-472539. The legal description of the Southwest Redevelopment Project Area is presented in a document recorded with the San Diego County Recorder as Document No. 90-635149. A metes and bounds legal description and a map are available for public review at the City Clerks' Office, 276 Fourth Avenue, Chula Vista, California, 91910. Interested persons may inspect the proposed Amendments. the Report and all other information pertaining thereto at the City of Chula Vista City Hall, 276 Fourth Avenue, Chula Vista. California, 91910, or contact Lyle Haynes, (619) 691-5047. ~. / -- _,._~~~ J" // ~--,,' "T JOINT REDEVELOPMENT AGENCY / CITY COUNCIL AGENDA STATEMENT ITEM NO.: MEETING DATE: ..3 08/15/00 ITEM TITLE: JOINT PUBLIC HEARING OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AND THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ON THE PROPOSED AMENDMENTS TO THE REDEVELOPMENT PLANS FOR THE TOWN CENTRE NO II REDEVELOPMENT PROJECT, THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT AND THE SOUTHWEST REDEVELOPMENT PROJECT a) ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AND ADOPTING THE FOURTH AMENDMENT TO THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT AREA PLAN AND THE MERGER OF THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT AND THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT, AND THE SOUTHWEST REDEVELOPMENT PROJECT PURSUANT TO THE PROVISIONS OF THE COMMUNITY REDEVELOPMENT LAW, HEALTH AND SAFETY CODE SECTION 33485 ET. SEQ. b) ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AND ADOPTING THE SECOND AMENDMENT TO THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT AREA PLAN AND THE MERGER OF THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT AND THE TOWN CENTRE II REDEVELOPMENT PROJECT, AND THE SOUTHWEST REDEVELOPMENT PROJECT PURSUANT TO THE PROVISIONS OF THE COMMUNITY REDEVELOPMENT LAW, HEALTH AND SAFETY CODE SECTION 33485 ET. SEQ. e) ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AND ADOPTING THE THIRD AMENDMENT TO THE SOUTHWEST REDEVELOPMENT PROJECT AREA PLAN AND THE MERGER OF THE SOUTHWEST REDEVELOPMENT PROJECT AND TOWN CENTRE II REDEVELOPMENT PROJECT, AND THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT PURSUANT TO THE PROVISIONS OF THE COMMUNITY REDEVELOPMENT LAW, HEALTH AND SAFETY CODE SECTION 33485 ET. SEQ. SUBMITTED BY: COMMUNITY DEVEL~MENT DIRECTOR ~~ t<; REVIEWED BY: CITY MANAGER # , 4/STHS VOTE: YES D NO 0 ..,3-1 '"' PAGE 2, ITEM NO.: MEETING DATE: 3 08/15/00 BACKGROUND The financial consulting firm of Rod Gunn Associotes (RGA) was retained for the purposes of evaluating the Agency's impraving fiscal condition and recommending a financial plan to take advantage of fhe current growth economy. RGA recommended fhe issuance of approximafely $14,000,000 in tax-exempt tax allocation bonds from the Town Centre II, Otay Valley Road, and Southwest Redevelopment project areas for fhe purposes of repaying various inter-fund loans and raising capifal for projects. On May 2, 2000 the Council and Agency approved the proposed Agency Financial Plan and authorized fhe issuance and sale of the 2000 Tax Allocation Bonds for the of ore mentioned project areas. At thaf time, sfaff verbally informed Council thaf on opportunity had iusf recently emerged to obtain bond insurance from Financial Security Assurance ("FSA") that could result in odditional proceeds of ot leasf $750,000. However, FSA would anly consider insuring the bonds on the condition that the three subject project oreas were merged for financial purposes. Council was advised fhat sfaff would explore that opportunity and if warranted, bring it back to Council for consideration. Staff has now evaluated the merger and recommend approval. The purpose of this item is fo present fhe proposed financial merger for consideration by the Council. Health and Safety Code Section 33458 allows for fhe merger to be acted upon only by the City Council where the legislative body is also the Agency. Staff has properly noticed the public hearing and prepared the necessary report pursuant to Health and Safety Code Section 33352. The Planning and Environmental Manager has determined that fhis requested merger action qualifies for a Class 20 cofegorical exemption pursuant to Section 15320 of the California Environmental Quality Act (CEQA). If the merger is approved, staff has prepared a subsequent report (Item #4) to consider and adopf fhe 2000 Tax Allocation Bonds from the merged project area. RECOMMENDATION It is recommended that the City Council of the City of Chula Vista ("Council") and the Redevelopment Agency of the City of Chula Vista ("Agency") conduct the Joint Public Hearing and adopt the Council ordinances approving and adopting fhe proposed omendments fo the Redevelopment Plans for the Town Centre II, Otay Valley Road, and Southwesf Redevelopment Project Areos which would result in fhe merger of those project areas for financial purposes. BOARDS/COMMISSIONS RECOMMENDATION Not Applicable DISCUSSION RGA was not able to obfain insurance for the bonds as proposed under the original Financial Plan on a sfand-alone project area by project area basis. However, during the course of frying to obtain insurance, FSA indicated an interest in pursuing opproval for bond insurance on the condifion that 3-d-. "' PAGE 3, ITEM NO.: MEETING DATE: :3 08/15/00 fhe project areas were merged. RGA and staff subsequently warked with FSA to farmally gain fheir opproval after analyzing the overall merifs of a finoncial merger ond concluding thaf it would be of substantial benefit to the City, Agency and community. The proposed merger is for financial purposes only. As indicafed in fhe public hearing nofice (Attachment 1) provided to all properly owners, fenants and residents in the project areas, the proposed amendments do not: 1) add property to the project areas or affect any existing properties in the project areas, 2) change any of the existing limifations in the Redevelopment Pions, or 3) change any of the existing tax sharing agreements between the Agency and fhe toxing districts within the project areas. The proposed merger is being recommended on the basis fhat it will allow for increased financing capacity thereby resulfing in additional funding for implementing projects and programs wifhin fhe project oreas, reduced short-term borrowing costs, as well as greater administrative ease and flexibility for financing redevelopment activities. The property taxes will continue to be collected, reported and disfributed by each project area with all pre-merger debt, housing set-aside, and fax sharing obligations to be paid first from the appropriate project areas. The change however, will be thot the remaining funds can be co-mingled for purposes of paying any obligations of fhe merged project areas. This flexibility will provide administrative and oversight management relief but more importantly negate the need for recording inter-Agency fund loans and therefore avoid the future associated interest costs from those "loons". However, if is possible thaf in some years a particular project area could benefit from Agency expenditures above the amounf of tax increment generated in that project area in fhat given year. Conversely, a particular project area could experience less Agency expenditures than the taxes generated within the project area in that given year. Sfaff undersfands fhe potenfial sensitivity to this issue, buf believe that over time each project area will be complefely redeveloped and on bolance, receive Agency ossisfance and benefit of fhe redevelopment activity generally commensurafe wifh the faxes generofed. Addifionolly, as previously sfated, the merger will provide additional project funds that would not have been generated and the project areas will avoid unnecessary interest costs from short-term borrowing from other City ond Agency funding sources. Pursuant to Healfh and Sofety Code Section 33487(a), fhe proposed merger will frigger a longer (30 year) affordability restriction for projects assisted by low and moderate income housing funds. Without the merger, the minimum affordability restriction is 10 yeors for owner-occupied units and 15 years for rental units or for the largest feasible fime. Staff does not believe this to be an issue since the Agency's affordability agreements exceed fhe 30 year requirements wifh some getting up to 55 year affordability restrictions. If the proposed merger is approved, if is currently estimated that a minimum of an additional $800,000 in additionol funding can be raised for projects. The reduction in interest rates between the previous BBB-rafed issues and the current AAA-roted insured issues more thon offsets the insurance premium cosfs proposed by FAST. Further information abouf the bonds is included in the report for Item 4 on the Joint City/Agency agenda. 3-.3 ., PAGE 4, ITEM NO.: MEETING DATE: 3 08/15/00 Included as Affachment 2 is fhe report on fhe proposed amendments as required pursuant to Healfh and Safely Code Section 33352, fhat summarizes the justifications, contents and impacts of the proposal. FISCAL IMPACT Adopfion of the Council ordinances and Agency resolufion will allow for additional bond proceeds to be generafed as well as other administrative efficiencies that will have a positive fiscal impact for the City and Agency. AnACHMENTS 1. Public Hearing Notice 2. Report fo the City Council - HSC Section 33352 H:\HOME\COMMDEV\MASTERS\COUNCIL AGENDA STATEMENT.doc 3-1 .., ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AND ADOPTING THE FOURTH AMENDMENT TO THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT AREA PLAN AND THE MERGER OF THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT AND THE OTAYVALLEY ROAD REDEVELOPMENT PROJECT, AND THE SOUTHWEST REDEVELOPMENT PROJECT PURSUANT TO THE PROVISIONS OF THE COMMUNITY REDEVELOPMENT LAW, HEALTH AND SAFETY CODE SECTION 33485 et seq. WHEREAS, the City Council of the City ofChula Vista (the "City Council") adopted the Redevelopment Plan for the Town Centre No. II Redevelopment Project on August 15, 1978 pursuant to Ordinance No. 1827; the Redevelopment Plan for the Otay Valley Road Redevelopment Project on December 29, 1983 pursuant to Ordinance No. 2059; and the Redevelopment Plan for the Southwest Redevelopment Project on November 27, 1990 pursuant to Ordinance No. 2420; and WHEREAS, the City Council proposes to amend these three existing redevelopment plans ("Redevelopment Plans") for the above described projects ("Plan Amendments") for the purpose of merging the three projects for financing purposes as permitted by Sections 33485-33489 of the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ("CRL"); and WHEREAS, the Redevelopment Plan for the Town Centre No. 11 Redevelopment Project was originally adopted by Ordinance No. 1827 on August 15, 1978 and has been amended three times: (i) on May 19, 1987 by Ordinance No. 2207; (ii) on July 19, 1988 by Ordinance No. 2274; and (iii) on November 8, 1994 by Ordinance No. 2610; and WHEREAS, the amendment carried out by this Ordinance is the fourth amendment ("Fourth Amendment") to the Redevelopment Plan for the Town Centre No. 11 Redevelopment Project; and WHEREAS, the purpose of this proposed Fourth Amendment is to merge the Town Centre No. 11 Redevelopment Project with the Otay Valley Road Redevelopment Project and the Southwest Redevelopment Project (collectively, the "Merged Redevelopment Project") pursuant to CRL Article 16, Section 33485, et seq.; and WHEREAS, although each of the proposed Plan Amendments will be considered and adopted separately pursuant to the CRL, to facilitate their consideration the Plan Amendments have been aggregated and presented together in a single joint public hearing on the proposed merger; and WHEREAS, this Ordinance relates to the amendment of the Town Centre No. 11 Redevelopment Project and the merger of that Redevelopment Project Area together with the Redevelopment Plan for the Otay Valley Road and the Redevelopment Plan for the Southwest Redevelopment Project (collective "Merged Area"); and WHEREAS, the Town Centre No. 11 Redevelopment Project by this Ordinance shall be merged with the Otay Valley Road Redevelopment Project and the Southwest Redevelopment DOCSOC\756517v2\24212.0003 ..3-S "T Project so that taxes attributable to each constituent project area which are allocated to the Agency pursuant to Section 33670(b) of the CRL are to be allocated to the entire Merged Redevelopment Project area for the purpose of paying principal of, and interest on, indebtedness incurred by the Agency to finance or refinance, in whole or in part, the Merged Redevelopment Project; except that any such taxes attributable to any constituent project area shall first be used to pay indebtedness in compliance with the terms of any bond resolution or other agreement pledging such taxes from the constituent project area, which resolution or other agreement was adopted or approved by the Agency prior to the merging of these three projects; and except as otherwise noted above, tax increment revenue attributed to each constituent project may be used for any lawful purpose in any constituent project now within the Merged Redevelopment Project; and WHEREAS, for financing purposes and for any other purposes permitted or required by law, the three constituent projects that have been merged by the respective Plan Amendments together and collectively, shall be called the "Merged Redevelopment Project", and the three constituent project areas together and collectively, shall be called the "Merged Redevelopment Project Area". WHEREAS, the City Council has received from the Redevelopment Agency of the City of Chula Vista (the "Agency") the proposed Fourth Amendment to the Town Centre No. II Redevelopment Project, a copy of which is on file at the office of the City Clerk, together with the Agency's Report to City Council including the reasons for such Plan Amendment; and WHEREAS, a Project Area Committee was not required to be formed in connection with the subject Plan Amendment because such does not affect the existing authority to the Agency to acquire, by eminent domain, property on which a substantial number of low and moderate income persons reside and because the subject Plan Amendment does not grant the Agency authority to fund or develop any additional public projects that will displace a substantial number of low income persons or moderate income persons; and WHEREAS, the subject Plan Amendment would have no impact on the General Plan for the City of Chula Vista because it only merges the existing Redevelopment Plans into the Merged Redevelopment Project; and WHEREAS, in conformity with the requirements of CRL Section 33490, the Agency has previously adopted and has in place an implementation plan for each Project Area that describes the redevelopment project area, the specific goals and objectives for the project area, and the specific programs, including potential projects and estimated expenditures proposed during the five (5) year term of each Implementation Plan, and further, each implementation plan includes an explanation of how the goals, objectives, programs, and expenditures will eliminate blight in the project area and implement the affordable housing requirements of the CRL; and WHEREAS, the implementation plans in place are current for the five year period 2000 through 2004, and do not require amendment in connection with the plan amendments or these merger proceedings; and WHEREAS, the proceedings for the merger of the three project areas have proceeded pursuant to and in conformity with CRL Section 33486 through the proposed amendment of each affected redevelopment plan for each project area as provided in Article 12 of the CRL, Section 33450, et seq.; and DOCSOC\756517v2\24212.0003 ..3 - (p "T WHEREAS, Section 33457.1 of Article 12 provides that to the extent warranted by a proposed amendment to a redevelopment plan, the reports and information required by Section 33352 and 33367 will be prepared; and WHEREAS, the City Council and the Agency held ajoint public hearing on August 15, 2000 on the proposed adoption of the Plan Amendments in the City Council Chambers, City Hall 476 Fourth Avenue, Chula Vista, California; and WHEREAS, notice of said joint public hearing was duly and regularly published in the Chula Vista Star News, a newspaper of general circulation in the City of Chula Vista, pursuant to the provisions of Government Code 6063 and CRL Section 33452, once a week for three successive weeks prior to the date of such joint public hearing, and a copy of said notices is on file with the City Clerk and the Agency; and WHEREAS, copies of the notice of joint public hearing were mailed by first class mail to the last known address of each assessee as shown on the last equalized assessment roll of the County of San Diego for each parcel ofland in each of the subject Project Areas, and to each resident and business within each of the subject Project Areas whose names and addresses could reasonably be identified by the Agency, not less than thirty (30) days prior to the date of such joint public hearing; and WHEREAS, copies of the notice of joint public hearing were mailed by certified mail with return receipt requested to the governing body of each taxing agency which receives taxes from property in each of the subject Project Areas and to the California Department of Housing and Community Development; and WHEREAS, the City has independently found and determined that such Plan Amendments are exempt from the provisions of the California Environmental Quality Act ("CEQA"), Public Resources Code Section ("PRC") as a Class 20 categorical exemption pursuant to PRC Sections 21080(b)(a) and 21084(a) and Section 15320 of the Guidelines promulgated thereunder; the Plan Amendments will result merely in a financial consolidation of the Merged Areas with no potential for significant impact on the environment; and WHEREAS, the City Council has considered the Report to Council from the Agency with regard to the Plan Amendments, has provided an opportunity for all persons to be heard, and has received and considered all evidence and testimony presented for or against any and all aspects ofthe Plan Amendments and the proposed merger, and has made a written response to each written objection of an affected property owner and taxing entity filed with the City Clerk before the hour set for such joint public hearing. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES ORDAIN AS FOLLOWS: Section 1. The City Council hereby finds and determines, based on the evidence in the record, including, but not limited to, the Agency's Report to the City Council on the proposed Plan Amendments, and all documents referenced therein, and evidence and testimony received at the joint public hearing on adoption of the subject Plan Amendments held on August 15,2000, that: DOCSOC\756517v2\24212.0003 ...3 - 7 ., a) This Fourth Amendment to the Town Centre No. II Redevelopment Plan conforms to the General Plan of the City ofChula Vista, including, but not limited to, the housing element of the General Plan. b) The implementation of the Plan Amendments and the merger will promote the public peace, health, safety and welfare of the City of Chula Vista and will effectuate the purposes and policies of the Community Redevelopment Law. This finding is based on the fact the merger is and will be of substantial benefit to the community and contribute to the revitalization of blighted areas through increased economic vitality of such areas, specifically the financial benefits and feasibility of the project areas that will accrue due to the merger. c) The merger increases the Agency's financing capacity, resulting in greater funding for the programs and expenditures detailed in the implementation plans for the project areas. Such programs and expenditures include redeveloping major commercial sites, which will revitalize blighted areas through the increased economic vitality of such areas. Such redevelopment can result in the growth of the tax base and increased tax increment revenues. A portion of any growth in tax increment revenues will increase funds to be deposited in the Agency's low and moderate income housing fund, which is used to increase, improve and preserve housing opportunities in or near such areas, as well as assist in meeting the citywide housing goals established by the City Council. d) The Agency has a feasible method and plan for the relocation of families and persons who might be displaced, temporarily or permanently from housing facilities in the Project Area. The Agency also has a feasible method and plan for its relocation of businesses. This finding is based upon the fact that the Agency has adopted a plan for relocation of families, persons and businesses who are displaced by Agency projects, and upon the fact that the plan provides for relocation assistance according to law, and the fact that such assistance, including relocation payments, constitutes a feasible method for relocation. e) There are, or are being provided, within the Merged Redevelopment Project or within other areas not generally less desirable in regard to public utilities and public and commercial facilities and at rents or prices within the financial means of the families and persons who might be displaced from the Project, decent, safe and sanitary dwellings equal in number to the number of and available to such displaced families and persons and reasonably accessible to their places of employment. t) Families and persons shall not be displaced prior to adoption of a relocation plan pursuant to Sections 33411 and 33411.1 of the Health and Safety Code. Dwelling units housing persons and families of low or moderate income shall not be removed or destroyed prior to adoption of a replacement housing plan pursuant to CRL Sections 33334.5, 33413 and 33413.5. Section 2. The City Council is satisfied that permanent housing facilities will be available within three years from the time residential occupants of the Project are displaced, and that pending the development of such facilities, there will be available to any such displaced residential occupants temporary housing facilities at rents comparable to those in the City of Chula Vista at the time of their displacement. This finding is based upon the City Council's finding that no persons or families of low and moderate income shall be displaced from residences unless and until there is a DOCSOC\ 756517v2\24212.0003 .3 - f "T suitable housing unit available and ready for occupancy by such displaced persons or families at rents comparable to those at the time of their displacement. Such housing units shall be suitable to the needs of such displaced persons or families and must be decent, safe, sanitary and otherwise standard dwellings. Section 3. Written objections to Plan Amendments filed with the City Clerk before the hour set for hearing and all written and oral objections presented to the City Council at the hearing having been considered and, in the case of written objections received from Project property owners, residents and businesses and affected taxing agencies, having been responded to in writing, are hereby overruled. Section 4. The Plan Amendments are categorically exempt from the provisions of the California Environmental Quality Act ("CEQA"), Public Resources Code Section ("PRC") as a Class 20 categorical exemption pursuant to PRC Sections 21080(b)(9) and 21084(a) and Section 15320 of the Guidelines promulgated thereunder; the Plan Amendments will result merely in a financial consolidation of the Merged Areas with no potential for significant impact on the environment. Section 5. That certain "Fourth Amendment to the Redevelopment Plan for the Town Centre No. 11 Redevelopment Project," a copy of which is on file in the office of the Agency and the office of the City Clerk, having been duly reviewed and considered, is hereby approved and adopted. Section 6. The subject Redevelopment Plan for the Town Centre No. 11 Redevelopment Project originally adopted by Ordinance No. 1827 on August 15, 1978 and first amended on May 19, 1987, by Ordinance No. 2207 and thereafter on July 19, 1988, by Ordinance No. 2274, and lastly on November 8, 1994 by Ordinance No. 2610 together with this Plan Amendment is hereby designated, approved, and adopted as the official redevelopment plan for the Town Centre II Redevelopment Project and a part of the Merged Redevelopment Project. Section 7. In order to implement and facilitate the effectuation of the Merged Redevelopment Project hereby approved, this City Council hereby: (a) pledges its cooperation in helping to carry out the Merged Redevelopment Project, (b) requests the various officials, departments, boards, and agencies of the City having administrative responsibilities in the Merged Redevelopment Project likewise to cooperate to such end and to exercise their respective functions and powers in a manner consistent with redevelopment of the Merged Redevelopment Project Area, (c) stands ready to consider and take appropriate action upon proposals and measures designed to effectuate the Merged Redevelopment Project, and (d) declares its intention to undertake and complete any proceeding, including the expenditure of moneys, necessary to be carried out by the City under the provisions of the Merged Redevelopment Project. Section 8. The City Clerk is hereby directed to send a certified copy of this Ordinance to the Agency, whereupon the Agency is vested with the responsibility for carrying out the Merged Redevelopment Project. Section 9. The City Clerk is hereby directed to record the subject Plan Amendment in the Official Records of San Diego County as promptly as practicable. Section 10. The City Clerk is hereby authorized and directed to certify to the passage of this Ordinance and to cause the same to be published in the Chula Vista Star News, a newspaper of general circulation which is published and circulated in the City of Chula Vista. DOCSOC\756517v2\24212.0003 ...3 - '1 "T Section 11. If any part of this Ordinance or the subject Plan Amendment which it approves is held to be invalid for any reason, such decision shall not effect the validity of the remaining portion of this Ordinance or of the subject Plan Amendment, and this City Council hereby declares that it would have passed the remainder of the Ordinance or approved the remainder of the subject Plan Amendment if such invalid portion thereof had been deleted. Section 12. and adoption. This Ordinance shall be in full force and effect thirty (30) days after passage PASSED AND ADOPTED at a regular meeting of the City Council held the 22nd day of August, 2000, by the following roll call vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: Mayor City Clerk DOCSOC\ 7565 t 7v2\24212.0003 -3-/0 "T STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) CITY OF CHULA VISTA ) I" City Clerk of the City ofChula Vista, do hereby certify that the foregoing Ordinance No. was introduced at a regular meeting of the City Council of the City ofChula Vista, held on the] 5th day of August, 2000, and that the same was duly passed and adopted at a regular meeting of said City Council held on the day of ,2000, by the following vote of the members thereof: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: And I further certify that the Mayor of the City ofChula Vista signed said Ordinance No. on the day of , 2000. In witness whereof, I have hereunto set my hand and affixed the official seal of the City of Chula Vista this _ day of , 2000. CITY CLERK OF THE CITY OF CHULA VISTA H:\HOME\COMMDEV\RESOS\TC II Ordinance.lXJC DOCSOC\7565 t 7v2\24212.0003 ..3-(( "T ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AND ADOPTING THE SECOND AMENDMENT TO THE OT A Y VALLEY ROAD REDEVELOPMENT PROJECT AREA PLAN AND THE MERGER OF THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT AND THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT, AND THE SOUTHWEST REDEVELOPMENT PROJECT PURSUANT TO THE PROVISIONS OF THE COMMUNITY REDEVELOPMENT LAW, HEALTH AND SAFETY CODE SECTION 33485 et seq. WHEREAS, the City Council of the City ofChula Vista (the "City Council") adopted the Redevelopment Plan for the Redevelopment Plan for the Otay Valley Road Redevelopment Project on December 29, 1983 pursuant to Ordinance No. 2059; the Town Centre No. 11 Redevelopment Project on August 15, 1978 pursuant to Ordinance No. 1827; and the Redevelopment Plan for the Southwest Redevelopment Project on November 27, 1990 pursuant to Ordinance No. 2420; and WHEREAS, the City Council proposes to amend these three existing redevelopment plans ("Redevelopment Plans") for the above described projects ("Plan Amendments") for the purpose of merging the three projects for financing purposes as permitted by Sections 33485-33489 of the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ("CRL"); and WHEREAS, the Otay Valley Road Redevelopment Project was adopted on December 20, 1983 by City Council Ordinance No. 2059 and was amended on November 8, 1994 by Ordinance No. 2611; and WHEREAS, this amendment is the second amendment ("Second Amendment") to the Redevelopment Plan for the Otay Valley Road Redevelopment Project and the purpose of this proposed Plan Amendment is to merge the Otay Valley Road Project with the Town Centre No. 11 Redevelopment Project and the Southwest Redevelopment Project (collectively, the "Merged Redevelopment Project") pursuant to CRL Article 16, Section 33485 et seq.; and WHEREAS, although each of the proposed Plan Amendments will be considered and adopted separately pursuant to the CRL, to facilitate their consideration the Plan Amendments have been aggregated and presented together in a single joint public hearing on the proposed merger; and WHEREAS, this Ordinance relates to the amendment of the Otay Valley Road Redevelopment Project and the merger of that Redevelopment Project Area together with the Redevelopment Plan for the Town Centre No. 11 Redevelopment Project and the Redevelopment Plan for the Southwest Redevelopment Project (collective "Merged Area"); and WHEREAS, the Otay Valley Road Redevelopment Project by this Ordinance shall be merged with the Town Centre No. 11 Redevelopment Project and the Southwest Redevelopment Project so that taxes attributable to each constituent project area which are allocated to the Agency pursuant to Section 33670(b) of the CRL are to be allocated to the entire Merged Redevelopment Project area for the purpose of paying principal of, and interest on, indebtedness incurred by the Agency to finance or refinance, in whole or in part, the Merged Redevelopment Project; except that DOCSOC\ 7565 t 8v2\24212.0003 -.i-Id-. "T any such taxes attributable to any constituent project area shall first be used to pay indebtedness in compliance with the terms of any bond resolution or other agreement pledging such taxes from the constituent project area, which resolution or other agreement was adopted or approved by the Agency prior to the merging of these three projects; and except as otherwise noted above, tax increment revenue attributed to each constituent project may be used for any lawful purpose in any constituent project now within the Merged Redevelopment Project; and WHEREAS, for financing purposes and for any other purposes permitted or required by law, the three constituent projects that have been merged by the respective Plan Amendments together and collectively, shall be called the "Merged Redevelopment Project", and the three constituent project areas together and collectively, shall be called the "Merged Redevelopment Project Area". WHEREAS, the City Council has received from the Redevelopment Agency of the City of Chula Vista (the "Agency") the proposed Second Amendment to the Otay Road Redevelopment Project, a copy of which is on file at the office of the City Clerk, together with the Agency's Report to City Council including the reasons for such Plan Amendment; and WHEREAS, a Project Area Committee was not required to be formed in connection with the subject Plan Amendment because such does not affect the existing authority to the Agency to acquire, by eminent domain, property on which a substantial number oflow and moderate income persons reside and because the subject Plan Amendment does not grant the Agency authority to fund or develop any additional public projects that will displace a substantial number of low income persons or moderate income persons; and WHEREAS, the subject Plan Amendment would have no impact on the General Plan for the City of Chula Vista because it only merges the existing Redevelopment Plans into the Merged Redevelopment Project; and WHEREAS, in conformity with the requirements ofCRL Section 33490, the Agency has previously adopted and has in place an implementation plan for each Project Area that describes the redevelopment project area, the specific goals and objectives for the project area, and the specific programs, including potential projects and estimated expenditures proposed during the five (5) year term of each Implementation Plan, and further, each implementation plan includes an explanation of how the goals, objectives, programs, and expenditures will eliminate blight in the project area and implement the affordable housing requirements of the CRL; and WHEREAS, the implementation plans in place are current for the five year period 2000 through 2004, and do not require amendment in connection with the plan amendments or these merger proceedings; and WHEREAS, the proceedings for the merger of the three project areas have proceeded pursuant to and in conformity with CRL Section 33486 through the proposed amendment of each affected redevelopment plan for each project area as provided in Article 12 of the CRL, Section 33450, et seq.; and WHEREAS, Section 33457.1 of Article 12 provides that to the extent warranted by a proposed amendment to a redevelopment plan, the reports and information required by Section 33352 and 33367 will be prepared; and DOCSOC\ 756518v2\24212.0003 ..3-1.3 ., WHEREAS, the City Council and the Agency held a joint public hearing on August 15, 2000 on the proposed adoption of the Plan Amendments in the City Council Chambers, City Hall 476 Fourth Avenue, Chula Vista, California; and WHEREAS, notice of said joint public hearing was duly and regularly published in the Chula Vista Star News, a newspaper of general circulation in the City of Chula Vista, pursuant to the provisions of Government Code 6063 and CRL Section 33452, once a week for three successive weeks prior to the date of such joint public hearing, and a copy of said notices is on file with the City Clerk and the Agency; and WHEREAS, copies of the notice of joint public hearing were mailed by first class mail to the last known address of each assessee as shown on the last equalized assessment roll of the County of San Diego for each parcel ofland in each of the subject Project Areas, and to each resident and business within each of the subject Project Areas whose names and addresses could reasonably be identified by the Agency, not less than thirty (30) days prior to the date of such joint public hearing; and WHEREAS, copies of the notice of joint public hearing were mailed by certified mail with return receipt requested to the governing body of each taxing agency which receives taxes from property in each of the subject Project Areas and to the California Department of Housing and Community Development; and WHEREAS, the City has independently found and determined that such Plan Amendments are exempt from the provisions of the California Environmental Quality Act ("CEQA"), Public Resources Code Section ("PRC") as a Class 20 categorical exemption pursuant to PRC Sections 21080(b)(a) and 21084(a) and Section 15320 of the Guidelines promulgated thereunder; the Plan Amendments will result merely in a financial consolidation of the Merged Areas with no potential for significant impact on the environment; and WHEREAS, the City Council has considered the Report to Council from the Agency with regard to the Plan Amendments, has provided an opportunity for all persons to be heard, and has received and considered all evidence and testimony presented for or against any and all aspects of the Plan Amendments and the proposed merger, and has made a written response to each written objection of an affected property owner and taxing entity filed with the City Clerk before the hour set for such joint public hearing. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES ORDAIN AS FOLLOWS: Section 1. The City Council hereby finds and determines, based on the evidence in the record, including, but not limited to, the Agency's Report to the City Council on the proposed Plan Amendments, and all documents referenced therein, and evidence and testimony received at the joint public hearing on adoption of the subject Plan Amendments held on August 15,2000, that: a) The Second Amendment to the Otay Valley Road Redevelopment Project conforms to the General Plan of the City of Chula Vista, including, but not limited to, the housing element of the General Plan. DOCSOC\ 756518v2\24212.0003 3-1'-/ 'T b) The implementation of the Plan Amendments and the merger will promote the public peace, health, safety and welfare of the City of Chula Vista and will effectuate the purposes and policies of the Community Redeve]opment Law. This finding is based on the fact the merger is and will be of substantial benefit to the community and contribute to the revitalization of blighted areas through increased economic vitality of such areas, specifically the financial benefits and feasibility of the project areas that will accrue due to the merger. c) The merger increases the Agency's financing capacity, resulting in greater funding for the programs and expenditures detailed in the implementation plans for the project areas. Such programs and expenditures include redeveloping major commercial sites, which will revitalize blighted areas through the increased economic vitality of such areas. Such redevelopment can result in the growth of the tax base and increased tax increment revenues. A portion of any growth in tax increment revenues will increase funds to be deposited in the Agency's low and moderate income housing fund, which is used to increase, improve and preserve housing opportunities in or near such areas, as well as assist in meeting the citywide housing goals established by the City Council. d) The Agency has a feasible method and plan for the relocation of families and persons who might be displaced, temporarily or permanently from housing facilities in the Project Area. The Agency also has a feasible method and plan for its relocation of businesses. This finding is based upon the fact that the Agency has adopted a plan for relocation of families, persons and businesses who are displaced by Agency projects, and upon the fact that the plan provides for relocation assistance according to law, and the fact that such assistance, including relocation payments, constitutes a feasible method for relocation. e) There are, or are being provided, within the Merged Redevelopment Project or within other areas not generally less desirable in regard to public utilities and public and commercial facilities and at rents or prices within the financial means of the families and persons who might be displaced from the Project, decent, safe and sanitary dwellings equal in number to the number of and available to such displaced families and persons and reasonably accessible to their places of employment. I) Families and persons shall not be displaced prior to adoption of a relocation plan pursuant to Sections 33411 and 33411.1 of the Health and Safety Code. Dwelling units housing persons and families of low or moderate income shall not be removed or destroyed prior to adoption of a replacement housing plan pursuant to CRL Sections 33334.5, 33413 and 334]3.5. Section 2. The City Council is satisfied that permanent housing facilities will be available within three years from the time residential occupants of the Project are displaced, and that pending the development of such facilities, there will be available to any such displaced residential occupants temporary housing facilities at rents comparable to those in the City of Chula Vista at the time of their displacement. This finding is based upon the City Council's finding that no persons or families oflow and moderate income shall be displaced from residences unless and until there is a suitable housing unit available and ready for occupancy by such displaced persons or families at rents comparable to those at the time of their displacement. Such housing units shall be suitable to the needs of such displaced persons or families and must be decent, safe, sanitary and otherwise standard dwellings. DOCSOC\ 756518v2\24212.0003 -3 -IS "T Section 3. Written objections to Plan Amendments filed with the City Clerk before the hour set for hearing and all written and oral objections presented to the City Council at the hearing having been considered and, in the case of written objections received from Project property owners, residents and businesses and affected taxing agencies, having been responded to in writing, are hereby overruled. Section 4. The Plan Amendments are categorically exempt from the provisions of the California Environmental Quality Act ("CEQA"), Public Resources Code Section ("PRC") as a Class 20 categorical exemption pursuant to PRC Sections 2] 080(b )(9) and 2] 084(a) and Section] 5320 of the Guidelines promulgated thereunder; the Plan Amendments will result merely in a financial consolidation of the Merged Areas with no potential for significant impact on the environment. Section 5. That certain "Second Amendment to the Otay Valley Road Redevelopment Project," a copy of which is on file in the office of the Agency and the office of the City Clerk, having been duly reviewed and considered, is hereby approved and adopted. Section 6. The subject Redevelopment Plan for the Otay Valley Road Redevelopment Project originally adopted on December 20, ] 983, by City Council Ordinance No. 2059 and was amended on November 8, ] 994 by Ordinance No. 26] I together with this Plan Amendment is hereby designated, approved, and adopted as the official redevelopment plan for the Otay Valley Road Redevelopment Project and a part of the Merged Redevelopment Project. Section 7. ]n order to implement and facilitate the effectuation of the Merged Redevelopment Project hereby approved, this City Council hereby: (a) pledges its cooperation in helping to carry out the Merged Redevelopment Project, (b) requests the various officials, departments, boards, and agencies of the City having administrative responsibilities in the Merged Redevelopment Project likewise to cooperate to such end and to exercise their respective functions and powers in a manner consistent with redevelopment of the Merged Redevelopment Project Area, (c) stands ready to consider and take appropriate action upon proposals and measures designed to effectuate the Merged Redevelopment Project, and (d) declares its intention to undertake and complete any proceeding, including the expenditure of moneys, necessary to be carried out by the City under the provisions of the Merged Redevelopment Project. Section 8. The City Clerk is hereby directed to send a certified copy of this Ordinance to the Agency, whereupon the Agency is vested with the responsibility for carrying out the Merged Redevelopment Project. Section 9. The City Clerk is hereby directed to record the subject Plan Amendment in the Official Records of San Diego County as promptly as practicable. Section 10. The City Clerk is hereby authorized and directed to certify to the passage of this Ordinance and to cause the same to be published in the Chula Vista Star News, a newspaper of general circulation which is published and circulated in the City of Chula Vista. Section 11. ]f any part of this Ordinance or the subject Plan Amendment which it approves is held to be invalid for any reason, such decision shall not effect the validity of the remaining portion of this Ordinance or of the subject Plan Amendment, and this City Council hereby declares that it would have passed the remainder of the Ordinance or approved the remainder of the subject Plan Amendment if such invalid portion thereof had been deleted. DOCSOC\ 756518v2\24212.0003 -3 - (e.. 'T Section 12. This Ordinance shall be in full force and effect thirty (30) days after passage and adoption. PASSED AND ADOPTED at a regular meeting of the City Council held the 22nd day of August, 2000, by the following roll call vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: Mayor City Clerk AS TO FORM: DOCSOC\ 756518v2\24212.0003 3-11 "T STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) CITY OF CHULA VISTA ) !, , City Clerk ofthe City of Chula Vista, do hereby certify that the foregoing Ordinance No. was introduced at a regular meeting of the City Council of the City of Chula Vista, held on the 15th day of August, 2000, and that the same was duly passed and adopted at a regular meeting of said City Council held on the day of ,2000, by the following vote of the members thereof: AYES: COUNCIL MEMBERS: COUNCIL MEMBERS: NOES: ABSENT: COUNCIL MEMBERS: And! further certify that the Mayor of the City of Chula Vista signed said Ordinance No. on the day of , 2000. In witness whereof, I have hereunto set my hand and affixed the official seal of the City of Chula Vista this _ day of , 2000. CITY CLERK OF THE CITY OF CHULA VISTA H:\HOME\COMMDEVlRESOS\OVR ORDINANCE.lXJC DOCSOC\756518v2\24212.0003 ..3 -1<( 'T ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AND ADOPTING THE THIRD AMENDMENT TO THE SOUTHWEST REDEVELOPMENT PROJECT AREA PLAN AND THE MERGER OF THE SOUTHWEST REDEVELOPMENT PROJECT AND TOWN CENTRE NO. II REDEVELOPMENT PROJECT AND THE OTAYVALLEY ROAD REDEVELOPMENT PROJECT PURSUANT TO THE PROVISIONS OF THE COMMUNITY REDEVELOPMENT LAW, HEALTH AND SAFETY CODE SECTION 33485 et seq. WHEREAS, the City Council ofthe City ofChula Vista (the "City Council") adopted the Redevelopment Plan for the Southwest Redevelopment Project on November 27, 1990 pursuant to Ordinance No. 2420, and the Town Centre No. II Redevelopment Project on August 15, 1978 pursuant to Ordinance No. 1827 and the Redevelopment Plan for the Otay Valley Road Redevelopment Project on December 29, 1983 pursuant to Ordinance No. 2059; and WHEREAS, the City Council proposes to amend these three existing redevelopment plans ("Redevelopment Plans") for the above described projects ("Plan Amendments") for the purpose of merging the three projects for financing purposes as permitted by Sections 33485-33489 of the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ("CRL"); and WHEREAS, the Redevelopment Plan for the Southwest Redevelopment Project was originally adopted on November 27, 1990 by City Council Ordinance No. 2420 and such plan and project was amended on July 9,1991 by Ordinance No. 2467 and amended on November 8,1994 by Ordinance No. 2612; and WHEREAS, the amendment carried out by this Ordinance is the third amendment ("Third Amendment") to the Redevelopment Plan for the Southwest Redevelopment Project; and WHEREAS, the purpose of this proposed Third Amendment is to merge the Southwest Redevelopment Project with the Town Centre No. II Redevelopment Project and the Otay Valley Road Redevelopment Project (collectively, the "Merged Redevelopment Project") pursuant to CRL Article 16, Section 33485, et seq.; and WHEREAS, although each of the proposed Plan Amendments will be considered and adopted separately pursuant to the CRL, to facilitate their consideration the Plan Amendments have been aggregated and presented together in a single joint public hearing on the proposed merger; and WHEREAS, this Ordinance relates to the amendment of the Southwest Redevelopment Project and the merger of that Redevelopment Project Area together with the Redevelopment Plan for the Town Centre No. II Redevelopment Project and the Otay Valley Road Redevelopment Project (collective "Merged Area"); and WHEREAS, the Southwest Redevelopment Project by this Ordinance shall be merged with the Town Centre No. II Redevelopment Project and the Otay Valley Road Redevelopment Project so that taxes attributable to each constituent project area which are allocated to the Agency pursuant to DOCSOC\ 756520v2\24212.0003 ..3 ~( 9 ., Section 33670(b) of the CRL are to be allocated to the entire Merged Redevelopment Project area for the purpose of paying principal of, and interest on, indebtedness incurred by the Agency to finance or refinance, in whole or in part, the Merged Redevelopment Project; except that any such taxes attributable to any constituent project area shall first be used to pay indebtedness in compliance with the terms of any bond resolution or other agreement pledging such taxes from the constituent project area, which resolution or other agreement was adopted or approved by the Agency prior to the merging of these three projects; and except as otherwise noted above, tax increment revenue attributed to each constituent project may be used for any lawful purpose in any constituent project now within the Merged Redevelopment Project; and WHEREAS, for financing purposes and for any other purposes permitted or required by law, the three constituent projects that have been merged by the respective Plan Amendments together and collectively, shall be called the "Merged Redevelopment Project", and the three constituent project areas together and collectively, shall be called the "Merged Redevelopment Project Area". WHEREAS, the City Council has received from the Redevelopment Agency of the City of Chula Vista (the "Agency") the proposed Third Amendment to the Southwest Redevelopment Project, a copy of which is on file at the office of the City Clerk, together with the Agency's Report to City Council including the reasons for such Plan Amendment; and WHEREAS, a Project Area Committee was not required to be formed in connection with the subject Plan Amendment because such does not affect the existing authority to the Agency to acquire, by eminent domain, property on which a substantial number of low and moderate income persons reside and because the subject Plan Amendment does not grant the Agency authority to fund or develop any additional public projects that will displace a substantial number of low income persons or moderate income persons; and WHEREAS, the subject Plan Amendment would have no impact on the General Plan for the City of Chula Vista because it only merges the existing Redevelopment Plans into the Merged Redevelopment Project; and WHEREAS, in conformity with the requirements of CRL Section 33490, the Agency has previously adopted and has in place an implementation plan for each Project Area that describes the redevelopment project area, the specific goals and objectives for the project area, and the specific programs, including potential projects and estimated expenditures proposed during the five (5) year term of each Implementation Plan, and further, each implementation plan includes an explanation of how the goals, objectives, programs, and expenditures will eliminate blight in the project area and implement the affordable housing requirements of the CRL; and WHEREAS, the implementation plans in place are current for the five year period 2000 through 2004, and do not require amendment in connection with the plan amendments or these merger proceedings; and WHEREAS, the proceedings for the merger of the three project areas have proceeded pursuant to and in conformity with CRL Section 33486 through the proposed amendment of each affected redevelopment plan for each project area as provided in Article 12 of the CRL, Section 33450, et seq.; and DOCSOC\ 756520v2\242 t 2.0003 ..3 -;}...() .~ WHEREAS, Section 33457.1 of Article 12 provides that to the extent warranted by a proposed amendment to a redevelopment plan, the reports and information required by Section 33352 and 33367 will be prepared; and WHEREAS, the City Council and the Agency held a joint public hearing on August 15, 2000 on the proposed adoption of the Plan Amendments in the City Council Chambers, City Hall 476 Fourth Avenue, Chula Vista, California; and WHEREAS, notice of said joint public hearing was duly and regularly published in the Chula Vista Star News, a newspaper of general circulation in the City of Chula Vista, pursuant to the provisions of Government Code 6063 and CRL Section 33452, once a week for three successive weeks prior to the date of such joint public hearing, and a copy of said notices is on file with the City Clerk and the Agency; and WHEREAS, copies of the notice of joint public hearing were mailed by first class mail to the last known address of each assessee as shown on the last equalized assessment roll of the County of San Diego for each parcel of land in each of the subject Project Areas, and to each resident and business within each of the subject Project Areas whose names and addresses could reasonably be identified by the Agency, not less than thirty (30) days prior to the date of such joint public hearing; and WHEREAS, copies of the notice of joint public hearing were mailed by certified mail with return receipt requested to the governing body of each taxing agency which receives taxes from property in each of the subject Project Areas and to the California Department of Housing and Community Development; and WHEREAS, the City has independently found and determined that such Plan Amendments are exempt from the provisions of the California Environmental Quality Act ("CEQA"), Public Resources Code Section ("PRC") as a Class 20 categorical exemption pursuant to PRC Sections 21080(b)(a) and 21084(a) and Section 15320 of the Guidelines promulgated thereunder; the Plan Amendments will result merely in a financial consolidation of the Merged Areas with no potential for significant impact on the environment; and WHEREAS, the City Council has considered the Report to Council from the Agency with regard to the Plan Amendments, has provided an opportunity for all persons to be heard, and has received and considered all evidence and testimony presented for or against any and all aspects of the Plan Amendments and the proposed merger, and has made a written response to each written objection of an affected property owner and taxing entity filed with the City Clerk before the hour set for such joint public hearing. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES ORDAIN AS FOLLOWS: Section 1. The City Council hereby finds and determines, based on the evidence in the record, including, but not limited to, the Agency's Report to the City Council on the proposed Plan Amendments, and all documents referenced therein, and evidence and testimony received at the joint public hearing on adoption of the subject Plan Amendments held on August 15, 2000, that: DOCSOC\ 75652Qv2\24212.0003 ..3 -eLf ., a) The Third Amendment to the Southwest Redevelopment Project conforms to the General Plan of the City ofChula Vista, including, but not limited to, the housing element of the General Plan. b) The implementation of the Plan Amendments and the merger will promote the public peace, health, safety and welfare of the City of Chula Vista and will effectuate the purposes and policies of the Community Redevelopment Law. This finding is based on the fact the merger is and will be of substantial benefit to the community and contribute to the revitalization of blighted areas through increased economic vitality of such areas, specifically the financial benefits and feasibility of the project areas that will accrue due to the merger. c) The merger increases the Agency's financing capacity, resulting in greater funding for the programs and expenditures detailed in the implementation plans for the project areas. Such programs and expenditures include redeveloping major commercial sites, which will revitalize blighted areas through the increased economic vitality of such areas. Such redevelopment can result in the growth of the tax base and increased tax increment revenues. A portion of any growth in tax increment revenues will increase funds to be deposited in the Agency's low and moderate income housing fund, which is used to increase, improve and preserve housing opportunities in or near such areas, as well as assist in meeting the citywide housing goals established by the City Council. d) The Agency has a feasible method and plan for the relocation of families and persons who might be displaced, temporarily or permanently from housing facilities in the Project Area. The Agency also has a feasible method and plan for its relocation of businesses. This finding is based upon the fact that the Agency has adopted a plan for relocation of families, persons and businesses who are displaced by Agency projects, and upon the fact that the plan provides for relocation assistance according to law, and the fact that such assistance, including relocation payments, constitutes a feasible method for relocation. e) There are, or are being provided, within the Merged Redevelopment Project or within other areas not generally less desirable in regard to public utilities and public and commercial facilities and at rents or prices within the financial means of the families and persons who might be displaced from the Project, decent, safe and sanitary dwellings equal in number to the number of and available to such displaced families and persons and reasonably accessible to their places of employment. 1) Families and persons shall not be displaced prior to adoption of a relocation plan pursuant to Sections 33411 and 33411.1 of the Health and Safety Code. Dwelling units housing persons and families of low or moderate income shall not be removed or destroyed prior to adoption of a replacement housing plan pursuant to CRL Sections 33334.5, 33413 and 33413.5. Section 2, The City Council is satisfied that permanent housing facilities will be available within three years from the time residential occupants of the Project are displaced, and that pending the development of such facilities, there will be available to any such displaced residential occupants temporary housing facilities at rents comparable to those in the City of Chula Vista at the time of their displacement. This finding is based upon the City Council's finding that no persons or families oflow and moderate income shall be displaced from residences unless and until there is a DOCSOC\ 756520v2\24212.0003 ..3 - d... d.... suitable housing unit available and ready for occupancy by such displaced persons or families at rents comparable to those at the time of their displacement. Such housing units shall be suitable to the needs of such displaced persons or famities and must be decent, safe, sanitary and otherwise standard dwellings. Section 3. Written objections to Plan Amendments filed with the City Clerk before the hour set for hearing and all written and oral objections presented to the City Council at the hearing having been considered and, in the case of written objections received from Project property owners, residents and businesses and affected taxing agencies, having been responded to in writing, are hereby overruled. Section 4. The Plan Amendments are categorically exempt from the provisions of the California Environmental Quality Act ("CEQA"), Public Resources Code Section ("PRC") as a Class 20 categorical exemption pursuant to PRC Sections 21080(b )(9) and 21084(a) and Section 15320 of the Guidelines promulgated thereunder; the Plan Amendments will result merely in a financial consolidation of the Merged Areas with no potential for significant impact on the environment. Section 5. That certain "Third Amendment to the Redevelopment Plan for the Southwest Redevelopment Project," a copy of which is on file in the office of the Agency and the office of the City Clerk, having been duly reviewed and considered, is hereby approved and adopted. Section 6. The subject Redevelopment Plan for the Southwest Redevelopment Project originally adopted on November 27, 1990, by City Council Ordinance No. 2420 and amended on July 9, 1991, by Ordinance No. 2467 and amended on November 8, 1994 by Ordinance No. 2612 together with this Plan Amendment is hereby designated, approved, and adopted as the official redevelopment plan for the Southwest Redevelopment Project and a part of the Merged Redevelopment Project. Section 7. In order to implement and facilitate the effectuation of the Merged Redevelopment Project hereby approved, this City Council hereby: (a) pledges its cooperation in helping to carry out the Merged Redevelopment Project, (b) requests the various officials, departments, boards, and agencies of the City having administrative responsibilities in the Merged Redevelopment Project likewise to cooperate to such end and to exercise their respective functions and powers in a manner consistent with redevelopment of the Merged Redevelopment Project Area, (c) stands ready to consider and take appropriate action upon proposals and measures designed to effectuate the Merged Redevelopment Project, and (d) declares its intention to undertake and complete any proceeding, including the expenditure of moneys, necessary to be carried out by the City under the provisions of the Merged Redevelopment Project. Section 8. The City Clerk is hereby directed to send a certified copy of this Ordinance to the Agency, whereupon the Agency is vested with the responsibility for carrying out the Merged Redevelopment Project. Section 9. The City Clerk is hereby directed to record the subject Plan Amendment in the Official Records of San Diego County as promptly as practicable. Section 10. The City Clerk is hereby authorized and directed to certify to the passage of this Ordinance and to cause the same to be published in the Chula Vista Star News, a newspaper of general circulation which is published and circulated in the City of Chula Vista. DOCSOC\ 756520v2\242 t 2.0003 3-02.3 " Section 11. If any part of this Ordinance or the subject Plan Amendment which it approves is held to be invalid for any reason, such decision shall not effect the validity of the remaining portion of this Ordinance or of the subject Plan Amendment, and this City Council hereby declares that it would have passed the remainder of the Ordinance or approved the remainder of the subject Plan Amendment if such invalid portion thereof had been deleted. Section 12. and adoption. This Ordinance shall be in full force and effect thirty (30) days after passage PASSED AND ADOPTED at a regular meeting of the City Council held the 22nd day of August, 2000, by the following roll call vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: Mayor City Clerk APPROVED AS TO FO DOCSOC\ 756520v2\24212.0003 3-..2.-'/ "1 STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) CITY OF CHULA VISTA ) I" City Clerk of the City ofChula Vista, do hereby certify that the foregoing Ordinance No. was introduced at a regular meeting of the City Council of the City ofChula Vista, held on the 15th day of August, 2000, and that the same was duly passed and adopted at a regular meeting of said City Council held on the day of ,2000, by the following vote of the members thereof: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: And I further certify that the Mayor of the City ofChula Vista signed said Ordinance No. on the day of , 2000. In witness whereof, I have hereunto set my hand and affixed the official seal of the City of Chula Vista this _ day of , 2000. CITY CLERK OF THE CITY OF CHULA VISTA H:\HOME\COMMDEV\RESOS\SW ORDINANCE.DOC DOCSOC\ 75652Ov2\24212.0003 .3 -e2:S- .T ATTACHMENT 1 NOTICE OF JOINT PUBLIC HEARING NOTICE OF A JOINT PUBLIC HEARING OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AND THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ON THE PROPOSED AMENDMENTS TO THE REDEVELOPMENT PLANS FOR THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT, THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT AND THE SOUTHWEST REDEVELOPMENT PROJECT. NOTICE IS HEREBY GIVEN that a joint public hearing will be held by the City Council of the City ofChula Vista (the "City") and the Redevelopment Agency of the City of Chula Vista (the "Redevelopment Agency") at the City Council Chambers, City of Chula Vista, City Hall, 276 Fourth Avenue, Chula Vista, California, on August 15, 2000 at 6:00 p.m. or as soon as possible thereafter, to consider approval and adoption of the proposed amendments ("Amendments") to the Redevelopment Plans for the Town Centre No. II Redevelopment Project, the Otay Valley Road Redevelopment Project and the Southwest Redevelopment Project, (the "Project Areas"). The purpose of the proposed Amendments to the Project Areas Plans is to merge the Project Areas. The Amendments will not enlarge the Project Areas, nor will the Arnendments affect any of the properties in the proposed Merged Project Area differently than if the Project Areas remained separate. The proposed Amendments do not change any of the existing limitations continued in the Project Area Plans, nor do they change any of the existing tax sharing agreements between the Agency and the taxing entities within the affected Project Areas. The main purpose of the proposed merger of the Project Areas would be for efficiency of administration and financing. The Redevelopment Agency's Report to the City Council on the proposed Amendments will be presented at the hearing. The Report includes all documentation required by the Community Redevelopment Law being Section 33000 et seq. of the California Health and Safety Code. The Report is available for public inspection at the City Clerk's Office, Chula Vista City Hall, 276 Fourth Avenue, Chula Vista, California, 91910. The City Council and the Redevelopment Agency shall consider all evidence and testimony for and against the adoption of the proposed Amendments. The Redevelopment Agency will undertake the proposed Amendments if, after the public hearing, the City Council approves and adopts the proposed Amendments. All persons having any objections to the proposed Amendments or the regularity of the prior proceedings, may appear before the City Council and the Redevelopment Agency and show cause why the proposed Amendments should not be adopted. At any time not later than the aforesaid hour set for the hearing, any person or organization may file in writing with the City Clerk of the City of Chula Vista a statement of his or her objections to the proposed Amendments. Any person or organization desiring to be heard will be given an opportunity to be heard. At the aforesaid hour, the City Council and the Redevelopment Agency shall hear all written and oral objections to the proposed Amendments. If no objections are received in writing from an affected property owner or taxing entity prior to or at the hearing, the City Council may consider adoption of the proposed Amendments after the hearing is closed. If any such objections are received prior to or at the hearing, the City Council may adopt the proposed Amendments only after consideration of the objections and the adoption of written findings in response thereto as required by law, at a subsequent date not less than one week after the time this public hearing is commenced in accordance with the law. The legal description of the Town Centre No. II Redevelopment Project Area is presented in a document recorded with the San Diego County Recorder as Document No. 78-370769. The legal description of the Town Centre No. II Redevelopment Project Area - Amendment NO.1 is presented in a document recorded with the San Diego County Recorder as Document No. 87-308578. The legal description of the Otay Valley Road Redevelopment Project Area is presented in a document recorded with the San Diego County Recorder as Document No. 83-472539. The legal description of the Southwest Redevelopment Project Area is presented in a document recorded with the San Diego County Recorder as Document No. 90-635149. A metes and bounds legal description and a map are available for public review at the City Clerks' Office, 276 Fourth Avenue, Chula Vista, California, 91910. Interested persons may inspect the proposed Amendments, the Report and all other information pertaining thereto at the City of Chula Vista City Hall, 276 Fourth Avenue, Chula Vista, California, 91910, or contact Lyle Haynes, (619) 691-5047. J -co2 G, "T COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA REDEVELOPMENT PROJECT AREA MERGER REPORT TO THE CITY COUNCIL OF THE CITY OF CHULA VISTA PURSUANT TO SECTION 33352 OF THE HEALTH AND SAFETY CODE AUGUST 15, 2000 DOCSOC\ 756340v2\24212.0003 .3 -,;2 I "T ATTACHMENT 2 REPORT TO CITY COUNCIL FOR THE PROPOSED PLAN MERGER AND PLAN AMENDMENTS TO THE TOWN CENTRE NO. II, OTAY V ALLEY ROAD, AND SOUTHWEST REDEVELOPMENT PROJECTS The Agency is contemplating the merger of three existing redevelopment project areas and plans, including (i) Town Centre No. II Redevelopment Project, (ii) Otay Valley Road Redevelopment Project, and (iii) Southwest Redevelopment Project pursuant to the provisions of the Community Redevelopment Law, Health and Safety Code Section 33485 et seq.! The City Council of the City of Chula Vista (the "City Council") adopted the Redevelopment Plan for the Town Centre No. II Redevelopment Project on August 15, 1978 pursuant to Ordinance No. 1827. The City Council adopted the Redevelopment Plan for the Otay Valley Road Redevelopment Project on December 29, 1983 pursuant to Ordinance No. 2059. The City Council adopted the Redevelopment Plan for the Southwest Redevelopment Project on November 27, 1990 pursuant to Ordinance No. 2420. This Report to Council has been prepared to assist the Agency in complying with Section 33352 of the CRL in relation to the proposed merger of the three project areas. Further, this Report to Council presents how the proposed merger is and, if approved by the City Council, will be of substantial benefit to the community and contribute to the revitalization of blighted areas through increased economic vitality of such areas, specifically the financial benefits and feasibility of the project areas that will accrue due to the merger. The proceedings for the merger of the three project areas have proceeded pursuant to and in conformity with CRL Section 33486 through the proposed amendment of each affected redevelopment plan for each project area as provided in Article 12 of the CRL, Section 33450, et seq. Section 33457.1 of Article 12 provides that to the extent warranted by a proposed amendment to a redevelopment plan, the reports and information required by Section 33352 will be prepared. In implementation of Section 33457.1, this Report to Council focuses upon the financial feasibility and increased economic vitality of the merged project area, assuming arguendo, the proposed merger is approved, and necessarily does not report on all of the items listed in Section 33352 because such discussion is not warranted. In conformity with the requirements of CRL Section 33490, the Agency Board has previously adopted and has in place an implementation plan for each project area that describes the redevelopment project area, the specific goals and objectives for the project area, and the specific programs, including potential projects and estimated expenditures proposed during the five (5) year term of each Implementation Plan. Further, each implementation plan includes an explanation of how the goals, objectives, programs, and expenditures will eliminate blight in the project area and implement the affordable housing requirements of the CRL. The implementation plans in place are current for the five year period 2000 through 2004, and do not require amendment in connection with the plan amendments or these merger proceedings. Unless otherwise stated, all statutory references are to the California Community Redevelopment Law ("CRL"), Health and Safety Code Section 33000, et seq. DOCSOC\ 756340v2\242 t 20003 3-e2~ "T The Agency Board caused to be prepared by its independent financial advisor and has adopted a Financial Plan for the project areas which demonstrates the Agency's ability to repay its obligations during the life of each of the redevelopment projects in conjunction with raising funds for economic development. The Agency prioritized its objectives for the Financial Plan in the following order: 1. To repay the Sewer Trunk Fund 2. To repay the inter-project loans 3. To raise funds for economic development 4. To eliminate existing fund balance deficits in Bayfront/Town Center Project and Southwest Project 5. To fund staff costs 6. To repay the General Fund and/or fund the COP payments The Financial Plan incorporated the recommendation for issuance of approximately $14,005,000.00 in tax-exempt tax allocation bonds. Proceeds of the tax allocation bonds would be utilized pursuant to the Financial Plan to repay obligations of the various redevelopment projects, raise funds for economic development, and provide resources to fund annual staff costs in the following manner: a. The anticipated June 30, 2000 outstanding balance of $1,937,863 due to the Sewer Trunk Fund is repaid in full. b. Outstanding inter-project loans are reduced from $16.1 million to $6.8 million. The balance is repaid over time. c. New revenues of approximately $8.5 million is raised in the Bayfront Project Area, $925,000 is raised in the Southwest Project Area and $111,000 is raised in the Town Centre II Project Area. d. The General Fund is repaid $610,000. All other General Fund loans are repaid over time on a priority subject to Agency discretion (i.e. the Agency could choose to fund economic development first.) e. Estimated costs of $2,108,000 in annual administration estimated for fiscal year 2000-2001 are funded, which includes a $342,000 contribution to the Bayfront Conservancy Trust. f. The fund balance deficits in Bayfront/Town Centre Project Area and Southwest Project Area are eliminated. DOCSOC\ 756340v2\24212.0003 ..;3-.29 "T Subsequent to the presentation of the Financial Plan to the Agency Board, staff was able to obtain a commitment from a bond insurance company, Financial Security Assurance ("FSA"), to provide bond insurance for the tax allocation bonds to be issued by the Agency, on the condition the three subject project areas, Town Centre No. II, Otay Valley Road, and Southwest, were merged for financing purposes. The Agency could not obtain bond insurance for the bonds as originally proposed in the Financial Plan on a stand-alone project area by project area basis, nor was the ability to obtain bond insurance contemplated in the original Financial Plan. Thus, an outcome of the recommendations set forth in the Financial Plan resulted in the subject merger proceedings. Based on the ability to obtain bond insurance through FSA and consequently lower Interest rates, the Agency will be able to raise a minimum of $800,000 in additional funds for economic development. The reduction in interest rates between BBB-rated issues and AAA-rated insured issues is approximately .65 %, which more than offsets the cost of the insurance premium proposed by FSA (1.05% of the debt service on the bonds.) Based on the bond insurance and current interest rate estimates, the principal amount of the financing is estimated to be approximately $15.5 million. The merger increases the Agency's financing capacity, resulting in greater funding for the programs and expenditures detailed in the implementation plans for the project areas. Such programs and expenditures include redeveloping major commercial sites, which will revitalize blighted areas through the increased economic vitality of such areas. Such redevelopment can result in the growth of the tax base and increased tax increment revenues. A portion of any growth in tax increment revenues will increase funds to be deposited in the Agency's low and moderate income housing fund, which is used to increase, improve and preserve housing opportunities in or near such areas, as well as assist in meeting the citywide housing goals established by the City Council. DOCSOC\ 756340v2\24212.0003 ..3 - 3-0 "T JOINT REDEVELOPMENT AGENCY / CITY COUNCIL AGENDA STATEMENT ITEM TITLE: SUBMITTED BY: REVIEWED BY: ITEM NO.: 4 MEETING DATE: 08/15/00 a) AGENCY RESOLUTION AMENDING VARIOUS AGENCY PROJECT AREA FISCAL YEAR 2001 BUDGETS IN ACCORDANCE WITH THE APPROVED AGENCY FINANCIAL PLAN AND AUTHORIZING THE VARIOUS INTER-PROJECT AREA ADVANCES AND ADVANCE REPAYMENTS RELATED THERETO, AND AUTHORIZING THE EXPENDITURE OF LOW AND MODERATE INCOME HOUSING FUNDS OUTSIDE THE PROJECT AREA b) AGENCY RESOLUTION AUTHORIZING AND DIRECTING THE ISSUANCE AND SALE OF NOT-TO-EXCEED $17,000,000 PRINCIPAL AMOUNT 2000 TAX ALLOCATION BONDS FOR THE MERGED REDEVELOPMENT PROJECT AND APPROVING AN OFFICIAL NOTICE OF SALE, A CONTINUING DISCLOSURE CERTIFICATE, A PRELIMINARY OFFICIAL STATEMENT AND FINANCING DOCUMENTS, AUTHORIZING THE SALE OF THE BONDS ON CERTAIN TERMS AND CONDITIONS, AUTHORIZING CERTAIN OTHER OFFICIAL ACTIONS AND PROVIDING FOR OTHER MATTERS PROPERLY RELATING THERETO c) COUNCIL RESOLUTION APPROVING THE SALE OF REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA 2000 TAX ALLOCATION BONDS FOR THE MERGED REDEVELOPMENT PROJECT d) COUNCIL RESOLUTION AUTHORIZING THE EXPENDITURE OF LOW AND MODERATE INCOME HOUSING FUNDS OUTSIDE OF THE PROJECT AREA COMMUNITY DEVELOPMENT DIRECTOR LlJ.-~ ~ CITY MANAGER-P 4/STHS VOTE: YES 0 NO D 4- / ., PAGE 2, ITEM NO.: 4 MEETING DATE: 08/15/00 BACKGROUND On May 2, 2000, fhe City Council and Redevelopment Agency adopted the Agency Financial Plan and approved the sate of three series of Chula Vista 2000 Tax Allocafion Bonds for fhree redevelopment projects. The May 2 report is attoched for background informotion and detail (see Attachment 1). Subject fo fhe adoption of the City Council ordinances providing for the Merged Redevelopment Project (Ifem #3), Agency staff requesfs the Council ond Agency fo authorize at this time the issuance and sale of a new single series of tax allocation bonds for the purpose of paying and repaying costs of redevelopment octivity within the Merged Redevelopment Project. As under fhe previously adopfed Agency Financial Plan and related bonds, the proceeds will be used to: 1) payor repay costs of redevelopmenf activity of the Merged Redevelopment Project (including inter-fund loan repaymenfs); 2) establish a reserve account for the Bonds; and 3) pay the costs of issuance. The purpose of fhis item is to present for approval the 2000 Tax Allocation Bonds and related budget adjustments similar to the action faken by the Council/Agency on May 2,2000. RECOMMENDATION It is recommended that the City Council and Redevelopment Agency adopt the respective resolutions approving the associated Agency budget amendments and authorizing the issuance of tax-exempt tax allocotion bonds in a not-to-exceed amounf of $15,500,000 from the Merged Redevelopmenf Project, and the expenditure of Low and Moderate Income Housing funds outside of the Town Centre II Project Area. BOARDS/COMMISSIONS RECOMMENDATION Not Applicable DISCUSSION Provided the ordinances for the Merged Redevelopment Project are approved, Attachment 2 presents the updated "Flow of Funds" financial information for the proposed 2000 Tax Allocation Bonds, as well as updafed Sources and Uses and Debt Service charts. The net difference between the previously approved bonds and the new issuance is a projected increose in the net bond proceeds of approximofely $1.423 million from $12,071,197 to $13,494,000. The projected increase is a result of inferest savings due to the bond insurance (due to the merger) as well as lower inferest rofe projections since we are now closer fo actually issuing the bonds. The addifional proceeds will go toward further repaymenf of loans issued by the Bayfront Project Area which in-turn increases the amount available for projects over fhe next three to five year period. All other aspects of the bonds remain fhe some. 4-eJ- ., PAGE 3, ITEM NO.: MEETING DATE: 4- 08/15/00 FISCAL IMPACT Approval of fhe resolufions will resulf in fhe issuance of the 2000 Tax Allocation Bonds as described in this report as well as the May 2 report. Compensation for the professional services associated with the bond issuance will come from the bond proceeds. The issuance of bonds will result in several immediate posifive budget impacts for FY 00/01 fhot require amendmenfs. The table below identifies the required appropriafion and advance repoyment amendments as well as the corresponding funding sources as described in the report. AGENCY FINANCIAL PLAN - PHASE I REQUIRED BUDGET AMENDMENTS APPROPRIATION SOURCE OF FUNDING Town Centre II Repay Bayfront Advances Repay General Fund Advances Transfer to Low/Mod for Bayfront $3,728,082 $617,993 $49,000 Bond Proceeds Bond Proceeds Tax Increment Revenue Otav Vallev Repay Bayfront Advances Southwest Repay Bayfront Advances Repay Sewer Laan Interest $6,718,785 Bond Proceeds $333,985 $230,154 Bond Praceeds Bond Proceeds Bavfront/Town Centre I Repay Sewer Loan Interest Low/Mod Credit from Town Centre II $106,375 49,000 Interest Revenue ATTACHMENTS 1. May 2, 2000 sfoff report 2. Flow of Funds Chort; Debt Service Schedules 3. Updoted Financial Plan dated 5/2/2000 4. Official Sfatement 2000 Tax Allocation Bonds H,\HOME\COMMDEV\STAFF.REP\OB-15-00\BONDS.DOC 4-3 "T RESOLUTION NO. RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA AMENDING VARIOUS AGENCY PROJECT AREA FISCAL YEAR 2001 BUDGETS IN ACCORDANCE WITH THE APPROVED AGENCY FINANCIAL PLAN AND AUTHORIZING THE VARIOUS INTER-PROJECT AREA ADVANCES AND ADVANCE REPAYMENTS RELATED THERETO, AND AUTHORIZING THE EXPENDITURE OF LOW AND MODERATE INCOME HOUSING FUNDS OUTSIDE THE PROJECT AREA WHEREAS, the Redevelopment Agency of the City of Chula Vista ("Agency") hired Rod Gunn Associates ("RGA") to conduct an Agency financial analysis and prepare a financial plan; and WHEREAS, RGA conducted the analysis and prepared an Agency Financial Plan ("Plan") that recommends the issuance of tax-exempt tax allocation bonds from the Town Centre II, Otay Valley, and Southwest projects for the purposes pf repaying some interfund advances and raising capital for projects; and WHEREAS, the Plan includes loan repayment advances from Town Centre II, Otay Valley and Southwest in various amounts to the General Fund, Sewer Fund, and the Bayfront project as identified in the table below; and WHEREAS, the Plan includes the provision for Town Centre II to pay a portion of the Low and Moderate Income Housing Fund obligations attributable to the Bayfront Project ($49,000) from Town Centre II tax increment revenue as allowed for pursuant to Health and Safety Code Section 33334.3(i); and WHEREAS, the Agency at the time of consideration of the merits of the plan, also considered the merits of Town Centre II paying a portion of the Low and Moderate Income Housing Fund obligations (the "Housing Fund Contribution") attributable to Bayfront, and has concluded that Town Centre II will benefit from the expenditure of low and moderate income housing funds outside of those respective project areas pursuant to Health and Safety Code Section 33334.2 (g); and WHEREAS, concurrently herewith, the City Council of the City of Chula Vista ("City") and the Agency after consideration of the merits of the Plan, approved the issuance of bonds (RDA 2000 Tax Allocation Bonds; "Bonds") and related documents on August 15, 2000; and WHEREAS, in order to implement the Plan and issue the Bonds, the Fiscal Year 2000-01 budget for the Redevelopment Agency needs to be amended pursuant to the table below. NOW, THEREFORE, BE IT RESOLVED that the Redevelopment Agency of the City of Chula Vista does hereby approve the Agency Financial Plan in the form presented and amend the FY 2001 Agency Budget as follows: 1a-( "I AGENCY FINANCIAL PLAN - PHASE I REQUIRED BUDGET AMENDMENTS APPROPRIATION SOURCE OF FUNDING Town Centre II Repay Bayfrant Advances Repay General Fund Advances Transfer ta Law/Mad far Bayfrant $3,728,082 $617,993 $49,000 Band Proceeds Band Proceeds Tax Increment Revenue Otav Vallev Repay Bayfront Advances $6,718,785 Bond Praceeds Southwest Repay Bayfrant Advances Repay Sewer Laan Interest $333,985 $230,154 Band Praceeds Bond Proceeds Bavfront/Town Centre I Repay Sewer Laan Interest Low/Mod Credit from Town Centre II $106,375 49,000 Interest Revenue BE IT FURTHER RESOLVED that the Redevelopment Agency of the City of Chula Vista does hereby find, pursuant to Health and Safety Code Section 33334.2 (g) that Town Centre" project, made up of non-contiguous commercial and public facility properties. will benefit from the expenditure of low and moderate income housing funds outside of the project area. BE IT FURTHER RESOLVED that the Redevelopment Agency of the City of ChuJa Vista authorizes the allocation of less than the required Housing Fund Contribution attributable to the Bayfront project area to the extent that the difference between the actual Housing Fund Contribution and the required Housing Fund Cpntribution is instead allocated, in the same fiscal year, from tax increment revenues of Town Centre" or other Agency project areas, and the Agency hereby directs such allocation from Town Centre" for FY 2000. PRESENTED BY APPROVED AS TO FORM BY CL~ Chris Salomone Director of Community Development ~-~\ )v.~ . Kaheny y Attorney H:IHOMEICOMMDEVlRESOSIBONDS - (A).doc 44. d-- "T RESOLUTION NO. RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA AUTHORIZING AND DIRECTING THE ISSUANCE AND SALE OF NOT TO EXCEED $17,000,000 PRINCIPAL AMOUNT 2000 TAX ALLOCATION BONDS FOR THE MERGED REDEVELOPMENT PROJECT AND APPROVING AN OFFICIAL NOTICE OF SALE, A CONTINUING DISCLOSURE CERTIFICATE, A PRELIMINARY OFFICIAL STATEMENT AND FINANCING DOCUMENTS, AUTHORIZING THE SALE OF THE BONDS ON CERTAIN TERMS AND CONDITIONS, AUTHORIZING CERTAIN OTHER OFFICIAL ACTIONS AND PROVIDING FOR OTHER MATTERS PRO PERL Y RELATING THERETO WHEREAS, the Redevelopment Agency of the City of Chula Vista (herein referred to as the "Agency") is a redevelopment agency duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law (Part I of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State of California), and the powers of the Agency include the power to issue bonds for any of its corporate purposes; and WHEREAS, there currently exists within the Agency the Town Centre II Redevelopment Project Area, the Otay Valley Road Redevelopment Project Area and the Southwest Redevelopment Project Area, among others and the City has undertaken proceedings and introduced ordinances to merge the three above-referenced project areas into a single merged redevelopment project (the "Merged Redevelopment Project"); and WHEREAS, subject to the adoption and effectiveness of the ordinances providing for the Merged Redevelopment Project, the Agency wishes to authorize at this time the issuance and sale of a single series of tax allocation bonds to be named REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, 2000 TAX ALLOCATION BONDS (MERGED REDEVELOPMENT PROJECT) (the "Bonds") for the purpose of paying and repaying costs of redevelopment activity within the Merged Redevelopment Project; and WHEREAS, proceeds the Bonds will be used (i) to payor repay costs of redevelopment activity of the Merged Redevelopment Project; (ii) to establish a reserve account for such Bonds; and (iii) to pay a portion of the costs of issuing such Bonds; and WHEREAS, it is desirable that the Bonds be sold in accordance with law pursuant to public sale; and WHEREAS, the Agency desires to authorize the sale of the Bonds upon the terms and conditions hereinafter set forth; NOW, THEREFORE, the Redevelopment Agency of the City ofChula Vista does hereby resolve and declare as follows: DOCSOC\ 725064v5\242 t2.000 I 4/;-1 '"T SECTION I. Issuance and Sale Authorized; Time and Place For Bids on Bonds. The issuance and sale of not to exceed Seventeen Million Dollars ($17,000,000) principal amount REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, 2000 TAX ALLOCATION BONDS (MERGED REDEVELOPMENT PROJECT), in accordance with law, is hereby authorized. The Bonds shall be executed by the manual or facsimile signature of the Chairperson, the seal or facsimile of the seal of the Agency shall be reproduced thereon and attested by the manual or facsimile signature of the Secretary, in the forms set forth in and otherwise in accordance with the Indenture identified below. Tuesday, October 3, 2000 between the hours of9:00 a.m. and 9;30 a.m. Pacific Daylight Savings Time or any business day within 60 days thereafter at which bids are received is hereby fixed as the time, and the MuniAuction website (www.MuniAuction.com) is hereby fixed as the place at which bids will be received for the purchase of the Bonds, as described in and subject to the terms and conditions of the Official Notice of Sale for the Bonds hereinafter referred to. The Executive Director or the Treasurer of the Agency is hereby authorized and directed for and on behalf of the Agency to select the date for receipt of bids and to award sale of the Bonds within 24 hours of the receipt of bids to the responsible bidder offering the lowest true interest cost to the Agency, all as determined by the Executive Director or the Treasurer, in consultation with the Agency's Financial Advisor, with the right being reserved to reject any and all bids; provided that the aggregate principal amount of the Bonds shall not exceed Seventeen Million Dollars ($17,000,000) the stated interest rate for any maturity of Bonds may not exceed seven percent (7%) per annum, and the initial purchaser's discount may not exceed one and one half percent (1.5%) of the aggregate principal amount of the Bonds. SECTION 2. Approval ofIndenture. The Agency hereby approves the proposed form of Indenture of Trust for the Bonds (the "Indenture") dated as of October I, 2000, between the Agency and U.S. Bank National Trust Association, as trustee (the 'Trustee") in the form on file with the Secretary. The Executive Director or the Treasurer is hereby authorized and directed to execute and deliver, and the Secretary is hereby authorized and directed to attest and affix the seal of the Agency to the Indenture in substantially said forms, with such additions thereto or changes therein as are approved by the Executive Director or the Treasurer upon consultation with Bond Counsel and the Agency's Financial Advisor (including such additions or changes as are necessary or advisable in accordance with Section 13 hereof), the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Indenture by the Executive Director or the Treasurer. SECTION 3. Approval of Continuing Disclosure Certificate. The Agency hereby approves the Continuing Disclosure Certificate together with any additions thereto or changes therein as may be necessary to conform the terms of the Continuing Disclosure Certificate to the terms thereof described in the Preliminary Official Statement and as deemed necessary or advisable by the Executive Director or the Treasurer, whose execution thereof shall be conclusive evidence of approval of any such additions and changes. The Executive Director or the Treasurer is hereby authorized and directed to execute the final form of the Continuing Disclosure Certificate for and in the name and on behalf of the Agency. SECTION 4. Official Notice of Sale. The invitations for bids for the purchase of the Bonds is hereby authorized, such invitations to be substantially in accordance with the Notice Inviting Bids and Proposal Form, which includes a bid form, all in the form presented at this meeting and on file with the Executive Director (the "Official Notice of Sale"), with such changes and modifications as 2 4b-;:L DOCSOC\ 725064v5\24212.000 I ., may be deemed appropriate or necessary by Agency staff and Bond Counsel, including the principal amount of the Bonds, to cause the Official Notice of Sale to conform to the terms of the Bonds as such terms are set forth in the hereinafter referred to Preliminary Official Statement. SECTION 5. Publication of Official Notice of Sale. The Agency's Financial Advisor shall cause the Official Notice of Sale or the Notices of Intention to Sell Bonds referenced in Section 9 hereof, in their final forms with such changes and modifications referred to in Sections 4 and 9 hereof, to be published once in the Star News, a newspaper published and of general circulation in the City of Chula Vista, California, (or any other such newspaper) on or before a date at least five (5) days prior to the day fixed for the receipt of bids. SECTION 6. Terms and Conditions of Sale. The terms and conditions of the offering and the sale of the Bonds shall be as specified in the Official Notice of Sale, including such modifications thereto as permitted pursuant to Section 4 hereof. SECTION 7. Official Statement Authorized. The Agency hereby approves the preliminary official statement (the "Preliminary Official Statement") in the form presented at this meeting and on file with the Executive Director, with such changes and modifications as may be deemed appropriate or necessary by Agency staff, and authorizes its distribution in connection with the sale of the Bonds. SECTION 8. Furnishing of Official Notice of Sale and Preliminary Official Statement. The Financial Advisor is hereby authorized and directed to cause to be furnished to prospective bidders a reasonable number of copies of the Official Notice of Sale (including the applicable Bid Form) and a reasonable number of copies of the Preliminary Official Statement; provided the Preliminary Official Statement may be distributed via electronic means. SECTION 9. Publication of Notice oflntention to Sell. The Secretary of the Agency in cooperation with the Financial Advisor shall cause a copy of the Notice oflntention to Sell Bonds to be published once in the Bond Buyer, One State Street Plaza, New York, New York, substantially in the form on file with the Executive Director with such changes and modifications as may be deemed appropriate and necessary by Agency staff and Bond Counsel to cause the Notice of Intention to Sell Bonds to conform to the terms of the Bonds as such terms are set forth in the Preliminary Official Statement. Such publication shall be on or before a date at least fifteen (15) days prior to the date fixed for the receipt of bids. SECTION 10. Filing of CDlAC Notice. The Agency hereby approves the filing by Bond Counsel ofa notice of the Agency's intent to sell the Bonds with the California Debt and Investment Advisory Commission pursuant to Section 8855 of the California Government Code. SECTION II. Delivery of the Bonds. The Agency hereby approves the sale of the Bonds by the Agency by competitive sale to the purchaser to whom the Bonds are awarded. The Bonds shall be delivered to the Purchaser upon compliance with the terms and conditions set forth in the Official Notice of Sale. The Executive Director, the Secretary, the Treasurer and other proper officers of the Agency are hereby authorized and directed to deliver any and all documents and instruments, to authorize the payment of Costs of Issuance for the Bonds (as defined and provided in the Indenture) and to do and cause to be done any and all acts and things necessary or convenient for delivery of the Bonds to the Purchaser. 3 4b-3 DOCSOC\ 725064v5\24212.000 I ., SECTION 12. Official Action. The Chairperson, the Vice-Chairperson, the Treasurer, the Executive Director, the Secretary, the Agency Counsel and any and all other officers of the Agency are hereby authorized and directed, for and in the name and on behalf of the Agency, to do any and all things and take any and all actions, including execution and delivery of any and all assignments, certjficates, documents, including the securing of bond jnsurance, if available at a present value savings, and additions to the financing documents of bond insurance provisions necessary or appropriate to facilitate the issuance of the Bonds in accordance with this Resolution. SECTION 13. General Authorization. The Financial Advisor and/or Bond Counsel are hereby authorized and directed to open the bids at the time and place specified in said Official Notice of Sale and to present the same to the Agency. The Financial Advisor is hereby authorized and directed to receive and record the receipt of all bids made pursuant to said Official Notice of Sale, to cause computations to be made as to which bidder has bid the lowest true interest cost to the Agency and to present such bids to the Agency, as provided in said Official Notice of Sale, along with a report as to the foregoing and any other matters deemed pertinent to the award of the Bonds and the issuance thereof. SECTION 14. Approval Subject to Merger ofProiect Areas. Anything to the contrary herein notwithstanding, the authorizations set forth herein for the issuance and sale of the Bonds is conditioned upon the adoption by the City and the effectiveness of ordinances providing for the merger of the Southwest Redevelopment Project Area, Town Centre II Redevelopment Project and the Otay Valley Redevelopment Project Area into the Merged Redevelopment Project and in no event shall Bonds be issued for a period less than sixty (60) days from the date of adoption of the ordinances providing for the Merged Redevelopment Project.c In !heo ev~ntthe!luthorizati()n!ld fg.rthherein llre_effectiv~ this resolution ShllUSUpe!!iede Resolution~!!. 16061 adoPilillM~~, ;!JlOO.!lutIlorizjmtthe is~uance(lfbonds f!!rell~JLof th~~tbroe~jectareas to becll1cIT~ed'cLI! the event thecol!ditionsJQ tb.e author.izationc. herein are notmd.Jhe Bond_ authorization setfurthjn Reosoljltiol1oNo. 1667sltaU.be unaffected and remJlll!Joll full force andeff~~1. SECTION 15. Effective Date. This Resolution shall take effect upon adoption. ADOPTED this day of ,2000. Chairperson of the Redevelopment Agency of the City of Chula Vista ATTEST: Secretary of the Chula Vista Redevelopment Agency (SEAL) 4~ - cJ 4 DOCSOC\ 725064v5\24212.000 t "T CERTIFICA nON State of California ) County of San Diego ) City of Chula Vista ) I, ,Secretary of the Board of Directors of the Redevelopment Agency of the City of Chula Vista, hereby certify that the attached copies of Resolution No. _ are full, true and correct copies of that now on file in the records of the Redevelopment Agency of the City of Chula Vista at the Chula Vista City Hall. IN WITNESS WHEREOF, I have hereunto set my hand this _ day of ,2000. &'s~ Secretary of the Redevelopment Agency of the City of Chula Vista H:\HOME\COMMDEVlRESOS\BONPS - (B).DOC 4~ -s- DOCSOC\ 725064v5\24212.000 t "T RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE SALE OF REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA 2000 TAX ALLOCATION BONDS FOR THE MERGED REDEVELOPMENT PROJECT WHEREAS, the Redevelopment Agency ofthe City ofChula Vista (herein referred to as the "Agency") is a redevelopment agency duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law (Part I of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State of California), and the powers of the Agency include the power to issue bonds for any of its corporate purposes; and WHEREAS, there currently exists within the Agency the Town Centre II Redevelopment Project Area, the Otay Valley Road Redevelopment Project Area and the Southwest Redevelopment Project Area, among others and the City Council has undertaken proceedings and introduced ordinances to merge the three above-referenced project areas into a single merged redevelopment project (the "Merged Redevelopment Project") for financial purposes; and WHEREAS, subject to the adoption and effectiveness of the ordinances providing for the Merged Redevelopment Project, the Agency wishes to authorize at this time the issuance and sale of a single series oftax allocation bonds to be named REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, 2000 TAX ALLOCATION BONDS (MERGED REDEVELOPMENT PROJECT) (the "Bonds") for the purpose of paying and repaying costs of redevelopment activity within the Merged Redevelopment Project; and WHEREAS, proceeds of the Bonds will be used (i) to payor repay costs of redevelopment activity of the Merged Redevelopment Project; (ii) to establish a reserve account for such Bonds; and (iii) to pay a portion of the costs of issuing such Bonds; and WHEREAS, it is desirable that the Bonds be offered for sale at this time in accordance with the procedures described herein; and WHEREAS, the Agency has authorized the sale of the Bonds upon the terms and conditions hereinafter set forth; and WHEREAS, the City Council has reviewed the terms and conditions for the issuance of the Bonds and desires to approve the issuance by the Agency of the Bonds pursuant to Section 33640 of the Health and Safety Code; NOW, THEREFORE, the City Council of the City ofChula Vista does hereby resolve and declare as follows: DOCSOC\ 725065v4\24212.000 1 4e- - ( 'r SECTION I. Approval ofIssuance of Town Centre Bonds. The City Council approves the issuance by the Agency of not to exceed Seventeen Million Dollars ($17,000,000) principal amount REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, 2000 TAX ALLOCATION BONDS (MERGED REDEVELOPMENT PROJECT). SECTION 2. Terms and Conditions of Sale. The terms and conditions of the offering and the sale of the Bonds shall be as specified in the Indenture and Official Notice of Sale approved by the Agency, including such modifications thereto as may be made by the Executive Director of the Agency. SECTION 3. Official Action. The Mayor, the Vice-Mayor, the Finance Director, the City Manager, the City Clerk, the City Attorney and any and all other officers of the City are hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things and take any and all actions, including execution and delivery of any and all assignments, certificates, and documents to facilitate the issuance of the Bonds in accordance with this Resolution. SECTION 4. Approval Subiect to Merger ofProiect Areas. Anything to the contrary herein notwithstanding, the authorizations set forth herein for the issuance and sale of the Bonds is conditioned upon the adoption by the City and the effectiveness of ordinances providing for the merger of the Southwest Redevelopment Project Area, Town Centre II Redevelopment Project and the Otay Valley Redevelopment Project Area into the Merged Redevelopment Project and in no event shall Bonds be issued for a period less than sixty (60) days from the date of adoption ofthe ordinances providing for the Merged Redevelopment ProjectJn the event the authorizatiol1~~t forth herein are effective, tbis resolution shalls!!l!ersJ;'Jle_R~()I!l1ionJ~T1),_70()().-Hl~all.oJ)JeqJ\1..l1Y 2, 200Jllll,-tb!)J;"i~Jng. the issuancjOofbonds for.~el!~!t9Lt!le~1!!.r-"..!UlJ'93-,,~t;m'as .!Qjlll.lll!,r~.,lI,-J!! theeventthe c9u.diti!!n.JL to .1hea uthorization herein. ar~_n.lltm!ltJhe BJ)lUIJluthorization~l.'! fQrtbj!LR!l5Q!!!ti<tD~~.Q....200()-1 <4~. shalllJe_ unaff.,~ted llllllI.,Illl!!llin ful! f!!n'e~uuleffect, SECTION 5. Effective Date. This Resolution shall take effect upon adoption. day of ,2000. ADOPTED this Mayor of the City of Chula Vista ATTEST: City Clerk of the City of Chula Vista (SEAL) 2 4c-.J- DOCSOC\ 725065v4\24212.000 1 "T CERTIFICATION State of California County of San Diego Cjty ofChula Vista ) ) ss ) I, ,City Clerk of the City ofChula Vista, hereby certify that the attached copies of Resolution No. _ are full, true and correct copies of that now on file in the records of the City of Chula Vista at Chula Vista City Hall. IN WITNESS WHEREOF, I have hereunto set my hand this _ day of ,2000. City Clerk H:IHOMEICOMMDEVIRESOSIBONDS - (C).DOC OOCSOCI 725065v4\24212.000 t 4c-3 ., RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE EXPENDITURE OF LOW AND MODERATE INCOME HOUSING FUNDS OUTSIDE OF THE PROJECT AREA WHEREAS, the Redevelopment Agency of the City ofChula Vista (the "Agency") is engaged in activities necessary to carry out and implement the Redevelopment Plans for the Southwest, Bayfront, Town Centre No. II, and Otay Valley Road redevelopment project areas; and WHEREAS, California Health and Safety Code Section 33334.2 (all section references herein are to the Health and Safety Code unless otherwise specified) authorize and direct the Agency to set aside in a Low and Moderate Income Housing Fund and expend a certain percentage of all taxes which are allocated to the Agency pursuant to Section 33670 for the purposes of increasing, improving and preserving the community's supply oflow and moderate income housing available at affordable housing cost to persons and families of low and moderate-income, lower income, and very low income (the "Housing Fund Contribution"); and WHEREAS, pursuant to applicable law, the Agency has established a Low and Moderate Income Housing Fund (the "Housing Fund") for its redevelopment project areas; and WHEREAS, pursuant to Section 33334.2 (g), the Agency is authorized to make expenditures from the Housing Fund outside of its redevelopment project areas upon a resolution of the Agency and the City Council of the City ofChula Vista (the "City Council") that such use will be of benefit to a redevelopment project area; and WHEREAS, the Agency proposes to fund a portion of the Housing Fund Contribution attributable to the Bayfront redevelopment project areas from tax increment revenues of the Town Centre II redevelopment project area pursuant to the authority of Section 33334.3(i) NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES HEREBY RESOLVE AND DECLARE AS FOLLOWS: SECTION I. The City Council finds and determines that expenditures from the Housing Fund outside of the Town Centre No. II redevelopment project area, or any other redevelopment project area of the Agency pursuant to Section 33334.3(i), will be of benefit to such redevelopment project area or areas. P(tJ;ED BY , s:: Q~ Chris Salomone Director of Community Development APPROVED AS TO FORM BY H:IHOMEleOMMDEVlRESOSIBONDS . (D).lXlC Doesael 725065v41242 t 2.000 I 4d-1 .., ATTACHMENT 1 JOINT REDEVELOPMENT AGENCY / CITY COUNCIL AGENDA STATEMENT ITEM NO.: .,J MEETING DATE: 05/02/00 ITEM TITLE: a. AGENCY RESOLUTION APPROVING THE AGENCY FINANCIAL PLAN AND AMENDING VARIOUS AGENCY PROJECT AREA FISCAL YEAR 2000 BUDGETS IN ACCORDANCE WITH THE APPROVED AGENCY FINANCIAL PLAN AND AUTHORIZING THE VARIOUS INTER-PROJECT AREA ADVANCES AND ADVANCE REPAYMENTS RELATED THERETO, AND AUTHORIZING THE EXPENDITURE OF LOW AND MODERATE INCOME HOUSING FUNDS OUTSIDE THE PROJECT AREA b. AGENCY RESOLUTION AUTHORIZING AND DIRECTING THE ISSUANCE AND SALE OF (I) NOT-TO-EXCEED $7,000,000 PRINCIPAL AMOUNT 2000 TAX ALLOCATION BONDS FOR THE TOWN CENTRE NO. II REDEVELOPMENT PROJECT, (II) NOT-TO-EXCEED $7,000,000 PRINCIPAL AMOUNT 2000 TAX ALLOCATION BONDS FOR THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT, AND (III) NOT-TO-EXCEED $4,000,000 PRINCIPAL AMOUNT 2000 TAX ALLOCATION BONDS FOR THE SOUTHWEST REDEVELOPMENT PROJECT, AND APPROVING AN OFFICIAL NOTICE OF SALE FOR EACH, A CONTINUING DISCLOSURE CERTIFICATE FOR EACH, APPROVING THE PREPARATION AND DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT AND FINANCING DOCUMENTS, AUTHORIZING THE SALE OF THE 2000 BONDS ON CERTAIN TERMS AND CONDITIONS, AUTHORIZING CERTAIN OTHER OFFICIAL ACTIONS AND PROVIDING FOR OTHER MATTERS PROPERLY RELATING THERETO, AND APPROVING A CONTRACT WITH ROD GUNN ASSOCIATES FOR FINANCIAL ADVISOR SERVICES AND WAIVING THE CONSULTANT SELECTION PROCESS AS IMPRACTICAL c. COUNCIL RESOLUTION APPROVING THE SALE OF THREE SERIES OF REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA 2000 TAX ALLOCATION BONDS FOR THREE REDEVELOPMENT PROJECTS d. COUNCIL RESOLUTION AUTHORIZING THE EXPENDITURE OF LOW AND MODERATE INCOME HOUSING FUNDS OUTSIDE OF THE PROJECT AREA SUBMITTED BY: DEPUTY CITY MANAGER/FINANCE DIRECTOR COMMUNITY DE\i,ELOPMENT DIRECTOR W- REVIEWED BY: CITY MANAGER 4/5THS VOTE: YES 0 NO D 4~~ 37G ~ PAGE 2, ITEM NO.: 3 MEETING DATE: 05/02/00 BACKGROUND In Moy 1999 staff secured the services of Rod Gunn Associates (RGA) to prepare on Agency Financiol Plan to evoluate the Agency's financial status. Stoff felt thot the timing for such on onolysis was good in light of the Agency's improving fiscol condition, current growth economy ond the odvancing time limits for the Agency to incur debt in some of the project areas. As a result of their analysis, RGA is recommending a two phosed linonciol plan (ot/ached as Exhibit A) to meet specific Agency finonciol objectives. Phase I proposes the issuance of opproximately $12,071,197 (net) in tox-exempt tox ollocation bonds to be secured by property tox increment from the Otoy Valley Road, Town Centre II ond Southwest Project Areas. The outhorizing resolutions incorporate "not-to-exceed" omounts totaling $18 million depending on the interest rates and other financiol foctors ot the octuol time of issuonce. The bond proceeds would be used to repay some interfund loans ond provide funding for future Agency projects over the next three to five yeors to take advontage of the development opportunities in the current growth economy. Phose II contemplates 0 financiol merger of all of the project areos ond subsequent issuonce of more bonds sometime before 2004, which is the lost year to incur debt in the original areos of Bay/rant/Tovm Centre I, Town Centre II, and Otoy Volley. The finoncial merger is not recommended at this time since the tax increment revenue picture in the Bay/ront project area is uncleor due to the status of the Midboy/ront, BFGoodrich south campus, ond power plant sites. If the finonciol pion is approved, the Agency is being osked to approve several budget oppropriotion amendments (Resolution "A") to reflect the bond proceeds repayment odvances (described later) as well os 0 short-term interfund loon from Town Centre II to Southwest ond Town Centre II paying a portion of the housing set-oside obligotions for Boy/ront and Southwest. Various project areos hove from time to time experienced cash shortages due to economic downturns, cash flow timing differences, etc. In the past, these shortoges hove been remedied through loans from other City funds, primarily Sewer Copitol funds. In order to moximize the benefits to be derived from the plonned issuonce of T ox Allocation Bonds within the next sixty doys, the Southwest Proiect Area requires a $300,000 short term cosh loon which will be repoid with the proceeds from the bonds. The Town Centre II Proiect Area currently has sufficient cash to camfortably moke fhis short term loon. The proposed plan was conceptually opproved in December 1999, however, Council requested 0 workshop to discuss it in more detoil prior to finol consideration. The workshop was held on Morch 16 with Council opproving the plan and directing stoff to prepare all fhe necessary agreements ond documents for final consideration. The only significant change to the pion from the March 16 workshop is 0 $37,000 increase in administrative charges which, along with other chonges, resulted in a $450,000 loss in bonding copacity. This report provides a summory of the revised plan (with expected fiscal results) and requests Council/Agency approval of the issuance of the RDA 2000 Tax Allocation Bonds in the above identified not-to-exceed amounts. 1-~ 3~ PAGE 3, ITEM NO.: MEETING DATE: 3 05/02/00 RECOMMENDATION Adopt the resolutions approving the Agency Finoncial Pion and ossocioted Agency budget omendments; authorizing the sale of the Redevelopment Agency 2000 T ox Allocation Bonds and authorizing the expenditure of Low ond Moderate Income Housing funds outside of the Town Centre II Project Areo pursuant to the oppraved Financiol Plan. BOARDS/COMMISSIONS RECOMMENDATION Not Applicable DISCUSSION As previously indicoted, the timing of fhe proposed bond issuonce is well planned given the improving Agency fiscol condition and the current growth economy. The bond proceeds will be used to repay some interfund loans (primarily Boyfront) and fund future proiects over the next three to five years. The project monies (which need to be spent on projects within three to five years) will be critical in helping "prime the pump" for development in the Bayfront, downtown ond Southwest proiect areos during this current window of opportunity for economic growth. Prior TO discussing the specifics of the proposed finoncial pion ond bond terms, it is important to briefly ::Iiscuss recent Agency financial and performonce history in order to ploce the proposed pion in proper context ond fully understand the basis for the obiectives. Backaround The stotewide recession of the late 1980's and early to mid 1990's resulted in several concurrent negotive fiscol impacts to the City ond Agency which have had lingering long-term effects. Moior properly tox reassessments ond stagnant growth in properly tox revenues in general, os well os State "takeowoys" through the Stote Educotion Revenue Augmentation Fund (ERAF) negotively influenced overall revenues and fiscal health. While growth in the City in general wos slow, the Redevelopment Agency was very octive completing ond incentivizing the Palomar Trolley Center, Wal*Mart, Auto Pork, and Chulo Vista Center Renovotion proiects. The Agency olso laid the groundwork for the Scripps Hospital Exponsion proiect (negotiations and relocations) ond octively pursued the Barkett "Mid-Boyfront" project. The sales tax producing projects helped the General Fund maintain a steady sales tax bose while other communities in the region and throughout the State were experiencing significant declines. The lond acquisition for the Auto Park project was incentivized through mojor loans from the Bayfront proiect orea to the Otay Volley proiect area. The Bayfront loans were mode largely from the previous Boyfront T ox Allocation Bond (TABs) proceeds. The Chulo Visto Center was incentivized through the issuonce of Generol Fund Certificates of Participation (COPs) for the parking structure. This General Fund obligotion wos arronged so thot the General Fund could potentially be repaid in the future if the proiect orea hod surplus revenues. However, Town Centre II funded the debf service for the COPs in the early years from fund reserves until those reserves were depleted several yeo'rs ago. Those COP payments, along with the other factors 4-~ '3/3 "T PAGE 4, ITEM NO.: MEETING DATE: 3 05/02/00 identified above (property tax reossessments, stagnant Agency revenues, ERAF, ond major project expenditures and loans) led to depleted Agency reserves, which then resulted in the current outstanding loan odvances from the General Fund ond Sewer Fund. Additionolly, if should be noted that throughout this period, the Bayfront proiect areo wos also advancing annuol loons of more than $200,000 to the Noture Interpretive Center (NIC) for its operating budget. The RDA continues to moke these loans and the proposed plan does not provide relief from fhat obligotion. In on effort to get through the recession as easily os possible, the Agency then begon selling non- essenfial assets, canceling Capital Improvemenf Projects, reducing operating budgets and refinanced (for the third and final time), the Boyfront TABs to achieve some annuol debt service sovings. Those short term efforts were generally effective under the economic and financiol circumstonces at that time. However, the proposed conceptuol plan presented for considerotion reflects 0 much brighter set of circumsfonces ond is geared toward oddressing some of the lingering negotive results of the recession. Financiol Pion Obiectives After 0 thorough review of the current Agency fiscol condition, Finance ond Community Development stoff outlined bosic Agwcy financiol obiectives for RGA to address in the proposed pion. Staff recommended thot the pl"n address the following obiectives in order of priority: 1) Repoy the Sewer ond RDA interfund loans, 2) Raise copital for projects, 3) Eliminote existing fund balonce deficits in the Bayfront/T own Centre I proiect oreas, 4) Fund staff ond operations cosfs on an on-going bosis, and then 5) Repoy the General Fund ond/or fund the Certificotes of Porticipotion (COP) payments. Phose I substantially oddresses the first four obiectives and Phase II is expected to address the fifth objective. Proposed Financiol Pion - Phose I Given the obove stated objectives, the plan proposes to issue approximately $12,071,197 (net) in tox-exempt bonds from fhe Town Centre II, Southwest, and Otay Valley Rood proiect areas in order to repoy certoin obligofions of various redevelopment areas and roise funds for projects after providing funding for annuol stoff and operations costs. The foble below delineotes the proposed sources and uses of the bond proceeds: SOURCES USES PROJECT FUNDS Town Centre II $4,404,281 Repay Baytront Loans $9,380,172 $8,485,701 Southwest 2,302,396 Repay Sewer Fund 1,043,392 Otay Valley 5,364,520 Repay General Fund 610,690 Project Funds 1,036,943 1,036,943 TOTAL $12,071,197 TOTAL $12,071,197 $9,522,644 It is importont to note thot of the $9,380,172 loan repaymenf going bock to Bayfront, $8,485,701 would be ovailable for projects with the remaining $894,471 used to fully repay fhe loan from the Sewer Fund. The net effect is that fhe entire Sewer Fund loon ($1,937,863) is tf-1 k! "T PAGE 5, ITEM NO.: MEETING DATE: 3 05/02/00 repaid, a small Generol Fund loan is repaid ($610,960) and the Agency receives $9,522,644 for projects. For federal tax purposes, roughly 85% of the bond proceeds need to be spent within three yeors, ond 100% within five yeors. Repayment of Agency or City interfund loans ore not treated os on expenditure of bond proceeds, for those purposes, expenditures of bond proceeds will be tracked through the timely copitol expenditures of the repaid funds. Bond Terms and Debt Service The revenue estimotes for the proposed bonds ore conservative. The coverage ratios ore between lAx ond 1.75x after accommodoting for over $2 million in onnuol odministrative costs. Annuol growth assumptions are 5% in Ofoy Volley ond only 2% in Town Centre II ond Southwest. In terms of new growth, all fhat is included is the build-out of the Wol'Mort Center, the Greenwold development (Family Resource Center), ond fhe old Corporation Yord by 2002/03. Included os Exhibit B are the sources, uses and debt service tables for each of fhe issues. Town Centre II runs through 2028, while Southwest and Otay Volley runs through 2030. The pion also includes a negotioted in lieu annuol payment of $180,000 from Allied Waste in order to help mitigote the revenue loss to the Agency from their tax assessment appeol. It is anticipoted that stoff will be presenting this agreement to City Council in the neor future. Even if this in-lieu poyment is not achieved, staff is comfortable that over tinle, this unreolized revenue streom will be made up from other development. Finolly, fhe plan includes 0 strotegy to fulfill a portion of the Agency's housing set-aside requirement from Bayfront and the Southwest project from Town Centre II. The housing set-aside requirement is a requirement to set aside 20% of 011 the Agency's tax increment in the Low/Mod Housing Fund. Traditionolly, ogencies sotisfy this requirement by setting oside 20% of the tox increment from eoch project. However, Section 33334.3(i) of the Heolth & Safety Code allows ogencies with mulfiple project oreos to fund the toto 1 housing set-oside dollor requirement from ony project orea they choose, so long os the fotal deposit equols 20% of all tax increment receipts of the Agency. In effect, the Agency could fund 011 of its housing requirement from one project areo, thus freeing up funds in other project oreas for economic development. This sfrategy is recommended since it will free up tox increment in Southwest on which to bond, ond will not odversely impact Town Centre II or fhe Low/Mod Housing Fund. This adjustment hos been incorporated in the budget amendment resolufion ("A") ond is the purpose for the request to odopt resolution ("0"). Fiscol Results Two importont elements that will be addressed in Phose I, are the elimination of negotive fund balonces (deficits) ond substontial reduction of the RDA inter-fund odvances described previously. The following table delineates the "before" and "after" picture for the Agency's fund balances: q-fj .~ "T PAGE 6, ITEM NO.: MEETING DATE: 3 05/02/00 TABLE 1 REDEVELOPMENT AGENCY FINANCIAL PLAN FUND BALANCE ANALYSIS ~!;,'1-t1:0~,,~~~~,\,:giRiNrk$i$mml!1rs'~;I0fi'iR~m~!i(<q~ii;?meg::~ii1~~~f#ill!g?rrm2:J: ,;~BaYfiiinIUCllii4kiown Centre U ';;i;OlaYValley.~~,SoUthwest"T;, PrOject Area iotals, Available Fund Balance (Deficit) at 6/30/99 ($1,717,772) $1,021,783 $980,736 ($1 ,343,196) ($1,058,449) Tax Allocation Bond Proceeds 4,404,281 5,364,520 2,302,396 12,071,197 Repayment of Inter-Project Area Advances 9,380,172 {3,681 ,667) (5,364,520) (333,985) Repayment of General Fund Advances (610,960) (610,960) Post Financial Plan Available Fund Balance $7,662,400 $1,133,437 $980,736 $625,215 $10,401,788 As the previous table reflects, the negafive fund bolances in Boyfront/TC I and Soufhwest will be eliminated and os 0 whole, fhe Redevelopment Project Funds will hove substantial fund reserves ($10.40 million) to proactively pursue and incentivize future development projects over the next three to five yeors. It should be stressed aaoin that the amount of funds ovailable for "proiects" is after allocatina $2,108.502 in onnuol administrotive costs which includes on allocation of $342,468 for the annuol RDA loan to the Noture Interpretive Center (NIC). Table 2 provides a "before" and "after" picture of the inter-fund advonces. As indicated, overall the RDA odvances (including odvances from fhe General Fund) will be reduced fram $33.73 million to $21.80 million. The Boyfront is currently owed $15.865 million ond will be repaid 011 but $6.485 million. There will still be substantial outstanding loans owed to the General Fund with repayment terms primarily based on the Agency's ability to pay fram surplus revenues. TABLE 2 INTERFUND ADVANCES ""'''''''''''''''IIIIIIi' "E....""mIi'...~""~.. R~' '_.......,~.. '~~~.,"~,~-"~_......-.."',.--..-,,---,,._..,............ d ,,,' ""~;r~oir ._~ Wee W'~'n '1=I"N' 'O,""""",,.~ "~SF'b" 0~..'""'*.::.."dl:::ro0y c,,-,"'\wn=..,,w 'X,"0 +'~"'." ,," m:fUNl5!~:li<<$~Aqb ~~:G '. .w.~~~.UN' ~~.~ S" . . .'.. '::BAYFRONro/. %;j0JfD:QTAYNAiJ:anml~mU~lr~jm~il!i6TAI1!ll. Existing Repayment REMAINING $15,629,325 (610,960) $15,018,365 $1,937,863 (1,937,863) $ 0 $15,865,059 (9,380,172) $6,484,887 $300,450 $33,732,697 (11,928,995) $21,803,702 $300,450 As outlined in Table 3 on the following page, of the $21.80 million of remaining loans, $15.02 million will still be owed to the General Fund which is primarily from the Town Centre II Certificates of Porticipotion for the Chulo Vista Center ($12.84 million). This amount will increose as the General Fund continues to moke the COP payments as wos originolly contemploted when the bonds were issued. 4-9 ~ "T PAGE 7, ITEM NO.: MEETING DATE: 3 05/02/00 TABLE 3 POST PLAN ADVANCES Southwest Town Centre II Olay Valley Road Bayfranl TOTAL 1 ,508,056 $15,018,365 $ 0 $6,484,887 $300,450 $971,594 12,839,165 6,484,887 1,508,056 $21,803,702 6,484,887 It is hoped thot Phase II of the plan (financiol merger) will ollow for 0 substantial amount of the remaining advances from the General Fund to be repaid. The development of the Bayfront will be the key to providing the Agency with the ability to repay those advances. Proposed Financial Plan - Phase II As previously discussed, Phase II of the plan calls for the Agency to consider the benefits of a financial merger of all of the project areas and then the subsequent issuance of additional bonds sometime prior to 2004. The idea is to "pool" the collective resources of all of the project areas to achieve some bonding efficiencies, eliminate inter-RDA project area loans, and increase overall flexibility. Current time limitations to incur debt (2004) in the BayfrontlTown Centre I (original area), Town Centre II (original area), ana Otay Valley Road project areas bring a sense of urgency to this matter. The financial merger is not recommended at this time since the Bayfront project revenue picture is so unclear. Future tax increment revenue questions on the Midbayfront, BFG South Campus and power plant sites need to be answered positively over the next couple of years in order for the merger to be effective. With some significant development in the Bayfront over the next few years, it is hoped that the revenue picture will be solid enough to merge the project areas and issue bonds. It is expected that a significant portion of the bond proceeds would go toward repaying the General Fund for the COPs at that time. The need for Bayfront development is a major reason for staff recommending that Bayfront be repaid from the loans advanced. The project area needs to have monies available to create/assist development opportunities. Summary The proposed financial plan represents a proactive effort by staff to take advantage of current market and financial conditions to help correct some of the negative fiscal impacts of the recession. Staff is confident that the proposed plan will render positive financial benefits to both the Agency and the City, and provide much needed capital to pursue projects during the current growth economy that will be necessary to ensure a successful redevelopment program. FISCAL IMPACT Adoption of the resolutions will allow for the marketing and sale of three (3) series allocation bonds in the Town Centre II, Otay Valley, and Southwest Project areas. 4~/() X7 of tax The ., 3 PAGE 8, ITEM NO.: MEETING DATE: 05/02/00 compensation for the associated professional services (financial consultant, bond counsel etc.) will be paid from the bond proceeds. The issuance of bonds will result in several immediate positive budget impacts for FY 99/00 that require amendments. The table below identifies the required appropriation and advance repayment amendments as well as the corresponding funding sources as described in the report. AGENCY FINANCIAL PLAN - PHASE I REQUIRED BUDGET AMENDMENTS APPROPRIATION SOURCE OF FUNDING Town Centre II Repay Bayfront Advances Repay General Fund Advances Advance to Southwest Transfer to Low/Mod for Southwest Transfer to Low/Mod for Boyfront Otay Valley Repay Boyfront Advances Southwest Repay Town Centre II Advance Repay Bayfront Advances Repay Sewer Loan Interest Low/Mod Credit from Town Centre II Bavfront/Town Centre I Repay Sewer Loan Interest Low/Mod Credit from Town Centre II ATTACHMENTS $3,681,667 $610,960 $300,000 $30,000 $526,000 $5,364,520 $300,000 $333,985 $218,391 ($30,000) $94,470 ($526,000) Bond Proceeds Bond Proceeds Available Fund Balance Tax Increment Revenue Tax Increment Revenue Bond Proceeds Bond Proceeds Bond Proceeds Bond Proceeds Interest Revenue Attachment A - Agency Financial Plan Attachment B - Debt Service Schedules Attachment C - Agency Agreement with Rod Gunn Associates Attachment D - Draft Official Statement - Agency 2000 Tax Allocation Bonds H,\HOME\COMMDEV\STAFF.REP\OS-02_00\RDA 2000 TABS.doc or 4-(/ 34 REPAY GENERAL FUND $617,993 ATTACHMENT 2 CHULA VISTA REDEVELOPMENT AGENCY FLOW OF FUNDS USE OF BOND PROCEEDS TO REPAY INTERFUND ADVANCES MERGED PROJECT BOND PROCEEDS $13.494,000 ALLOCATED TO TOWN CENTRE 11 ALLOCATED TO SOUTHWEST REPAY BA YFRONT $333,985 REPAY BAYFRONT $3,728,082 MERGED PROJECT FUNDS $1,040,000 REPAY SEWER FUND $],055,155 ALLOCATED TOOTAY VALLEY ROAD REPAY SA YFRONT $6,718,785 USE OF BA YFRONT ADV ANCES REPAYMENT PROJECT FUNDS $9,874,476 ADVANCES REPAID FROM BOND PROCEEDS $10.780.852' REPAY SEWER FUND $906.376 "4~( d- ~ . Increase $1,400,000 RUG. 4.2000 10:32RM ROD GUNN RSSOC NO.49B P.2/5 SOURCES AND USES OF FUNDS ChuIa Vista Redevelopment Agency Merged Project Tax Allocation Bonds Dated Date Delive", Date 10/15/2000 10/24/2000 Sources: Bond Proceeds: Par Amount Accrued Interest 15,580,000.00 22,113.94 15,602,113.94 Uses: Other Fund Deposits: Reserve C.pitalized Interest Fund Accrued Interest 1.160,680.00 166,749.89 22,113.94 l.349.543.83 Deli.e", Date Expenses: Cost of IoSUlUlce Und.crwritcr's Discount Bond lnsw.nce 200,000.00 186,960.00 371,505.50 758,465 .sO Other Uses of Ptmds: Contingency 13,494,104.61 15,602,113.94 Aug 4, 2000 10,08 IlIIl Prepared by Rod GuM A8Sociot<:o, Inc., Seal a""cI1 CA 4- _I ~ or RUG. 4.2000 10:32RM ROD GUNN RSSOC BOND SUMMARY STATISTICS ChuJa VI~1a RedeveIoplIUlnt ACfmcy Merged Project Tax Allocation Bondi Dated Dalll Dellvery Date Last Maturity 10115/2000 10/24/2000 09/01/2030 Arbitrase Yiel4 True Interest Cost (TIC) Net Interest Cost (mC) All-In TIC Average Coupon 6.038556% 5.922759% 5.908640% 6,2882-16% 5.843095% Average Life (years) Puntion of Issue (years) 18.371 10.767 Par Amount Bond Proceeds Total Inr.erest Nellnle~t Total Debt Service M.,umum Annusl Debt Service Average Annual Debt Service 15,5S0,OOO.00 15,602,113.94 16,746,939,92 16,933.899.92 32,326,939.92 1,160.680.00 1,082,138,02 Underwriter's Fees (per $1000) Average Takedown Other Fee 12.000000 Total UndefWriter's Discount 12.000000 Bi4 Price 98,800000 Bond Component Par V slue Average Price Coupon 18.371 Bonds 15.580.000.00 100.000 5.843 % 18.371 15,580,000.00 NO.49B Average Life TIC All-In TIC Par Valuc + Accrued Interest + Premium (Discount) - Underwriterts Diseoum: - COSt of Issuance Expense - Other Amounts 15,580,000.00 15.580.000.00 22,113,94 (186.960.00) (186,960.00) (200.000,00) (371,505.50) Target Value 15.393.040.00 14.843.648.44 Target Date Yield 10/15/Z000 5.922759 % 10124/Z000 6.288216% An:.itrage Yield 15.580.000.00 22,113.94 (371,505 .50) 15,230,608.44 10/2412000 6.038556% P.3/5 Aug 4, 2000 10,26 am Prepared by Rod Gunn ABSOoiales. In<:.. Scalllcaob CA 1~(t '1 RUG. 4.2000 10:33RM ROD GUNN RSSOC NO.49B BOND DEBT SERVICE Chula Vista Redevelopment Agency Merged Project Tax Allocation Bonds Period Annual Ending Principal Coupon InrereSl Debt Service Debl Serviee 10/24/2000 03/01/2001 334,166,17 334,166.17 09/01/2001 290.000 4.400% 442,278.75 732,278.75 1,066,444.92 03/0112002 435,898.75 435,898.75 09/01/2002 170.000 4.550% 435,898,75 605.898,75 1.041.797,50 03/01/2003 432,031.25 432,031.25 09/0112003 225,000 4.700% 432,031.25 657,031.25 1,089,062.50 03/01/2004 426.743.15 426,743.75 09/01/2004 295.000 4.850 % 426.743.75 721.743,75 1,148,487,50 03/01/2005 419,590.00 419,590.00 09/01/2005 315,000 4.950% 419,590.00 734,590.00 1,154,180.00 03/01/2006 411.793,75 411,793,75 09/01/2006 330,000 5.000% 411,793.75 741,793.75 1,153,587.50 03/01/2007 403.543.75 403.543.75 09/01/2007 350.000 5.100% 403,543.75 753,543.75 1,157,087.50 03/01/2008 394,618.75 394,618.75 09/01/2008 365.000 5.150% 394.618,75 759.618.75 1,154.237.50 03/01/2009 385,220.00 385,220.00 09/01/2009 380,000 5.200 % 385,220.00 765,220.00 1,150,440.00 03/01/2010 375.340.00 375,340.00 09/01/2010 410.000 5.200% 375,340,00 785.340.00 1,160.680.00 03/01/2011 364,680.00 364.680.00 09/01/2011 425,000 5.300% 364,680.00 789,680.00 1,154,360.00 03/01/2012 353.417,50 353.417.50 09/01/2012 450,000 5.400% 353,417.50 803,417.50 1,156,835.00 03/01/2013 341.267.50 341,267.50 09/01/2013 475,000 50450% 341,267.50 816,267,50 1,157,535,00 03/01/2014 328,323.75 328,323.75 09/01/2014 495.000 5.500% 328.323,75 823,323.75 1.151.647.50 03/01lm15 314.711,25 314,711.25 09/0112015 450,000 5.600% 314,711.25 764,711.25 1,079,422.50 03/01/2016 302,l1l.25 302, I 11.25 09/01/2016 480,000 5,950% 302,111.25 782,1 I 1.25 1.084.222.50 03/01/2017 287,831.25 287,831.25 09/0112017 505,000 5.950% 287.831.25 792,831.25 1,080,662.50 03/01/2018 272,807.50 272.807.50 09/01/2018 540,000 5.950% 272,807.50 812,807.50 1,085,615.00 03/01/2019 256,742.50 256,742.50 09/01/2019 570.000 5.950% 256,742.50 826,742.50 1,083,485.00 03/01/2020 239.785.00 239,785.00 09/01/2020 600,000 5.950% 239,785.00 839,785.00 1,079,570.00 03/01/2021 221,935.00 221,935.00 09/01/2021 640.000 5.950% 221.935.00 861.935.00 1,083,870.00 03/01/2022 202,895,00 202,895.00 09/01/2022 670.000 5.950% 202,895.00 872.895.00 1.075.790.00 03/0112023 182,962.50 182,962.50 09/01/2023 705.000 5.950% llU.982.50 887,962.50 1,070,925.00 03/01/2024 161,988.75 161,988,75 09/01/2024 745.000 5.950% 161.988.75 906,988.75 1,068,977.50 03/01/2025 139,825.00 139,825,00 09/0112025 785,000 5.950W, 139,825.00 924,825.00 1,064,650.00 03/01/2026 116,471.25 116,471.25 09/01/2026 840.000 5.950% 116,471.25 956,471.25 1,072,942.50 A"B 4. ZOOO 10:08 am l'reporO(\ by llod Gunn As.ocl."', In,., Seal B.",.,n CA c( -/~ ., P.4/S AUG. 4.2000 10:33AM ROD GUNN ASSOC NO.49B BOND DEBT SERVICE Chula Vista Redevelopment Agency Merged Projeet Tali: Allocation llonds Period AIlnuai Ending Principal Coupon Interest Oebl Service Debt Service 03/01/2027 91,481.25 91,481,25 09/01/2027 890,000 5.950% 91,481.25 981,481.25 1,072,962.50 03/01/2028 65,003.75 65,003.75 09/0112028 935,000 5.950% 65,003.75 1,000,003.75 1,065,007.50 03/0112029 37,187.50 37,187.50 09/01/2029 610,000 5,95'0% 37.187.50 647,187,50 684,375,00 03/01/2030 19,040.00 19,040.00 09/01/2030 640,000 5.950% 19,040.00 659,040.00 678,080.00 15,580,000 16.746,939.92 32,326,939.92 32,326,939.92 P.5/5 Aug 4. 2000 10:08 lIlIl Prepared. by Rod Gu.nn M80ciatc&, Inc,. Seal Beach CA 4-(~ or DRAFT AS OF JULY 26, 2000 NEW ISSUE - BOOK-ENTRY ONL Y RATINGS Standard &Poor's: AAA y(oody's: Aaa (See "CONCLUDING INFORMA nON - Ra'ings on the Bonds" herein) In lhe opinion of Slradling Yocca Carlson 4< RaUlh. a Professional CorporaJion. Newport Beach. Califomie. Sond Counsel. under existing statutes. regulations. rulings and judicial decisions" and assuming certain represeruQtions and ::Jmpliance with certain covenants and reqw:remenls discussed herein. interest on and on"ginal issue discOLUlt with respect :0 the Bonds are excluded from gross income for federal income fa."" purposes. and are not an item of ta.t preference for purpo~'<!s of calculating the federal aLternative minimum ULteS imposed on individuals and corporations. In the junher opiru:on 0/ Bond Counsel, inures' on and originaL issue discOunI with respect to the Bonds are e:tempt from California personal jr.c~me taxes. See "LEGAL MATTERS - Tax MaJlers" herein. SAN DIEGO COUNTY STATE OF CALIFORNIA ~\\f?- -fl- '- -~ -~ REDEVELOPl\iIENT AGENCY OF THE CITY OF CHULA VISTA $15,500,000* 2000 TAX ALLOCATION BONDS (MERGED REDEVELOPMENT PROJECT) OTY OF CHutA VISTA Due: September 1 As Shown On The Inside Cover Page Hereof. 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 inIonnation essential to the making of an informed investment decision. See "BONOOWNERS' RISKS" herein for a discussion of special risk factors that should be considered in evaluating the investment quality of the Bonds. Imeres< on the Bonds is payable commencing March 1, 2001. semiannually thereafter on September 1 and ,larch 1 of each year until mamrity or earlier redemption (see "THE BONDS - General Provisions" and "THE BO~US - Redemption" herein) . Dated: October IS, 2000 The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an insur-.illce policy to be issued concurrently with the delivery of the Bonds by FINANCIAL SECURITY ASSURANCE. INC. See "SOURCES OF PAYMEi..,. FOR THE BONDS - Municipal Bond Insurance" herein. FSA LOGO The information contained within this Official Statement was prepared under the direction of the Agency by the following linn serving as FInancing Consultant to the Agency. ROD GUNN ASSOCIATES, INC. A DETAILED MATURITY SCHEDULE IS SET FORTH ON THE INSIDE COVER PAGE HEREOF The Bonds are payable salely from certain taX revenues of the Redevelapment Agency of the City of Caula Vis<a (the "Agency") as described herein and certain other funds beld under the Indenture (see "SOURCES OF PAnlE.'IT FOR THE BONDS". "BONOOWNERS' RISKS" and "DEBT STRUCTURE" herein). It is anticipated that the Bonds will be available for delivery in New York. New York. on or about October 24. 2000 for deposit with The Depository Trust Campany (see "THE BONDS" General Provisions" Book-Entry Only System" herein). The dale of the Official Swumenl is _" 1000. * Prdiminary, subject 10 change. .,. REDEVELOPlYIENT AGENCY OF THE CITY OF CHULA VISTA Maturity Date September 1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Principal Amount $15,500,000* 2000 TAX ALLOCATION BONDS (MERGED REDEVELOPMENT PROJECT) MATURITY SCHEDULE Interest Maturity Date ~ Yield September 1 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Principal ~ (plus Accrued Interest from October 15, 2000) · Preliminary, subject to change. II -r Interest Rate Yield REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA CHULA VISTA, CALIFORNIA AGENCY GOVERNING BOARD AND CITY COUNCIL Shirley G. Honon, Mayor and Chair Patty Davis, Counalmember John S. Moot, Councilmember Stephen C. Padilla, Councilmember Mary Salas, Counalmember CITY AND AGENCY STAFF David D. Rowlands, Jr., City Manager Sid Morris, Assisram City Manager George Krempl, Assisram City Manager David Palmer, Deputy City Manager Robert Powell, Deputy City ManagerlDirector of Finance Chris Salomone, Director of Community Development Lyle Haynes, Assistam Director of Community Development Susan Bigelow, City Clerk John Kaheny, City Attorney PROFESSIONAL SERVICES Bond Counsel and Disclosure Counsel Stradling Y occa Carlson & Rauth, a Professional Corporation Newport Beach, California Fmancing Consultant Rod Gunn Associates, Inc. Seal Beach, California Trustee U.S. Bank Trust National Association Los Angeles, California FOR ADDITIONAL INFORMATION Robert Powell, Director of Finance, City of Chula Vista, California (619) 691-5051 Rod Gunn Associates, Inc. (562) 598-7677 Hi , T ABLE OF CONTENTS INTRODUCTORY STATEMENT.................... 1 The Issuer ................................................. I Security and Sources ofRepaymem................... 1 Purpose .................................................... 2 The Bonds................................................. 2 Legal Matters ............................................. 3 Professional Services.....................................3 Offering of the Bonds ...................................4 Information Concerning this Official Statement..... 4 SELECTED ESSENTIAL FACTS .................... 6 THE BONDS............................................... 7 General Provisions....................................... 7 Estimated Sources and Uses of Funds ...............10 Redemption ..............................................10 SOURCES OF PAYMENT FOR TIlE BONDS...13 Pledge of Tax Revenues ...............................13 Reserve Account ........................................13 Municipal Bond Insurance.............................14 BONDOWNERS' RISKS _...................._-_......15 Factors Which May Affect Tax Revenues........ ..15 Loss of Tax Exemption ................................17 Secondary Market..... ............... .................. .18 Projected Tax Revenues Assumptions and Bond Retirement .............................................18 THE AGENCY ....................................:......21 Gove=ent Organization .............................21 Agency Powers ..........................................21 Redevelopment Plan....... .............................22 P!im Limitations ......... ....... .........................22 Capital Projects........................................ ..23 Low and Moderate Income Housing .................23 THE MERGED REDEVELOPMENT PROJECT. .... ... ..... ...... .................... ...... ..25 Description of the Town Centre IT Project Area ...26 Description of the Otay Valley Road Project Area.................................................... .26 Description of the Southwest Project Area......... .27 Assessed Valuations ....................................27 Major Taxpayers ........................................29 Assessment Appeals ....................................30 ~ , FINANCIAL INFORMA nON ...................... 31 Agency Budgetary Process and Administrdtion ... 31 Puhlic Employee Salaries and Benetits ............. 31 Agency Accounting Records and Financial Statements... .............................. ............ 31 Tax Increment Revenues .............................. 32 Tax Sharing Agreements .............................. 41 DEBT STRUCTIJRE......_.............._............. 43 Outstanding Indebtedness of the Merged Project Area .................................................... 43 Scheduled Debt Service on the Bonds............... 45 Additional Agency Indebtedness .....................46 SUMMARY OF TIlE INDENTURE................ 47 Establishment of Funds................................ 47 Invesonent of Funds ........... ........................48 Other CovenantS of the Agency...................... 49 Amendment oflndenmre.............................. 50 Events of Default and Remedies..................... 50 Defeasance of Bonds........................... ........ 52 LEGAL MATTERS .................................... 53 Enforceability of Remedies ................... ........53 Approval of Legal Proceedings ...................... 53 Tax Matters ............................................. 53 Absence of Litigation.................................. 54 CONCLUDING INFORMATION................... 55 Ratings on the Bonds ..................................55 The Financing COnsultant............................. 55 Additional Information ................................ 55 References.................... ............... ............55 Execution ................................................56 DEFINITIONS OF CERTAIN TERMS...........A-1 CITY OF CHULA VISTA INFORMATION STATEMENT ........................................B-l AGENCY AUDITED FINANCIAL STATEMENTS ............ .._........ ......... ....... C-1 FORM OF CONTINUING DISCLOSURE CERTIFlCA TE ............. .................... .....0-1 FORM OF BOND COUNSEL OPINION........_E-1 SPECIMEN INSURANCE POLICy............... F-1 iv OFFICIAL STATEMENT REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA $14,000,000* 2000 TAX ALLOCATION BONDS (MERGED REDEVELOPMENT PROJECT) This Official Statement which includes the cover page and appendices (the "Official Statement") is provided to furnish certain infonnation concerning the sale of the Redeyelopment Agency of the City of Chula Vista (the "Agency") 2000 Tax Allocation Bonds (Merged Redeyelopment Project) (the "Bonds"), in the aggregate principal amount of $14,000,000.. INTRODUCTORY STATEMENT 171is InrroduCtory Statemenr conrains only a brief description of this issue and does not purpon to be complete. 171e Inrroductory Statemenr is subject in all respects to more complete injormarion in the entire Offidal Starement and the offering of rhe Bonds to potential investors is made only by means of the entire Official Statement and the documents sU/runanzed herein. Potenrial investors must read the entire Official Statemenr to obtain injormarion essential to the making of an injonned investmel11 decision (see "BONDOWNERS' RISKS" herein). The Issuer The Agency. The Redevelopment Agency of the City of Chula Vista (the" Agency") is a public body, corporate and politic, existing under and by virtUe of the Community Redevelopment Law of the State of California, constituting Pan I of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State (the "Redevelopment Law"). The Agency was activated by the City Council of t!1e City of Chula Vista (the "City Council") in 1972. The City Council, at the same time, declared itself to be the members of the Agency and appointed the City Manager to be the Agency' 5 Executive Director (see "THE AGENCY" herein). The City. The City of Chula Vista (the "City") is located on San Diego Bay in Southern California, 8 miles south of San Diego and 7 miles nonh 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 "APPENDIX B - CITY OF CHULA VISTA INFORMATION STATEMENT" herein). Security and Sources of Repayment The Bonds. The Bonds are issued and secured under an Indenture of Trust, dated as of October I, 2000 (the "Indenture"), by and between the Agency and U.S. Bank Trust National Association, Los Angeles, California, as Trustee (the "Trustee") (see "SUMMARY OF THE INDENTURE" herein). Pursuant to the Indenture, the Agency has pledged to the repayment of the Bonds (and has secured by a lien on) Tax Reyenues of the Agency's Merged Redeyelopment Project, as defined herein. Tax Reyenues of the Merged Redevelopment Project are, collectively, tax increment revenues allocated to the Agency pursuant to Section 33670 of the Redeyelopment Law ("Tax Increment Revenues") of the Agency's Town Centre No. II Project Area, excluding (I) amounts required to be deposited in the Agency's Low and Moderate Income Housing Fund and (ii) amounts required to be paid under the Tax · Preliminary, subjecllO change. I ., Sharing Agreement. Tax Increment Revenues of the Agency's Olay Valley Road Project Area excluding amounts required to be deposited in the Agency's Low and Moderate Income Housing Fund and Tax Increment Revenues of the Agency's Southwest Project Area excluding (i) amounts required to be deposited in the Agency's Low and Moderate Income Housing Fund and (ii) amounts required to be paid under the Tax Sharing Agreements (see "THE AGENCY - Low :uljj."Moderate Income Housing". "FINANCIAL INFORMATION - Ta... Increment Revenues - Tax Sharing Agreements" and "BONDOWNERS' RISKS" herein). The Merged Redevelopment Project. The Merged Redevelopment Project was created on August , 2000 pursuant to an amendment to the redevelopment plans for three of the Agency's four existing redevelopment projects. the Town Centre No. II Project Area. the Olay Valley Road Project Area and the Southwest Project Area. The Redevelopment Plan for the Town Centre No. II Project Area ("Town Centre II Project Area") was adopted in 1978. The Town Centre II Project Area consiSts of 212 acres of mixed commercial and municipal uses. The Redevelopment Plan for Oray Valley Road Project Area (the "Otay Valley Road Project Area") was adopted in 1983. The Oray Valley Road Project Area consists of 770 acres of primarily industrial uses. The Redevelopment Plan for the Southwest Project Area ("Southwest Project Area") was adopted in 1990. The Southwest Project Area consists of 1,100 acres of mixed residential, commercial and industrial uses (see "THE MERGED REDEVELOPMENT PROJECT" herein). The Bonds are limited obligations of the Agency. The Bonds do not constitute a debt or liability of the City, the County of San Diego, the State of California or of any political subdivision thereof, other than the Agency. The Agency shall only be obligated to pay the priDcipal of the Bonds, or the interest thereon, from the funds described herein, and neither the faith and .credit nor the taxing power of the City, the County of San Diego, the State of California or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Agency has no ad valorem taxing power. Purpose The' Bonds are being issued to provide funds to a reserve account, to pay the expenses of the Agency in connection with the issuance of the Bonds and to provide funds for the redevelopment actiyities of the Agency (see "THE BONDS - Estimated Sources and Uses of Funds" herein). The Bonds Redemption. The Bonds maturing September 1, and September 1, are subject to mandatory redemption, without premium, prior to their maturity date, in pan by lot on September 1 in each year corrunencing September I, with respect to the Bonds maturing September 1. and corrunencing; September 1, _ with respect to the Bonds maturing September 1, _, from Sinking Account payments under the Indenture (see "THE BONDS - Redemption - Mandatory Sinking Account Redemption" herein). The Bonds are also subject to optional redemption prior to maturity, in whole or in pan, in a manner determined by the Agency, on September 1, 2003, and on any Interest Payment Date thereafter at a redemption price equal to the principal amount thereof, plus accrued interest to the date of redemption. plus a premium, as described herein (see "THE BONDS - Redemption - Optional Redemption" herein). Denominations. The Bonds will be issued in the minimum denomination of $5,000 each or any integral multiple thereof (see "THE BONDS - General Provisions" herein). 2 -r Registration, Transfer and Exchange. The Bonds will be issued in fully registered form without coupons. Any Bond may, in accordance with its terms, be transferred or exchanged, pursuant to the provisions of the Indenture (see "THE BONDS - General Provisions - Transfer or Exchange of Bonds" herein). When delivered, the Bonds will be registered in the name of The Depository TruSt Company, New York, New York ("DTC"), or its nominee. DTe will act as securities depOS!I9JY for the Bonds. Individual purchases of Bonds will be made in book-entry form only. Purchasers anile Bonds will nor receive certiticates representing their Bonds purchased (see "THE BONDS - General Provisions - Book- Entry Only System" herein). Payment. Principal of the Bonds and any premium upon redemption will be payable in each of the years and in the amounts set forth on the inside cover page hereof upon surrender at the corporate trust oftice of the Trustee in Sr. Paul, Minnesota. Interest on the Bonds will be paid by check of the Trustee mailed by first class mail to the person entitled thereto (except as otherwise described herein for interest paid to an account in the United States of America by wire aansfer as requested in writing no later than the applicable Record Date by an owner of $1,000,000 or more in aggregate principal amount of Bonds) (see "THE BONDS - General Provisions" herein). Initially, interest on and principal and premium, if any, of the Bonds will be payable when due by wire of the Trustee to DTC which will in turn remit such interest, principal and premium, if any, to DTC Participants (as defined herein), which will in turn remit such interest, principal and premium, if any, to Beneficial Owners (as defined herein) of the Bonds (see "THE BONDS - Genera! Provisions: Book-Entry Only System" herein). Notice. Notice of any redemption will be mailed by first class mail by the Trustee at least tiJirty (30) but no more than sixty (60) days prior to the date fixed for redemption to the registered owners of any Bonds designated for redemption and to the Securities Depositories and Information Services provided in the Indenture. Neither failure to receiye such notice nor any defect in the notice so mailed wilf affect the sufficiency of the proceedings for redemption of such Bonds or the cessation of accrual of interest on the redemption date (see "THE BONDS - Redemption - Notice of Redemption" herein). Legal Matters A1l1egal proceedings in connection with the issuance of the Bonds are subject to the approving opinion of Stradling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Such opinion, is described more fully under the heading "LEGAL MATTERS" herein. Certain legal matters will be passed on for the Agency by the City Attorney and by Saadling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California as Disclosure Counsel. Tax Exemption. In the opinion of Bond Counsel, subject, however, to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes, such interest is nor an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although, for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See "LEGAL MATTERS - Tax Matters" herein. Professional Services U.S. Bank Trust National Association, Los Angeles, California, will serve as trustee (the "Trustee") under the Indenture. The Trustee will act on behalf of the Bondowners for the purpose of receiving all moneys required to be paid to the Trustee, to allocate, use and apply the same, to hold, receive and disburse the Tax Revenues and other funds held under the Indenture, and otherwise to hold all the oftices and perform all the functions and duties provided in the Indenture to be held and performed by the Trustee. 3 -r Rod Gunn Associates, Inc.. Seal Beach. California, Financing Consultant, advised the Agency as to the financial structure and certain other financial matters relating to the Bonds. Fees payable to Bond Counsel, Disclosure Counsel and the Financing Consultant are contingent upon the sale and delivery of the Bonds. The Agency's financial statements for the tiscal year ended"iiine 30, 1999. attached hereto as "APPENDIX C" have been audited by Calderon, Jaham & Osborn, Certitied Public Accountants and Consultants, San Diego, California. Offering of the Bonds Authority for Issuance. The Bonds are to be issued and secured pursuant to the Indenture, as authorized by Resolution No. _ of the Agency adopted on August _, 2000. The Bonds are also issued in accordance with the laws of the State of California (the "State"), and particularly the Community Redevelopment Law of the State, constituting Part I of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State (the "Redevelopment Law"). Offering and Delivery of the Bonds_ The Bonds are offered, when, as and if issued, subject to the approval as to their legality by Stradling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. It is anticipated that the Bonds will be available for delivery in New York, New York, on or about October 24,2000. No dealer, broker, salesperson or other person has been authorized by the Agency or the Financing Consultant to give any infonnation or to make any representations in connection with the offer or sale of the Bonds described herein, other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell nor the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for 'SUch person to make such offer, solicitation or sale or to any person to whom it is unlawful to make such offer, solicitation or sale. In connection with the offering of the Bonds, 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 dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page hereof and said public offering prices may be changed from time to time by the Underwriter_ Information Concerning this Official Statement This Official Statement speaks only as of its date. The information set forth herein has been obtained by Rod Gunn Associates, Inc. from the Agency, the City and other sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness, nor has it been independently verified and is not to be construed as a representation by the Financing Consultant, the Agency or the City. Statements contained in this Ofticial Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended as such and are not to be construed as representations of fact. 4 or Preliminary Official Statement Deemed Final. The information set forth herein is in a form deemed final. as of its date, by the Agency and the City for the purpose of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (except for the omission of certain information permirred to be omined under the Rule). The information herein is subject to revision, amendment and completion in a Final Official Statement. The information and expressions of opinion herein are subject~ge without notice and the delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the information or opinions set forth herein or in the affdirs of the Agency since the date hereof. Continuing Disclosure. The Agency will covenant to provide annually certain financial information and operating data relating to the Merged Redevelopment Project by not later than March 31 each year commencing March 31, 2001 and to provide the audited Financial Statements of the Agency for the fiscal year ending June 30, 2000 and for each subsequent fiscal year when they are available (together, the" Annual Report"), and to proYide notices of the occurrence of certain other enumerated events. The Annual Report will be fIled by the Trustee on behalf of the Agency with each Nationally Recognized Municipal Securities Information Repository certified by the Securities and Exchange Commission (the "Repositories") and a State repository, if any. The notices of material events ..ill be timely filed by the Agency with the Municipal Securities Rulemaking Board, the Repositories and a State repository, if any. The specific nature of the information to be contained in the Annual Report or the notices of material events and certain other terms of the continuing disclosure obligation are summarized in "APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICA TEn. The Agency has not previously undertaken, nor has preYiously failed to comply with any under.aking, to provide any required continuing disclosure. A vailability of Legal Documents. The summaries and references contained herein with respect to the Indenture, 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. Definitions of certain terms used herein are set forth in "APPENDIX A" hereto. Copies of the documents described herein are available for inspection during the period of initial offering of the Bonds at the offices of the Financing Consultant, Rod Gunn Associates, Inc., 3010 Old Ranch Parkway, Suite 330, Seal Beach, California 90740, telephone (562) 598-7677. Copies of these documents may be obtained after delivery of the Bonds from the Agency at 276 Fourth Avenue, Chula Vista, California 91910, telephone (619) 691-5051. 5 or SELECTED ESSENTIAL FACTS The following summary does nor purpon to be complete. Reference is hereby made to the complete Official Statement in this regard. THE PROJECT AREA Size of the Merged Redevelopment Project: Town Centre II Otay Valley Road Southwest 212 acres 770 acres 1.1 00 acres 2,082 acres Ten Largest Secured Property Taxpayers, Expressed as a Percentage of 1999/00 Secured Assessed Valuation: THE BONDS Maximum Annual Debt Service on the Bonds: $14,000,000* $ 1,831,500 $ 1,215,000* Principal Amount: 1999/00 Projected Tax Revenues: Ratio of 1999/00 Tax Revenues to Maximum Annual Debt Service on the Bonds: 150.7%* Parity Debt Coverage Ratio Requirement: 145% · Preliminary, subjecllo change. 6 ; THE BONDS General Provisions Repayment of the Bonds. Interest is payable on the Bonds at the rates per annum set forth on the inside cover page hereof. Interest with respect to the Bonds will be computed on the basis of a year consisting of 360 days and twelve 30-day months. Each Bond will be dated as of October 15, 2000, and interest on the Bonds will be payable commencing March 1, 2001 and thereafter from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event interest thereon will be payable from such Interest Payment Date; (b) it is authenticated on or before February 15, 2001, in which event interest thereon will be payable from October 15, 2000; or (c) interest on any Bond is in default as of the date of authentication thereof, in which eyent interest thereon will be payable from the date to which interest has preyiously been paid in full. Interest will be paid 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 on any Bond which is not puncrually paid or duly provided for on any Interest Payment Date shall be payable to the person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to such Owner not less than ten (10) days prior to such special record date. Interest on the Bonds shall be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respectiYe addresses shown on the Registration Books as of the close of business on the preceding Record Date; provided, however, that at the wrinen request of the Owner of Bonds in an aggregate principal amount of at least $1.000.000, which wrinen request is on file with the Trustee as of any Record Date, interest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account within the United States of America as shall be specified in such wrinen request. The principal of and premium (if any) on the Bonds shall be payable in lawful money of the United States of America by check of the Trustee upon presentation and surrender thereof at the Office of the Trustee in St. Paul, Minnesota. Book-Entry Only System. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede.& Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Bond will be issued for each maruriry of the Bonds, each in the aggregate principal amount of such maruriry, and will be deposited with DTC. DTC 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 17 A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-enrry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities 7 or Dealers, Inc. Access to the DTC system is also available to others such as seCUrities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Participants are on tile with the Securities and Exchange Commission. Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneticial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive wrinen contirmation from DTC of their purchase, but Beneticial Owners are expected to receive wrinen confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the BODds, except in the event that use of the book-enrry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC's parmership nominee, Cede & Co. or such other name as requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accountS such Bonds are credited, which mayor may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than ail of the Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to Bonds. 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 Bonds are credited on the record date (identified in a listing anached to the Omnibus Proxy). Principal, redemption price and interest payments on the Bonds will be made to Cede &Co. or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from 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 (nor its nominee), Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest 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 is the responsibility of DTC, and disbursement of such payments to Beneficial Owners is the responsibility of Direct and Indirect Participants. 8 -r DTC may discontinue providing its services as securities depositOry with respect to the Bonds at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered. The Agency may decide to discontinue use of the system of book-entry transfers through DTe (or a successor securities depositOry). In that event, the Bonds will be printed and delivered. The infonnation in this section concerning DTC and DTC's book-enrry system has been obtained from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the accuracy thereof. Transfer or Exchange of Bonds. Any Bond may, in accordance with its terms, be transferred or exchanged, pursuant to the provisions of the Indenture, upon surrender of such Bond for cancellation at the principal corporate oust office of the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the TruStee shall authenticate and deliver a new Bond or Bonds of like maturity and aggregate principal amount. The Trustee will collect any tax or other governmental charge required to be paid with respect to such transfer or exchange. The TruStee may refuse to transfer or exchange any Bonds or portions thereof during the period established by the Trustee for selection of Bonds for redemption, or any Bonds selected for redemption. 9 --r Estimated Sources and Uses of Funds Under the provisions of the Indenture, the Trustee will receive the proceeds from the sale of the Bonds and will apply them as follows: Sources of Funds Principal Amount of Bonds Underwriter's Discount Accrued Interest Total Available Funds Uses of Funds Interest Account Redevelopment Fund Reserve Account (I) Costs of Issuance Fund (Z) Total Use of Funds (1) An amount equal to the Reserve Requirement (see "SOURCES OF PAYMEl'IT FOR THE BONDS - Reserve ACCOWlt" herein). . (0) Expenses include fees of Bond Counsel, the Financing Consultant, the Disclosure Coun.""l, Trustee. bond insurance premiums, coStS of printing the Official Statemem, rating agency fees and other COSts of issuance of the Bonds. Deposit to the Redevelopment Fund. Proceeds deposited to the Redevelopment Fund will be used to fund certain redevelopment activities of the Agency. These activities are expected to include [to be completed] . Redemption Optional Redemption. The Bonds maturing on or before September 1, 2003 are not subject to optional redemption prior to their respective maturity dates. The Bonds maturing on or after September 1, 2004 are subject to redemption prior to maturity at the option of the Agency as a whole or in part among maturities designated by the Agency and by lot within a maturity, from any source of available funds, on any date on or after September 1, 2003, at the following respective redemption prices (expressed as a percentage of the principal amount of Bonds to be redeemed) together with accrued interest thereon to the date of redemption: Redemption Periods September 1, 2003 through August 31, 2006 September I, 2007 through August 31, 2010 September 1, 2010 through August 31,2011 September 1, 2011 through August 31,2012 September 1, 2012 and thereafter Redemption Prices 103.0% 102.5% 102.0% 101.0% 100.0% 10 'T Mandatory Sinking Account Redemption. The Bonds maturing September 1, _ (the "Term Bonds") are subject to mandatory redemption, in pan by lot, on September 1 in each year commencing September 1, _ with respect to the Term Bonds maturing September 1, _, and commencing' September 1, with respect to the Term Bonds maturing September 1, , from mandatory Sinking Account payments at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest thereon to the date of redemption without premium, in the aggregate principal amounts and on September 1 in the years as set forth in the following schedules or in lieu of redemption thereof, the Term Bonds may be purchased by the Agency and tendered to the Trustee pursuant to the provisions of the Indenture; provided, however, that if some but not all of the Term Bonds have been redeemed pursuant to the optional redemption provisions described herein, the total amount of all future Sinking Account payments anributable to such Term Bonds will be reduced by the aggregate principal amount of such Term Bonds so redeemed, to be allocated among such Sinking Account payments in integral multiples of $5,000 as determined by the Agency (wrinen notice of which determination shall be given by the Agency to the Trustee). SCHEDULE OF MANDA TORY SINKING ACCOUNT REDEMPTIONS' TERM BONDS MATURING SEPTEMBER I, September 1 Principal Year Amount (maturity) Notice of Redemption_ When redemption is authorized or required, the Trustee on behalf and at the expense of the Agency shall mail (by first class mail, postage prepaid) notice of any redemption at least thirty (30) but not more than sixty (60) days prior to the redemption date, to (i) the Owners of any Bonds designated for redemption at their respectiye addresses appearing on the Registration Books, and (ii) the Securities Deposirories and ro one or more Information Services designated in a Request of the Agency delivered to the Trustee; provided, however, that such mailing shall not be a condition precedent to such redemption and neither failure to receive any such nOtice nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Notice of redemption of the Bonds (other than notice of mandatory Sinking Account redemption and other than notice that refers to Bonds which are the subject of an advance refunding) shall be given only if sufficient funds have been deposited with the Trustee to pay the redemption price of the Bonds to be redeemed. Effect of Redemption. From and after the date fixed for redemption, if funds ayailable for the payment of the redemption price of and interest on the Bonds so called for redemption shall haye been duly deposited with the Trustee, such Bonds so called shall cease to be entitled to any benefit under the Indenture other than the right to receiye payment of the redemption price and accrued interest to the redemption date, and no interest shall accrue thereon from and after the redemption date specitied in such notice. 11 or Partial Redemption. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Agency will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Agency, a new Bond or Bonds of the same interest rate and maturity, of authorized denominations in an aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. Selection of Bonds for Redemption. Wheneyer provision is made in the Indenture for the redemption of less than all of the Bonds, the Trustee shall select Bonds for redemption by lot in any manner which the Trustee deems appropriate and fair. 12 or SOURCES OF PAYMENT FOR THE BONDS Pledge of Tax Revenues The Tax Revenues are pledged to the payment of principal of and interest on the Bonds pursuant to the Indenture until the Bonds have been paid, or until moneys have been set aside irrevocably for that purpose. The Trustee will covenant to exercise such rights and remedies as may be necessary to enforce the payment of the Tax Revenues when due under the Indenture and otherwise to protect the interests of the Bondowners in the eyent of default by the Agency. The Bonds are limited obligations of the Agency. The Bonds do not constitute a debt or liability of the City of Chula Vista, the County of San Diego, the State of California or of any political subdivision thereof, other than the Agency. The Agency shaII only be obligated to pay the principal of the Bonds, or the interest thereon, from the funds described herein, and neither the faith and credit nor the taxing power of the City of Chula VISta, the County of San Diego, the State of California or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Agency has no ad valorem taxing power. The Agency has irrevocably pledged a lien on the Tax Revenues of the Merged Redevelopment Project, as defined herein, to the repayment of the Bonds. Such Tax Revenues consist of, collectively, Tax Increment Revenues allocated to the Agency's Town Centre II Project Area excluding (i) amounts required to be deposited in the Agency's Low and Moderate Income Housing Fund and (ii) amounts required to be paid under a Tax Sharing Agreement, Tax Increment Revenues allocated to the Agency's Dtay Valley Road Project Area, excluding that portion of such Tax Increment Revenues required to be deposited in the Agency's Low and Moderate Income Housing Fund and Tax Increment Revenues allocated to the Agency's Southwest Project Area, excluding (i) amounts required to be paid under the Tax Sharing Agreements and (ii) amounts required to be deposited in the Agency's Low and Moderate Income Housing Fund (see~ "THE AGENCY - Low and Moderate Income Housing", "FINANCIAL INFORMATION - Tax Increment Revenues - Tax Sharing Agreements" and "BONDOWNERS' RISKS" herein). Reserve Account Reserve Requirement. A Reserve Account has been established under the Indenture to be held by the Trustee to further secure the timely payment of principal and interest on the Bonds. The amount required to be maintained in the Reserve Account, $1,215,000*, is an amount equal to the lesser of 10% of the principal amount of the Bonds, Maximum Annual Debt Service or 125% of average annual Debt Service (the "Reserve Requirement"). Subject to certain rights of the Trustee, in the event that the amount on deposit with the Trustee to pay principal and interest due on the Bonds is less than the full amount required for such purpose on the date due, the Trustee will withdraw from the Reserve Account, the difference between the amount required to be on deposit and the amount available on such date. The Indenture provides that in lieu of a cash deposit, the Agency may satisfy all or a portion of the Reserve Requirement by means of a Qualified Reserve Account Credit Instrument, which consists of a qualifying letter of credit, surety bond, insurance policy or similar financial undertaking (see "APPENDIX A - DEFINITIONS OF CERTAIN TERMS" herein). . · Preliminary. subject to change. 13 --r Municipal Bond Insurance Other than with respect to information concerning Financial Security Assurance Inc. ("Financial Security") contained under the caption "Municipal Bond Insurance" and "APPENDIX F" specimen "Municipal Bond Insurance Policy" herein, none of the information in this Ofticial Statement has been supplied or verified by Financial Security and Financial Security makes no representation or warranty, express or implied, as to (i) the accuracy or completeness of such information; (ii) the validity of the Bonds; or (iii) the tax exempt StatuS of the interest on the Bonds. Bond Insurance Policy Concurrendy with the issuance of the Bonds, Financial Security Assurance Inc. ("Financial Security") will issue its Municipal Bond Insurance Policy for the Bonds (the "Policy"). The Policy guarantees the scheduled payment of principal of and interest on the Bonds when due as set forth in the form of the Policy included as "APPENDIX F" to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. Financial Security Assurance Inc. Financial Security is a New York domiciled insurance company and a wholly owned subsidiary of Financial Security Assurance Holdings Ltd. ("Holdings"). Holdings is an indirect subsidiary of Dexia, S.A., a publicly held Belgian corporation. Dexia, S.A., through its bank subsidiaries,- is primarily engaged in the business of public finance in France, Belgium and other European countries. No shareholder of Holdings or Financial Security is liable for the obligations of Financial Security. At March 31, 2000, Financial Security's total policyholders' surplus and contingency reserves were approximately $1,340,272,000 and its total unearned premium reserve was approximately $663,574,000 in accordance with statutory accounting principles. At March 31, 2000, Financial Security's total shareholder's equity was approximately $1,360,722,000 and its total net unearned premium reserve was approximately $547,872,000 in accordance with generally accepted accounting principles. The financial statements included as exhibits to the annual and quarterly reports filed by Holdings with the Securities and Exchange Commission are hereby incorporated herein by reference. Also incorporated herein by reference are any such financial statements so f1!ed from the date of this Official Statement until the termination of the offering of the Bonds. Copies of materials incorporated by reference will be provided upon request to Financial Security Assurance Inc.: 350 Park Avenue, New York, New York 10022, Attention: Communications Department (telephone (212) 826-0100). The Policy does not protect investors against changes in market value of the Bonds, which market value may be impaired as a result of changes in prevailing interest rates, changes in applicable ratings or other causes. Financial Security makes no representation regarding the Bonds or the adyisability of investing in the Bonds. Financial Security makes no representation regarding the Ofticial Statement, nor has it participated in the preparation thereof, except that Financial Security has provided to the Issuer the information presented under this caption for inclusion in the Ofticial Statement. 14 .,. BONDOWNERS' RISKS The purchase of the Bonds involves investmem risk. If a n'skfactor materiakes to a sufficient degree, it could delay or prevent paymem of principal of and/or interest on the Bonds. Such n'sk factors include, bw are not limited to, the following matters and should be considered, along with other infonnation in this Official Statement, by potemial investors. Factors Which May Affect Tax Revenues The ability of the Agency to pay principal and interest on the Bonds depends on the timely receipt of Tax Revenues as projected herein (see "Projected Tax Revenues Assumptions and Bond Retirement" below). Projections of Tax Revenues are based on the underlying assumptions relating to Tax Increment Revenues of each of the constituent project areas. A number of factors which may affect Tax Increment Revenues, and consequently, Tax Revenues, are outlined below. Reductions in Assessed Value. The projections of Tax Revenues contained in this Official Statement are based on current assessed valuations within each of the constituent project areas, a tax rate equal to $1.00 per $100 of assessed value applied to the taxable property in the constituent project areas and certain projected increases in property values due to inflation allowed under Anicle XIIIA of the California Constitution (see "FINANCIAL INFORMA TlON - Tax Increment Revenues" and "BONDOWNERS' RISKS - Projected Tax Revenues Assumptions and Bond Retirement" herein). The Agency believes that the projections of Tax Revenues and the assumptions upon which the projections are based are reasonable. However, any future decrease in the assessed valuation (or any increase at a rate less than assumed), any general decline in the economic stability of the area, a relocation Out of a constituent project area by one or more major property owners, successful appeals by property owners for a reduction in a property's assessed Yalue, or other events that permit reassessment of property at lower values, either on a case by case basis or as a blanket reduction due to a general decline in propeny values and any property tax refunds which may result therefrom (see "FINANCIAL INFORMATION - Tax Increment Revenues - Proposition 8 Adjustments" herein), the destruction of propeny caused by natural disasters or any delinquencies in the payment of property taxes will reduce the Tax Increment Revenues allocated to, or receiyed by, the Agency and correspondingly may have an adyerse impact on the Tax Revenues and ability of the Agency to pay principal and interest on the Bonds. See "Projected Tax Revenues Assumptions and Bond Retirement" below regarding the Agency's assumptions pertaining to such projections. Article XIIIA. Pursuant to the California voter initiative process, on June 6, 1978, California voters approved Proposition 13 which added Anicle XIIIA to the California Constitution. This amendment imposed cenain limitations on taxes that may be levied against real property to I % of the full cash value of the propeny, adjusted annually for inflation at a rate not exceeding 2 % annually. Full cash value is determined as of the 1975/76 assessment year, upon change in ownership (acquisition) or when newly constructed (see "FINANCIAL INFORMATION - Tax Increment Revenues" herein for a more complete discussion of Article XIIIA). Anic1e XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining propeny Yalues 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. Reduction in Inflationary Rate. The annual intlationary adjusnnent, while limited to 2 %. is determined annually and may not exceed the percentage change in the California Consumer Price Index (CCPI). Since Anicle XIIIA was approyed, the annual adjusnnent for intlation has fallen below the 2 % limitation three times: for 1983/84, 1 %; for 1995/96, 1.19%; and for 1996/97, 1.11 %. The Agency has projected Tax Increment Revenues based on a 2 % intlationary increase in secured assessed values. Should the assessed yalue of secured property not increase by at least 2% annually, the Agency's 15 ., receipt of projected Tax Revenues may be less than shown in this Ofticial Statement (see "Projected Tax Revenues Assumptions and Bond Retirement" herein). 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 (see "FINANCIAL INFORMATION - Tax Increment Revenues - Proposition 8 Adjustments" herein). The Agency's ability to generate sufficient Tax Revenues to pay debt service on the Bonds will be dependent on the economic strength of constituent project areas. Since Proposition 8 adjusonents are closely tied to the economics of an area, and primarily, real estate development, factors which adyersely affect real estate development may adversely affect Tax Revenues. Such factors include general economic conditions, fluctuations in the real estate market, fluctuations in interest rates, unexpected increases in development COSts and other factors. If further Proposition 8 adjustments are made by the County Assessor in future years because of declines in the fair market value of propenies caused by the lack of real estate development in the area generally, Tax Revenues may be adversely affected. Assessment Appeals. Assessment appeals may be filed by property owners seeking a reduction in the assessed value of their property. After the propeny owner files an appeal, the County's Appeals Board will hear the appeal and make a determination as to whether or not there should be a reduction in assessed value for a panicular property and the amount of the reduction, if any. Several appeals are currently pending in the Project Areas (see "THE PROJECT AREAS - Assessment Appeals" herein). To the extent that any reductions are made to the assessed valuation of such propenies with appeals currently pending, or appeals subsequently f11ed, Tax Increment Revenues, and correspondingly, Tax Revenues will be reduced. Such reductions may have an adverse affect on the Agency's ability to pay debt service on the Bonds. Earthquake, Fire and Other Risks. Natural and man-made disasterS and hazards, including, without limitation, earthquakes, fires, floods, mudslides and other calamities, may haye the effect of reducing Tax Increment Revenues through reduction of aggregate assessed valuations within the boundaries of the Merged Redevelopment Project. According to the Public Safety Element of the City's General Plan, the City is located in a seismically active region and could be impacted by a major earthquake originating from the numerous faults in the area. The City is traversed by two potentially active faults, the Sweetwater Fault and La Nacion Fault and three inferred faults, the Otay Riyer Fault, the Telegraph Canyon Fault and the San Diego Bay- Tijuana Fault. Seismic hazards encompass potential surface rupture, ground shaking and landslides. The occurrence of any natural or man-made disaster or hazard may significantly reduce Tax Increment Revenues received by the Agency and may adversely impact the Agency's ability to pay debt service on the Bonds. Hazardous Substances. An additional environmental condition that may result in the reduction in the assessed value of parcels would be the discovery of a hazardous substance that would limit the beneficial use of a property within a constituent project area. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner (or operator) may be required to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the propeny within a 16 or constiruent project area be affected by a hazardous substance would be to reduce the marketability and value of the property, perhaps by an amount in excess of the costS of remedying the condition. Certain Bankruptcy Risks. The enforceability of the rights and remedies of the Owners and the obligations of the Agency may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equitable 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 Federal Constirution; and the reasonable and necessary exercise, in certain exceptional siruations, of the police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of servicing a signiticant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the Owners 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. Voter Initiatives - State Constitutional Amendment. California's voter initiative process allows measures which qualify for the ballot to be approved or disapproyed by voters in a State of California statewide election. Article XIIIB. On October 6, 1979, California voters approved Proposition 4, or the Gann Initiative, which added Anicle XIIIB to the California Constirution. The principal thrust of Article XIIIB is to limit the annual appropriations of the State and any city, COUnty, school district, authority or any other political subdivision of the state. The amendment includes a requirement that if an entity'S revenues in any year exceed amounts permined to be spent, the excess will be rerurned to the taxpayer by revising the tax override rate over the subsequent two years. To the extent such tax rates are reyised, Tax Increment Revenues may be affected, since Tax Increment Revenues allocated to the Agency are a function of the combinations of tax rates levied by ~ertain taxing agencies having jurisdiction within the Project and assessments of property located within the Merged Redevelopment Project (see "FINANCIAL INFORMATION - Tax Increment ReveDues - Property Tax Rate" herein). Limited Obligations. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or proYision of additional sources of income to taxing agencies having the effect of reducing the property tax rate must necessarily reduce the amount of Tax Increment Revenues, and consequently, Tax Revenues that would otherwise be available to pay the principal of, interest on and premium, if any, on the Bonds. Future Initiatives. From time to time other initiatiye measures could be adopted, further affecting the Agency's Tax Ip.crement Reyenues. Loss of Tax Exemption As discussed under the heading "LEGAL MATTERS - Tax Matters" interest on the Bonds could cease to be excluded from gross income for purposes of federal income taxation, retroactive to the date the Bonds were issued, as a result of furure actS or omissions of the City. In addition, it is possible that furure changes in applicable federal tax laws could cause interest on the Bonds to be included in gross income for federal income taxation or could otherwise reduce the equiyalent taxable yield of such interest and thereby reduce the value of the Bonds. 17 -r Secondary Market There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a panicular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then preyailing circumstances. Such prices could be substantially different from the original purchase price. Projected Tax Revenues Assumptions and Bond Retirement Receipt of projected Tax Revenues in the amounts and at the times projected by the Agency depends on the realization of certain assumptions relating to the Tax Increment Revenues. The projections of Tax Increment Revenues and the corresponding Tax Reyenues shown on the following table were based on the assumptions shown below. Based upon the projected Tax Increment Revenues, the Agency expects sufficient Tax Revenues should be available to the Agency to pay principal of and interest on the Bonds. Although the Agency believes that the assumptions upon which the projected Tax Increment Revenues and Tax Revenues are based are reasonable, the Agency and the Financing Consultant provide no assurance that the projected Tax Increment Revenues and Tax Revenues will be achieved. To the extent that the assumptions are not actually realized, the Agency's ability to timely pay principal and intereSt on the Bonds may be adversely affected. (a) The 1999/00 secured roll was assumed to increase two percent (2%) annually for inflation in future years (see "FINANOAL INFORMATION - Tax Increment Revenues. Manner in Which Property Valuations and Assessments are Determined (Article XIllA)" herein). (b) The values of unsecured personal propeny, State assessed utility propeny and unitary revenues have been maintained throughout the projections at their 1999/00 levels (see "FINANCIAL INFORMATION - Tax Increment Revenues - Unsecured and Secured Property" and "Unitary Property" herein). (c) For the purposes of the projections, it was assumed that there would not be any value added to the 1999/00 tax rolls as a result of changes in propeny ownership. (d) For the purposes of the projections, it was assumed that the following value would be added to the 1999/00 tax rolls as a result of new consrruction activity: Constituent Project Area Town Centre II SouthweSt Assessed Value $3,250,000 $6,000,000 Tax Year 200 l/02 2000/01 Development Best Buy Electronics Office Building (e) A tax rate equal to $1.00 per $100 of assessed value applied to the taxable propeny in the constituent project areas was used to determine Tax Increment Revenues each year (see "FINANCIAL INFORMATION - Tax Increment Revenues. Property Tax Rate" herein). (f) Projected Tax Revenues are net of amounts due pursuant to the Tax Sharing Agreements (see "FINANCIAL INFORMATION - Tax Sharing Agreements" herein). (g) Projected Tax Revenues are net of amounts required to be Set aside for Low and Moderate Income Housing (see "THE AGENCY - Low and Moderate Income Housing" herein). (h) Projected Tax Increment Revenues do not retlect delinquencies (see "FINANCIAL INFORMATION - Tax Increment Revenues - Tax Collections" herein). 18 or (i) Projected Tax Increment Reyenues do not reflect any potential decreases resulting from pending assessment appeals or furore Proposition 8 adjusonents, if any (see "THE PRO.JECT AREA" and "FINANCIAL INFORMA nON - Tax Increment Revenues - Proposition 8 Adjustments" herein). However, a successful appeal by Allied Waste Systems in the Otay Valley Road Project Area granted in January, 2000 has been taken into account in Table No.2 (see "OTAY VALLEY ROAD PRO.JECT AREA - Assessment Appeals" herein). In addition, the anticipated propeny tax exemption for property owned by Scripps Health in the Town Centre II Project Area has been taken into account in Table No. I (see "TOWN CENTRE II PRO.JEeT AREA - Description of the Project Area" herein). 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E. =:s:s:s:s c.c.::::::: oc 0 ~ N'~";~': ~.~.!.=.~:=.~~ ------- g g g g g g s :=: :=: $: :=: s: :=: :=: :=: s s: :=: = = = 0 = = :: : :: :5 :5 :5 :: :5 :5 :5 :5 :: ~~~~~~~~~~~~~~~~~~~~~ ::::::::::::::::::::N ~;:i~~~~~~~= NMMMNNMNNNNN NM~~'C"'" C NNNMNN oc~a...;;a~~~ NNNNMNN:;" 8~g;~ NMM~ --r TIIE AGENCY Government Organization The Agency is a public body, corporate and politic, existing under and by virtUe of the Redevelopment Law. The Agency was activated in 1972, and is governed by a fiye-member board which consists of all members of the City Council. The Chairman and Vice Chairman are appointed to a one-year term by the Agency Board from among its members. The Agency's members and term expiration dates are as follows: AGENCY GOVERNING BOARD AND CITY COUNCIL Board Member Shirley G. Honon, Mayor and Chair Parry Davis, Councilmember John S. Moot, Councilmember Stephen C. Padilla, Councilmember Mary Salas, Councilmember Term Expires December 2002 December 2002 December 2000 December 2002 December 2004 The City performs certain general administrative functions for the Agency. The City Manager serves as the Agency's Executive Director and Secretary, and the Finance Director serves as Agency Treasurer. The COSts of such functions, as well as additional services performed by City scaff are allocated annually to the Agency. The Agency reimburses the City for such allocated costs out of available Tax Increment Revenues. Such reimbursement is subordinate to any outstanding loans, bonds and indebtedness of the Agency. Current scaff assigned to administer the Agency include: KEY ADMINISTRATIVE PERSONNEL David D. Rowlands, Jr. City Manager Sid Morris Assistant City Manger George Krempl Assistant City Manager David Palmer Deputy City Manager Roben Powell Deputy City Manager/Director of Finance Chris Salomone Director of Community Development Lyle Haynes Assistant Director of Community Deyelopment Susan Bigelow City Clerk John Kaheny. City Attorney Agency Powers All powers of the Agency are yested in its members. Pursuant to the Redevelopment Law, the Agency is a separate public body and exercises goyernmental functions, including planning and implementing the Merged Redevelopment Project. The Agency may exercise the right to issue or incur loans, adyances or other indebtedness for authorized purposes and to expend their proceeds, and the right to acquire, sell, rehabilitate, develop, administer or lease propeny. The Agency may demolish buildings, clear land and cause to be constructed certain improvements, including streets, sidewalks and utilities, and can further prepare for use as a building site any real propeny which it owns or administers. The Agency may, from any funds made ayailable to it for such purposes, and subject to certain conditions, pay for all or pan of the value of land and the cost of buildings, facilities or other improvements to be publicly owned and operated thereon. The Agency may not construct or develop buildings, with the exception of public buildings and housing, and must sell or lease cleared propeny which it acquires within a redevelopment project for redevelopment in conformity with a panicular redeyelopment plan, and may nmher specify a period within which such redevelopment mUSt begin and be completed. 21 '" Redevelopment Plan Under the Redevelopment Law the governing board is required to adopt, by ordinance, a redevelopment plan for each redevelopment project. A redevelopment agency may only undertake those activities within a redevelopment project specifically authorized in the adopted redevelopment plan. A redevelopment plan is a legal document, the content of which is largely prescribed in the Redevelopment Law rather than a "plan" in the customary sense of the word. The general objectives of the Agency's Redevelopment Plan are to encourage investment in the project areas by the private sector. The Redevelopment Plans provide for the acquisition of property, the demolition of buildings and improvements, the relocation of any displaced occupants, and the construction of streets, parking facilities, utilities and other public improyements. The Redevelopment Plans also allow the redeyelopment of land by private enterprise, the rehabilitation of structures, the rehabilitation or construction of low and moderate income housing, and participation by owners and the tenants of properties in the Project Areas. The City Council approyed and adopted the Redevelopment Plan for the Town Centre II Project Area on August 15, 1978. It was subsequently amended in May, 1987 to add financial provisions, on July 19, 1988 to add additional acreage, on November 8, 1994 to add limitations prescribed by Assembly Bill 1290 (" AB 1290") (see "Plan Limitations" below) and on August , 2000 to merge the Town Centre II Project Area with the Otay Valley Road Project Area and the Southwest Project Area. The City Council approved and adopted the Redevelopment Plan for the Otay Valley Road Project Area on December 20, 1983. It was subsequently amended on November 8, 1994 to add limitations prescribed by AB 1290 and on August _, 2000 to merge the Otay Valley Road Project Area with the Town Centre II Project Area and the Southwest Project Area. The City Council approved and adopted the Redevelopment Plan for the Southwest Project Area on November 27, 1990. It was subsequently amended on November 8, 1994 to add limitations prescribed by AB 1290 and on August _, 2000 to merge the Southwest Project Area with the Town Centre II Project Area and the Otay Valley Road Project Area. Plan Limitations The Redeyelopment Plans impose certain limitations on the amount of Tax Increment Revenues that the Agency may be allocated from each Project Area. The Redevelopment Plans also establish a date after which no loans, advances of indebtedness may be issued or incurred. In addition, AB 1290 was enacted by the State Legislature in 1994. Among other things, AB 1290 provides that a redevelopment agency may not pay indebtedness or receive property taxes pursuant to Section 33670 of the Redevelopment Law after 10 years from the termination of the effectiveness of a Redevelopment Plan (which is now limited to 40 years after the adoption of such Redevelopment Plan). Even though the Project Areas have been merged, the limitations established with respect to a constituent project area continue to apply to such Project Area. 22 -r The limitations imposed by the respective Redevelopment Plans are as follows: Town Centre II Otav Vallev Road Southwe$t Maximum Tax Increment Revenues $100 million $11 5 million $15 million annually Maximum Bonded Indebtedness $42.5 million $45 million $150 million Last Date to Incur Debt 111/2oo4(1)17119/2D08"n 111/2004 11127/2010 Plan Expil)ltion Date 8/15/2018(1)17/19/20281:) 12/20/2023 11/27/2030 LaSt Date to Collect Tax Increment Revenues 811512028"'17/1912038'" 12/20/2033 11/27/2040 '" Applicable to the area of the project area as originally adopted. '" Applicable to the area added by amendment to the redevelopment plan. Capital Projects Pursuant to the Law, the Agency may pay the costs of public buildings, facilities and improvements subject to certain restrictions. However, pursuant to Section 33445 of the Redevelopment Law, for redevelopment plans and amendments to redevelopment plans which add territory to a redeyelopment project, adopted after October I, 1976, the acquisition of property for public improvements and the installation or construction of each public improvement must be provided for in the redevelopment plan. In addition, pursuant to Section 33445 of the Redevelopment Law, for each public improvement, either within or outside a Project Area, the Agency is required to obtain the consent of the City Council after the following is determined: (a) That the buildings, facilities, structures, or other improvements are of benefit to the Project Area or the immediate neighborhood in which the Project Area is located, regardless of whether the improyement is within another redevelopment project; (b) That no other reasonable means of financing such buildings, facilities, structures, or other improvements, are ayailable to the community; and (c) That the payment of funds for the acquisition of land or the cost of buildings, facilities, structures, or other improyements will assist in the elimination of one or more blighting conditions inside the project area or provide housing for low- or moderate-income persons, and is consistent with the implementation plan adopted pursuant to Section 33490 of the Redevelopment Law. Low and Moderate Income Housing General. The Redevelopment Law requires that for every redeyelopment plan adopted on or after January 1, 1977, or any area which is added to a project area by an amendment to a redevelopment plan on or after January I, 1977, not less than 20 % of the taxes allocated to a redevelopment agency pursuant to Section 33670 of the Redeyelopment Law be set aside in a separate low and moderate income housing fund to be used for the purpose of increasing and improving the supply of low and moderate income housing ayailable at an affordable housing cost unless the redeyelopment agency makes a finding annually by resolution made in accordance with the Redevelopment Law that: 23 -r (l) No need exists in the community to improve, increase or preserve the low and moderate income housing; or (2) A stated percentage less than twenty percent (20%) of the taxes is sufficient to meet the housing needs of the community, including the needs of low or moderate income households and very low income households. Under the Redevelopment Law, the redevelopment agency bears the burden of establishing that any such finding is supported by substantial evidence in light of the entire record before the redevelopment agency in the event that any such finding is challenged. 24 ~ , TIIE MERGED REDEVELOPMENT PROJECT The Merged Redevelopment Project is comprised of three of the Agency's constituent Project Areas: the Town Centre II Project Area, the Dtay Valley Road Project Area and the Southwest Project Area. Proiect Area Town Centre II Dtay Valley Road Southwest Year Adopted 1978 1983 1990 Acreage 212 770 1.100 2,082 Land Use Commercial Commercial/Light Industrial Commercial/Residential Df the taxable property within the Merged Redeyelopment Project, residential deyelopment accounts for approximately 18 % of the secured assessed value of the Merged Redevelopment Project; commercial development comprises 59 % of the secured assessed value of the Merged Redevelopment Project; and industrial deyelopment accounts for an additional 19% of the secured assessed value. The remaining 4 % of secured assessed value in the Merged Redevelopment Project is deriyed from vacant laDd. Such vacant land is primarily located in the Dtay Valley Road and Southwest Project Areas. Secured Assessed Value by Land Use Category Industrial 19% Residential 18% Comme!t:ial 59% Source: County of San Diego Auditor-Comroller. 25 -r Description of the Town Centre II Project Area The Town Centre II Project Area encompasses approximately 212 acres of commercial, institutional and municipal uses in eleven non-contiguous areas of the City's central core. The Chula Vista Center, a sixty-tive acre regional shopping mall is located in the Town Centre 11 Project Area, as well as Scripps Memorial Hospital and the City's Civic Center Complex and public works yard. The City has imested significantly in the Project Area, tinancing a portion of the cost of public parking structures utilized by the Chula Vista Center. The Chula Vista Center, located one-quarter mile from the 1-5 freeway and seven miles from both downtown San Diego and the international border, began in 1962 as twO retail areas bisected by a city street. An expansion of the center closed the street and linked the twO areas by constrUcting an additional 140,000 square feet of leasable space. Together with the anchor tenants of the center, Broadway Stores (now Macy's), Sears, Roebuck & Co. and J. C. Penneys, the total center consisted of 800,000 square feet of retail space. A timher expansion was undertaken in 1994, adding a 35,000 square foot 10-screen movie theater and Mervyn's department stOre. Today, additional major tenants in the Chula Vista Center include Sam Goody, Waldenbooks, Miller's Outpost and Footlocker. The current occupancy rate of the entire Chula Vista Center is approximately %. The Chula Vista Center accounts for 50% of the secured assessed value of the T own Centre II Project Area and the anchor tenants comprise an additional 33 % of the secured assessed value of the Town Centre II Project Area. The Agency also assisted in development of the Wal Mart anchored 200,000 square foot South Bay Marketplace shopping center, a portion of which is located in the Town Centre 11 Project Area. Wal Mart developed its 149,000 square foot stOre in 1994. Best Buy electronics Store will commence consuuction in June, 2000 of its 44,000 square foot store in the South Bay Marketplace. The Agency anticipates this new development will add $3,250,000 to the tax rolls in 2001/02. Scripps Memorial Hospital Chula Vista was established in 1964. The Scripps medical facilities are located adjacent to as well as in the Town Centre 11 Project Area. A 40,000 square foot expansion was completed by Scripps in 1999, which provides a full range of outpatient medical care, 24 hour emergency care and ICU. Property owned by Scripps Health is exempt from property tax for tax year 199WOO, however, the tax roll shows taxable property owned by Scripps Health valued at $8,514,103. The Agency expects this value to be exempt in future years. This anticipated exemption is taken into account in "TABLE NO.1 - MERGED REDEVELOPMENT PROJECT PROJECTED TAX REVENUES AND BOND RETIREMENT" . The City's public works yard, a 7-acre parcel located in the Town Centre II Project Area, is currently being marketed for deyelopment with office/retail uses. Description of the Otay Valley Road Project Area The Otay Valley Road Project Area is an area of approximately 770 acres located in the southeastern corner of the City, just to the east of the 1-805 Freeway. It was established in 1983 and is comprised primarily of light industrial and warehouse uses. A portion of an existing landtill overlaps the boundaries of the Project Area and a former landfill site is also located in the Project Area. The Project Area contains the Chula Vista Auto Park, which currently has 4 dealerships and is designed for up to 10 dealerships. Adjacent to the Project Area is the Coors Amphitheatre and Knorr's Soak City liSA. The Agency anticipates that related entertainment uses may deyelop on vacant land in the Project Area surrounding the 20,000 seat outdoor amphitheatre, which opened in 1998 and is owned and operated by Universal/MCA. Other uses in the Otay Valley Road Project Area consist of small industrial parks, used for multi-tenant warehousing or light manufacturing. Manufacturers include metal fabricatOrs such as Gold Coast Engineering and Hyspan Precision Products, some of the City'S largest employers. 26 or There are approximately 100 acres of vacant land in the Otay Valley Road Project Area. This vacant acreage includes a 40 acre former landtill site that has been recently purchased and remediated and is now available for development. There are also 23 acres available for additional dealerships in the Chula Vista Auto Park, as well as a 17 acre parcel adjacent to the freeway available for commercial development. Description of the Southwest Project Area The Southwest Project Area is an area of approximately 1,100 acres. It was created in 1990 and is zoned primarily for limited industrial and thoroughfare commercial projects. Existing commercial development is generally neighborhood retail and existing industrial development uses include mini- storage and light manufacturing. The first major new development to be completed in the Southwest Project Area is the Palomar Trolley Center, a community retail center with national brand clothing stores such as Old Navy and Ross Dress for Less, a grocery store, and warehOuse retail uses such as Office Depot and Party City. It is easily accessed by the San Diego Trolley System and was developed with Agency assistance. The most recent development, the Family Resource Center, is a 75,000 square foot office building developed by the Greenwald Company. This 2-story facility with attached classrooms and conference center will be used by San Diego County Health and Human Services. It is anticipated that this deyelopment will add $6 million to the tax rolls in 2000/01. There are approximately 75 acres of yacant land in the Southwest Project Area. Assessed Valuations Assessed value of the Project Areas comprising the Merged Redevelopment Project between fiscal years 1995/96 and 1999/00 are shown in the tables below. Assessed value of the Town Centre II Project Area has increased $21.8 million between fiscal years 1995/96 and 1999/00, an overall increase of 19% (see "FlNANOAL INFORMATION - Tax Increment Rev~nues - Historical Assessed Valuation and Tax Increment Revenues" herein). TABLE NO.2 TOWN CENTRE D PROJECf AREA ASSESSED V ALUA TIONS (I) 1995/96 through 1999/00 1995/96 1996197 1997/98 1998/99 1999/00 Increm:nta! Increase $ Base Year Value TOlal Value 81,467,979 33.119.003 $ 114,586,982 $ 96,037,114 33.306.955 $ 129,344,069 $ 94.884,445 33.306.955 $ 128,191,400 $ 102.314.911 33.105.355 S 135.420.266 S 103.300.819 33.105.355 S 136,406,174 (I) Does not reflect assessment appeals or Scripps Health property tax exemption (see "Assessment Appeals" below). Source: County of San Diego Assessor. 27 ., Between tlscal years 1995/96 and 1999/00, there has been an overall increase of 8% in assessed valuation in the Otay Valley Road Project Area, after giving affect to a $17.7 million reduction in the value of the Allied Waste Systems property (see "FINANOAL INFORMATION - Tax Increment Revenues - Historical Assessed Valuation and Tax Increment Revenues" herein). There has been a significant amount of property ownership change in the last two years, which accounts for the increasing assessed values. TABLE NO.3 OT A Y VALLEY ROAD PROJECT AREA ASSESSED VALUATIONS (ll 1995/96 through 1999/00 1995196 1996/97 1997/98 1998199 1999/00 ]n=ta1 Increase $ Base Year Value Total Valu.: $ 76.572.112 18.431.l19 95,003.231 $ 70,365,268 18.431.l19 88,796,387 S 66.169.246 18.431.119 $ 84,600,365 $ 92.920.325 ]7.894.789 $ 110,815,114 S 102.473.979 17 .894. 789 $ 120,368.768 s (I) Does nor reflect assessment appeals (see" Assessment Appeals" below). Source: Coumy of San Diego Assessor. Between fiscal years 1995/96 and 1999/00, there has been an overall increase of 13 % in assessed valuation in the Southwest Project Area (see "FlNANOAL INFORMATION - Tax Increment Revenues - Historical Assessed Valuation and Tax Increment Revenues" herein). There has been some property ownership change in the last twO years and new consuuction, accounting for the increasing assessed yalues. TABLE NO.4 SOUTHWEST PROJECT AREA ASSESSED V ALUA nONS (I) 1995/96 through 1999/00 1995/96 1996/97 1997/98 1998199 1999/00 . Increm:::l.tal Increase $ 47,487.167 S 48.104,133 S 47.677,835 S 62.006.889 S 83.861.570 Base Y= Value 219.498.444 219.498.444 219.498.444 219.498.444 219.498.444 Total Value S 266,985,611 S 267,602,577 S 267,176,279 S 281,505,333 S 303,360,014 (ll Does nor reflect assessment appeals (see" Assessment Appeals" below). Source: County of San Diego Assessor. 28 or Major Taxpayers The ten largest secured property taxpayers represent 32.7% of the 1999/00 secured assessed value of the Merged Redevelopment Project. TABLE NO.5 MERGED REDEVELOPMENT PROJECT TEN LARGEST TAXPAYERS AS A PERCENT OF 1999/00 ASSESSED VALUE (I) 1999/00 % or Secured Secured Original Taxpayer Assessed Assessed Land Project Area Value Value Use C V Cenlers LLC $ 58.369.223 12.4% Regional Commercial Town Cemre II Cypress Creek Campany 18.263.260 3.9% Commercial Center Southwest Sears Roebuck & Company 14,203.247 3.0% Retail Town Centre II Wal Mart Real Estate Business Trust 12.251.634 2.6% Relail To\VIl Centre II Federated Western. Properties 11.868.399 2.5% Relail Town Centre II Parma Property Company 8.900.000 1.9% Warchouse Otay Valley Road Allied Waste Systems 8.663.967 1.8% Landfill Otay Valley Road DGF Family Limiled Partnership 8.424.062 1.8% Commercial Otay Valley Road Marliskar Investments 6.939,825 1.5% Industrial Southwest Mervyn's Corporation 6.100.000 1.3% Retail Town Centre II Total $ 153,983,617 32.7% (l) This chan does reflect Scripps Health anticipated property laX exemption and the assessment appeal granted to Allied WaSte Systems (see "Assessment Appeals" below). Source: County of San Diego Auditor-Controller. The following provides a description of the largest taxpayers. Regional Shopping Center, Chula VIsta Center, owner. This center occupies 65 acres and is developed with oyer 350,000 square feet, exclusive of anchor department stores, which total an additional 561,000 square feet. The Agency assisted in financing a parking structure in conjunction with aD expansion of the center. In addition to depamnent Slores aDd mall shops, the center contains a 10-screen moyie theater. The site is approximately one-quaner mile from the 1-5 freeway and seven miles from both downtown SaD Diego and the international border. The current owner purchased the center from Homan Development (a subsidiary of Sears, Roebuck & Company) in 19 . Commercial Center; Cypress Creek Company, owner. This community shopping center, Palomar Trolley Center, contains 210,000 square feet of retail space with over 35 tenants. Major tenants include Ralph's Grocery Store, Ross Dress for Less, Office Depot, Old Navy aDd Party City. The tirst phase was constructed in 1994 aDd the second phase was completed in 1996. Department Store, Sears, Roebuck and Company, owner. Located in the Chula Vista Center, the Sears department store contains 249,000 square feel of retail space on 15.5 acres. The Sears store has been a pan of the regional shopping center since its original development. 29 or Retail Store, Wal Mart Real Estate Business Trust, owner. Located in the South Bay Marketplace shopping center. the Wal Mart store is 100,000 square feet and is developed on 13.5 acres. It was constructed in 1995. The newly-constructed Best Buy electronics store, when constructed, will be located adjacent to Wal Mart. Department Store, Federated Western Properties, owner. Located in the Chula Vista Center, the Macy's depamnent store contains 150,000 square feet of retail space on 8.6 acres. Originally a Broadway depamnent store, the depamnent store has been a part of the regional shopping center since its original development. Warehouses; Parma Property Company, owner. This taxpayer owns two warehouses in the Brandywine industrial park area. The properties were purchased in 1998. Facilities are comprised of one 70,000 square foot warehouse located on 4 acres and one 100,000 square foot warehouse located on 5.8 acres. Both facilities were built in 1988. Landfill; Allied Waste Systems, owner. A portion of a landfill overlaps the boundary of the Otay Valley Road Project Area. A reduction in value of the facility was granted in January, 2000 and the portion of the property located in the Project Area is currently valued at approximately $8.66 million. Automobile Dealership; DGF Family Limited Partnership, owner. This 8.3 acre property is developed with Fuller Ford, Fuller Honda and Fuller Kia automobile dealerships which opened in 1994. Industrial Buildings; Marliskar Investments, owner. This property is comprised of tWQ light industrial buildings, one 50,000 square foot building constructed in 1965 on 2.3 acres and one 100,000 square foot building constructed in 1970 on nine acres. They were purchased by the current owner in 1998. Department Store, Mervyn's Corporation, owner. Located in the Chula Vista Cemer, the Mervyn's depamnem store contains 82,000 square feet of retail space on 5 acres. This depamnem store was constructed as a pan of the expansion of the cemer in 1994. Assessment Appeals Allied Waste Systems was granted an appeal in January, 2000, which reduced the value of its property holdings located in the Otay Valley Road Project Area by $17,700,000. This reduction is taken imo account in "TABLE NO.1 - MERGED REDEVELOPMENT PROJECT PRO.IECTED TAX REVENUES AND BOND RET1REMDlT" . As of May 31, 2000, the County of San Diego reportS that there are two pending appeals for properties in the Southwest Project Area and one additional pending appeal for properties in the Town Centre II Project Area. The IOtal value of properties currently under appeal is approximately $1,500.000. In addition, property owned by Scripps Health (located in the Town Centre II Project Area) is exempt from property tax for tax year 1999/00. However, the tax roll shows taxable property owned by Scripps Health valued at $8,514,103. The Agency expects this property to be tax-exempt in future years. This anticipated exemption is taken into accoum in "TABLE NO. 1- MERGED REDEVELOPMENT PROJECT PROJECTED TAX REVENUES AND BOND RETIREMENT" . 30 - , FINANCIAL INFORMATION Agency Budgetary Process and Administration The law requires redevelopment agencies to adopt an annual budget containing the following: (1) The proposed expenditures of the agency. (2) The proposed indebtedness to be incurred by the agency. (3) The anticipated reyenues of the agency. (4) The work program for the coming year, including goals. (5) An examination of the previous years' achieyements and a comparison of the achievements with the goals of the preyious years' work program. All expenditures and indebtedness of the Agency are required to be in conformity with the adopted or amended budget. The Executiye Director of the Agency is responsible for preparing the proposed budget and submitting it to the Agency Governing Board. After reviewing the proposed budget at a public meeting, the Agency Governing Board holds a public hearing. The Agency Governing Board adopts the budget prior to the start of each fiscal year. The City Finance Director actS as Treasurer of the Agency.and is responsible for controlling expenditures within budgeted appropriations. Public Employee Salaries and Benefits The Agency contracts with the City to proyide the Agency with staff. Agency Accounting Records and Financial Statements Every redevelopment agency is required to present an annual report to its legislative body (being the city council) within six months of the end of each fiscal year. The annual report is required, among other things, to include an independent financial "audit report" and a fiscal statement for the previous fiscal year. The California Health and Safety Code defines "audit report" to mean an examination of and opinion on the financial statements of the agency which preSents the results of the operations and fmancial position of the agency. The independent financial audit is required to be conducted in accordance with generally accepted auditing standards and the rules governing audit reports promulgated by the Governmental Accounting Standards Board. The independent financial audit report is also required to include an opinion of the agency's compliance with laws, regulations and administrative requirements governing activities of the agency. The California Health and Safety Code requires the fiscal statement to contain the following information: (1) The amount of outstanding indebtedness of the agency and each project area. (2) The amount of tax increment revenues generated in the agency and in each project area. (3) The amount of tax increment reyenues paid to a taxing agency pursuant to a tax sharing agreement, other than school or community college district. (4) The tinancial transactions report required to be submitted to the State Controller. 31 or (5) The amount allotted to school or community college districts pursuant to the Redevelopment Law. (6) The amount of exis-Jng indebtedness and the total amount of payments required to be paid on existing indebtedness for that fiscal year. (7) Any other fiscal information which the agency believes is useful to describe us programs. In addition, the annual report is required to include detailed information regarding the Agency's housing program to assist low and moderate income households and deposits and expenditures from the Low and Moderate Income Housing Fund required pursuant to the Redevelopmem Law. The Indenture requires the .-\gency to keep, or cause to be kept, proper books and accounts separate from all other records and accounts of the Agency and the City in which complete and correct entries are made of all transactions relating to the Tax Revenues and the Special Fund. The Indenture requires the Agency to me with the Trustee annually, within 180 days after the close of each fiscal year, so long as any of the Bonds are Oumanding, its audited financial statements showing the Tax Revenues and all disbursements from the Special Fund as of the end of such fiscal year. The Agency covenants under the Indenture to furnish a copy of such statements upon reasonable request to any Bondowner. Basis of Accounting. The modified accrual basis of accounting is used by all governmental fund types and agency funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amoum of the transaction can be determined and "available" means collectible within the c.urrent period or soon enough thereafter to be used to pay liabilities of the current period. The Agency considers property taxes as available if they are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as fund liabilities when due. Measurement Focus. All governmental funds are accounted for on a spending or "financial flow" measuremem focus. Generally, this means that only current assets and current liabilities are included on their balance sheets, with the exception that the non-current portion of long-term receivables and advances due to governmental funds are reported on their balance sheets, offset by fund balance reserve accounts. Statements of revenue, expenditures and changes in fund balances for goyernmental funds generally present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in current assets. The Agency retained the firm of Calderon, Jaham & Osborn, Certified Public Accountants and Consultants, San Diego, California, to examine the component unit financial Statements of the Agency as of and for the fiscal year ended June 30, 1999, which are included as "APPENDIX C". The firm's examination was made in accordance with generally accepted auditing Standards and the "Guidelines for Compliance Audits of California Redeyelopmem Agencies" issued by the State Controller. The tirm reported after their examination that the Agency's financial statements present fairly its tinancial position and results of operations in conformity with generally accepted accounting principles and that they noted no instances of non-compliance for the fiscal year ended June 30, 1999. Tax Increment Revenues Tax Increment Reyenues. As proyided in the Redeyelopment Plans for the Project Areas and pursuant to Article 6 of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State of California, taxes leyied upon taxable property in a Project Area each year by or for the benefit of the State, any city, county. city and county or other public corporation for tiscal years beginning after the effective date of the ordinance adopting the Redevelopment Plan for the Project Area, or any amendment with respect thereto, will be diyided as follows: 32 , (a) That ponion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of the taxing agencies upon the toral sum of the assessed value of the taxable property in the redevelopment project as shown upon the assessment roll used in connection with the taxation of that propeny by the taxing agency, last equalized prior to the effecth'e date of the ordinance, shall be allocated to and when collected shall be paid to the respective taXing agencies as taxes by or for the taxing agencies on all other propeny are paid (for the purpose of allocating taxes levied by or for any taxing agency or agencies which did not include the territory in a redeyelopment project on the effective date of the ordinance but to which that territory has been annexed or otherwise included after that effective date, the assessment roll of the cpunty last equalized on the effective date of the ordinance shall be used in determining the assessed yaluation of the taxable property in the project on the effective date); (b) Except as provided in subdivision (c), that portion of the levied taXes each year in excess of that amount shall be allocated to and when collected shall be paid into a special fund of the redevelopment agency to pay the principal of and interest on loans, moneys advanced to, or indebtedness (whether funded, refunded, assumed, or otherwise) incurred by the redevelopment agency to finance or refinance, in whole or in part, the redevelopment project. Unless and until the total assessed valuation of the taxable property in a redevelopment project exceeds the total assessed value of the taxable property in that project as shown by the last equalized assessment roll refe:-red to in subdiyision (a), all of the taXes leyied and collected upon the taxable property in the redevelopment project shall be paid to the respective taxing agencies. When the loans, adyances, and indebtedness, if any, and interest thereon, haye been paid, all moneys thereafter received from taxes upon the taxable property in such redevelopment project shall be paid to the respective taxing agencies as taxes on all other property are paid; and (c) That ponion of the taxes in excess of the amount identified in subdivision (a) which are anributable to a tax rate levied by a taxing agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of, and the interest on, any bonded indebtedness for the acquisition or improvement of real property shall be allocated to, and when collected shall be paid into, the fund of that taxing agency. This subdivision applies to taxes levied to repay bonded indebtedness approved by the yoters of the taXing agency on or after January 1, 1989. Procedure for the Allocation and Payment of Tax Increment Revenues. The ponion of taxes required to be allocated to the Agency is allocated and paid to the Agency by the County Auditor pursuant to the following procedure: Not later than the first day of October of each year, the Agency is required to file with the County Auditor a state:nent of indebtedness certified to by the chief fiscal officer of the Agency for each Project Area. The statement of indebtedness is required to contain for each such Project Area: (a) The date on which each loan, advance, or indebtedness was incurred or entered into; (b) The principal amount, term, purpose, and interest rate, of each loan, advance or indebtedness; and (c) The outstanding balance and amount due or to be paid by the Agency of each loan, advance or indebtedness. 33 '1 At the same time or times as the payment of taxes into the funds of the respective taxing agencies of the County, the County Auditor-Controller is required to allocate and pay Tax Increment Revenues to the Agency in an amount not to exceed the amount of loans, advances and indebtedness as shown on the Agency's Statement of Indebtedness. Manner in Which Property Valuations and Assessments are Determined (Article XIIIA). On June 6, 1978, California voters approved an amendment (commonly known as both Proposition 13 and the Jarvis-Gann Initiative) to the State Constitution which imposes certain limitations on taxes that may be levied against real property. This amendment, which added Anicle XIIIA to the State Constitution, among other things, defines full cash value of property to mean "the county assessor's valuation of real property as shown on the 1975176 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". This full cash value may be adjusted annually to reflect int1ation at a rate not to exceed two percent per year, or any reduction in the consumer price index or comparable local data, or any reduction in the event of declining property value caused by substantial damage, destruction or other factors. The amendment funher limits the amount of any ad yalorem tax on real property to one percent of the full cash value of that propeny, except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July I, 1978 and on any bonded indebtedness for the acquisition or improvement of real property which is approved after July 1, 1978 by two-thirds of the votes cast by voters voting on such indebtedness. However, pursuant to a recem amendment to the California Constitution, redevelopment agencies are prohibited from receiving any of the tax increment revenue attributable to tax rates levied to finance bonds approved by the voters on or after January I, 1989 (see "Property Tax Rate" below). In the general election held November 4, 1986, voters of the State of California approved twO measures, Propositions 58 and 60, which funher amend the terms "purchase" and "change of ownership", for purposes of determining full cash value of property under Anicle XIlIA, to not include the purchase or transfer of (l) 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 Anicle XIlIA to permit the Legislature to allow persons over age 55 who sell their residence and buy or build another of equal or lesser value within two years in the same county (or in certain cases, another coumy), to transfer the old residence's assessed value to the new residence. For each fiscal year since Article XIIIA has become effective (the 1978/79 fiscal year), the annual increase for inflation has been at least two percem except for the 1983/84, 1995/96 and 1996/97 tiscal years. For the 1983/84 fiscal year, the annual increase for inflation was I %; for the 1995/96 tiscal year, the annual increase for inflation was 1.19%; and for the 1996/97 fiscal year, the annual increase for int1ation was 1.11 %, retlecting the actual increase in the State Consumer Price Index, as reported by the State Depanmem of Finance. The projections contained in Table No.1 "PROJECTED TAX REVENUES AND BOND RETIREMENT" herein are based on the assumption that inflation will be at least two percent annually in future years. In accordance with this assumption, the projection of Tax Increment Revenues in such tables includes a two percent annual valuation increase for existing real property on the secured property assessment roll. As described above, the full cash value of property is redetermined with each change of ownership. There is not adequate Statistical data for smaller geographical areas such as the Project Areas to reliably project increases in assessed valuation due to changes in propeny ownership. Therefore, the projections of Tax Increment Revenues in Table No. 1 "PROJECTED TAX REVENUES AND BOND RETIREMENT" herein are based upon the assumption that there will not be any value added to the tax rolls as a result of changes in property ownership. 34 I 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 intlation factor determined pursuant to Article XIIIA, or ilS full cash value as at" the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market yalue. Full cash yalue, sometimes referred to as market value, is affected by fluctuations in the real estate market, fluctuations in interest rates, unexpected increases in development costs and other factors. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed the following lien date up to the lower of the then-current fair market value or the factored base year value. Because of generally adverse economic conditions affecting the real estate market, many localities in California haye experienced certain declines in assessed values as a result of Proposition 8 property owner appeals or blanket adjustments made by the County Assessor to propeny changing ownership or newly built since 1988. Unsecured and Secured Property. In California, property which is subject to ad yalorem taxes is classified as "secured" or "unsecured". The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured propeny, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property, arising pursuant to State law, has priority over all other liens on the secured property, regardless of the time of the creation of the other liens. For the purpose of projecting Tax Increment Revenues in Tables No. 1 "PROJECTED TAX REVENUES AND BOl',1D RETIREMENT" herein, the unsecured property assessment roll was assumed to remain constant at the level shown on the 1999/00 assessment roll. Property in the Projecr Areas is assessed by the San Diego County Assessor except for public utility property which is assessed by the State Board of Equalization. The valuation of secured property is determined as of January 1 each year for taxes owed with respect to the succeeding fiscal year. The tax rate is equalized during the following September of each year, at which time the tax rate is determined. Taxes are due in two equal installments. Installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due January 1 and become delinquent August 31, and such taxes are leyied at the prior year's secured tax rate. Secured and unsecured property is entered on separate parts of the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing agency has four ways of collecting unsecured property taxes: (1) a civil action against the taxpayer; (2) tiling 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 cenificate of delinquency for record in the county recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interestS belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the propeny securing the taxes to the State for the amount of taxes which are delinquent. Currendy, a 10% penalty is added to delinquent taxes which have been leyied with respect to propeny on the secured roll. 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. Under State law, from time of the sale of the propeny to the State for nonpayment of taxes, owners have five years to redeem, during which time legal title remains in the owners as taxpayers subject to a lien in r,lYor of the State. The amount necessary to redeem the property is equal to the sum of the delinquent taxes, delinquency penalties and redemption penalties of 1'..1 % per month. Five years after the propeny is in default of taxes, the tax collector has the authority to sell property which has not been redeemed. 35 i A 10% penalty also attaches to delinquent taxes with respect to property on the unsecured roll, and further, an additional penalty of I Y, % per month accrues with respect to such taxes beginning the tirst day of the third month following the delinquency date. Supplemental Assessments. Legislation adopted in 1984 (Section 75, et seq. of the Revenue and Taxation Code of the State of California) provides for the supplemental assessment and taxation of property at its full cash value as of the date of a change of ownership or the date of completion of new construction (the "Supplemental Assessments"). To determine the amount of the Supplemental Assessment the County Auditor applies the current year's tax rate to the supplemental assessment roll and computes the amount of taxes that would be due for the full year. The taxes due are then adjusted by a proration factor to reflect the portion of the tax year remaining as determined by the date on which the change in ownership occurred or the new construction was completed. Supplemental Assessments become a lien againSt the real property on the date of the change of ownership or completion of new construction. Supplemental Assessments are not included in the Table Nos. 11, 12 and 13 "mSTORICAL ASSESSED VALUATION AND TAX INCREMENT REVENUES" herein. In addition, because Supplemental Assessments cannot be projected, Supplemental Assessments are not included in the projections of Tax Increment Revenues in Table No. I "PROJECTED TAX REVENUES AND BOND RETIREMENT" herein. Unitary Property. Commencing in the 1988/89 fiscal year, the Revenue and Taxation Code of the State of California changed the method of allocating property tax revenues derived from state assessed utility properties. It provides for the distribution of state assessed values to tax rate areas by a county- wide mathematical formula rather than assignment of state assessed value according to the location of those values in individual tax rate areas. Commencing with the 1988/89 fiscal year, each county has established one county-wide tax rate area. The assessed value of all unitary property in the county has been assigned to this tax rate area and one tax rate is levied against all such property ("Unitary Revenues"). The property tax revenue deriyed from the assessed value assigned to the county-wide tax rate area shall be allocated as follows: (1) each jurisdiction will be allocated up to two percent of the increase in Unitary Revenues on a pro-rata basis county-wide; and (2) any decrease in Unitary Revenues or increases less than two percent, or any increase in Unitary Revenues above twO percent will be allocated among jurisdictions in the same proportion of each jurisdiction's Unitary Revenues received in the prior year to the total Unitary Revenues county-wide. Taxable values for properties assessed by the State Board of Equalization, the tax rate levied against such property and the corresponding Unitary Revenues have been held constant at 1999/00 levels for the purpose of projecting Tax Increment Revenues in Table No.1 "PROJECTED TAX REVENUES AND BOND RETIREMENT" herein. Property Tax Rate. There are numerous tax rate areas within the Project Areas. The differences between the $1.00 tax rate and those actually levied (referred to as the "tax override rate") represents the tax levied by overlapping entities to pay debt service on bonded indebtedness approved by the voters. Tax override rates typically decline each year. A declining tax override rate is the result of several factors: an effectiye limit, established by Article XlIlA of the California Constitution, on the amount of property taxes that can be levied; rising taXable yalues within the jurisdictions of taxing entities levying the approved override rate (which reduces the tax r,He needed to be levied by the taxing entity to meet debt service requirements); and the eventual retirement, over time, of the voter-approved debt. 36 'T For tiscal year 1999/00, the tax rate, including the tax override rate, for the majority of the property in the Project Areas is $1.009 per $100 of taxable value. Future Tax Increment Revenues have been projected in Table No. I "PRO,JEeTED TAX REVENUES AND BOND RETIREMENT" herein by applying the general levy ($1.00 per $100 of taxable value) to incremental taxable values. Administrative Costs. In 1990, the Legislature enacted SB 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. For tiscal year 1999/00 the County charged administrative fees totaling $13,000 to the Town Centre II Project Area, $8,500 to the Otay Valley Road Project Area and $11,000 to the Southwest Project Area. The projections of Tax Increment Revenues take administrative costs into account. Historical Assessed Valuation and Tax Increment Reyenues. The following tables show taxable yalues and Tax Increment Revenues for the Project Area for fiscal years 1995/96 through 1999/00. TABLE NO.6 TOWN CENTRE II PROJECT AREA HISTORICAL ASSESSED VALUATION AND TAX INCREMENT REVENUES. 1995/96 1996197 1997/98 1998/99 1999/00 Secured (1) S 101.888.890 $ 115.989.759 S 115,109.300 $ 117.949.060 $ 124.537,450 Unsecured (1) 12.698.092 13.354.310 13.082.100 17.471.206 11.868.724 Total (2) S 114.586.982 $ 129.344.069 S 128.191.400 S 135,420.266 $ 136.406.174 Less: Base year (3) 133.119.(03) (33.306.955) (33.306.955) (33.105.355) (33.105.355) Increm::ntallncrease S 81.467.979 $ 96.007,114 $ 94.884.445 S 102.314,911 $ 100.300.819 Tax RaIe 1.010112% 1.010155% 1.010059% 1. 009962 % L 009903 % Taxln=t Revenues S 822.918 S 970.124 $ 958.388 S 1.003.342 $ 1.043.238 Unitary Revenues (4) 2.098 2.088 2.648 629 614 Total Tax Revenues (5) $ 8Z5,016 $ m.212 $ 961,036 $ 1,033,971 $ 1,00,852 * Does not reflect the anticipated Scripps Health property taX exemption (see "THE MERGED REDEVELOPMENT PROJECT - Description of tbe Town Centre II Projea Area"). (I) Taxable Valuation at 100% of Assessor's Market Value, as of August 20 equalized roll. (2) San Diego County Auditor-Controller's Office. (3) Base year assessed values may vary from year to year based on changes in property ownership of agencies exempt from property tax. (4) See "Unitary Pro pert)." herein for a discussion of the method of allocating Unitary Reyenues. (5) The "Total Tax Revenues" are based on data furnished by the San Diego County Auditor- Controller's Office. Actual Tax Increment Revenues received vary from Tax Increment Reyenues because of supplemental taxes, appeals or refunds, deductions for delinquencies and tax-sharing agreements and administrative charges by the County. Source: San Diego County Auditor-ControlIer. 37 .,. TABLE NO_ 7 OT A Y VALLEY ROAD PROJECT AREA HISTORICAL ASSESSED VALUATION AND TAX INCREMENT REVENUES. 1995/96 1996/97 1997/98 1998/99 1999/00 Sd:ured (I) S 74.052.220 S 68.275.320 S 65.658.423 S 91.982.421 S 101.303.630 Unsc:cured (I) 20.951.011 20.52J.()67 18.941.942 18.832.693 19.065.138 Total (2) $ 95.003.231 S 88.796.387 S 84.600.365 S 110.815.114 S 120.368.768 Less: Base y= (3) (18.431.119) (18.431.119) (18.431.119) (17.894.789) (17.894.789) Increm:ntallncrease S 76,572.112 S 70.365.268 S 66.169.246 $ 92,920.325 S 102,473.979 Tax RaIe 1.010138 ft 1.010143% 1.010091 % 1. 009987% 1.009369% Tax In=l Revenues S m.4S4 S 710,790 S 668,369 S 938.483 S 1.034.341 UnilaI}' Revenues (4) 50.478 50.221 51.566 46.085 44.989 Total Tax Revenues (5) $ 823,962 $ 761,011 $ 719,935 $ 984,568 $ 1,079.330 * (I) (2) (3) (4) (5) - Does not reflect the assessment appeal granted to Allied Waste Systems in January, 2000 (see "THE MERGED REDEVELOPMENT PROJECT - Assessment Appeals"). Taxable Valuation at 100% of Assessor's Market Value, as of August 20 equalized roll. San Diego County Auditor-Conrroller's Office. Base year assessed values may vary from year to year based on changes in property ownership of agencies exempt from property tax. See "Unitary Property" herein for a discussion of the method of allocating Unitary Revenues. The "Total Tax Revenues" are based on data furnished by the San Diego County Auditor- Conrroller's Office. Actual Tax Increment Revenues received vary from Tax Increment Revenues because of supplemental taxes, appeals or refunds, deductions for delinquencies and tax-sharing agreements and adminisrratiye charges by the County. Source: San Diego County Auditor-Comroller. 38 -r TABLE NO.8 SOUTHWEST PROJECT AREA HISTORICAL ASSESSED VALUATION AND TAX INCREMENT REVENUES 1995/96 1996197 1997/98 1998199 1999/00 Secured (I) S 247.533.m S 248.629.822 S 249.783.551 S 258.196.443 S 269.261.990 Unsecured (1) 19.452.434 18.972.755 17.392.n8 23.308.890 34.098.024 Total (2) S 266.985.611 $ 267 .f:I:12..5T7 $ 267.176.279 S 281.505.333 S 303.36(>.014 Less: Base yeor (3) (219.498.444) (219.498.444) (219.498.444) (219.498.444) (219.498.444) 1=ra!lncre3se S 47.487.167 S 48.104,133 S 47.677.835 S 62.006.889 S 83.861.570 Tax Rare 1.010112% 1.010161% 1.010151% 1.010155% 1.010082% Tax. Increm:nt Revenues S 479.674 $ 485.929 S 481.618 S 626.366 S 847,071 Unitary RevenlJl:S (4) 259 258 252 Tara! Tax RevenIJl:S (5) $ 479,674 $ 485.929 $ 481.877 $ 626.624 $ 847.323 (I) Taxable Valuation at 100% of Assessor's Market Value, as of August 20 equalized roll. (2) San Diego County Auditor-Controller's Office. (3) Base year assessed values may vary from year to year based on changes in property ownership of agencies exempt from property tax. . (4) See "Unitary Pro~'" herein for a discussion of the method of allocating Unitary Revenues. (5) The "Total Tax Revenues" are based on data furnished by the San Diego County Auditor- Controller's Office. Actual Tax Increment Revenues received vary from Tax Increment Revenues because of supplemental taxes, appeals or refunds, deductions for delinquencies and tax-sharing agreements and administrative charges by the County. Source: San Diego County Audiwr-Comroller. 39 --r Tax Collections. Tax Increment Revenues disuibuted to the Agency are adjusted for delinquencies in the payment of taxes, tax roll corrections, supplemental assessments and collection of prior year delinquencies. The tables below represents Ta."{ Increment Revenues allocated to and paid to the Agency and the distribution rates as a percent of the original tax levy. TABLE NO.9 TOWN CEl'ffRE II PROJECT AREA TAX COLLECTIONS 1996/97 1997/98 1998/99 Original Tax Levy $ 972,212 $ 961,036 $1,033,971 Receivables (20,768) (18,083) (19,284) Supplemental Assessments 100,453 9,490 29,151 Corrections/Refunds! Adjustments (27,531) (4,533) (3,653) Prior Year Collections 29,476 38,462 27,469 Tax Increment Revenues Distributed (1) $ 1,053,842 $ 986,372 $1,067,654 Percent of Original Levy Distributed 108.4% 102.6% 103.3% (1) Prior to payments due under Tax Sharing Agreement and deposit to Low and Moderate Income Housing Fund. TABLE NO. 10 OTA Y VALLEY ROAD PROJECT AREA TAX COLLECTIONS 1996/97 1997/98 1998/99 Original Tax Levy $ 761,Oll $ 719,935 $ 984,568 Receivables (15,762) (12,890) (15,683) Supplemental Assessments (34,003) 60,063 100,581 Corrections/Refunds/Adjustments (23,322) (7,623) (14,665) Prior Year Collections 27,710 28,036 19,144 Tax Increment Revenues Distributed (I) $ 715,634 $ 787,521 $1,073,945 Percent of Original Levy Distributed 94.0% 109.4% 109.1% (1) Prior to deposit to Low and Moderate Income Housing Fund. 40 or TABLE NO. 11 SOUTHWEST PROJECT AREA TAX COLLECTIONS 1996/97 1997/98 1998/99 Original Tax Levy $ 481,877 $ 626,624 $ 847,323 Receivables (l 0,726) (9,189) (10,072) Supplemental Assessments 28,897 27,718 55,757 Corrections/Refund5/ Adjustments (18,993) (5,700) (4,452) Prior Year Collections 17,327 19.436 14,062 Tax Increment Revenues Distributed (1) $ 498,382 $ 658,889 $ 902,618 Percent of Original Levy Distributed 103.4% 105.1 % 106.5% (1) Prior to payments due under T.., Sharing Agreements and deposit to Low and Moderate Income Housing Fund. Tax Sharing Agreements Pursuant to former Section 33401(b) of the Redevelopment Law, a redevelopment agency could enter into an agreement to pay tax increment revenues to any taxing agency that has territory located within a redevelopment project to alleviate any financial burden or detriment caused by the redevelopment project. These agreements are ~commonly referred to as "tax sharing agreements" or "pass-through agreements". Agreements entered into by the Agency pursuant to said Section 33401(b) are described below and are referred to herein as the "Tax Sharing Agreements", (see "TABLE NO.1 - PROJECTED TAX'REVENUES AND BOND RETIREMENT" herein). Town Centre II Project Area County of San Diego, The Agency has entered into a Tax Sharing Agreement with the County of San Diego. Pursuant to the agreement, the Agency is required to reimburse the County 13.25% of Tax Increment Revenues allocated to the Town Centre II Project Area, beginning in the 26" year of the Redevelopment Plan (2014/15). Gtay Valley Road Project Area There have been no Tax Sharing Agreements entered into with respect to the Otay Valley Road Project Area. Southwest Proiect Area County of San Diego. The Agency has entered into a Tax Sharing Agreement with the County of San Diego. Pursuant to the agreement, the Agency is required to reimburse the County for the amount of Tax Increment Revenues generated by the County's share (27.15 %) of the compounded 2 % annual intlationary growth in assessed yalue over the base year amount. In addition, the Agency will reimburse the County for 66.67 % of the County's share of Tax Increment Revenues generated in excess of the 2 % annual intlationary growth, reduced by 20% of such amounts required to be deposited in the Agency's Low and Moderate Income Housing Fund. 41 , Sweetwater Union High School District. The Agency has entered into a Tax Sharing Agreement with the Sweetwater Union High School District. Pursuant to the agreement, the Agency is required to reimburse the District 40% of its 17.95% share of Tax Increment Revenues allocated to the Southwest Project Area. Southwestern Community College District. The Agency has entered into a Tax Sharing Agreement with the Southwestern Community College District. Pursuant to the agreement, the Agency is required to reimburse the District 40 % of its 4.83 % share of Tax Increment Revenues allocated to the Southwest Project Area. San Diego County Office of Education. The Agency has entered into a Tax Sharing Agreement with the San Diego County Office of Education. Pursuant to the agreement, the Agency is required to reimburse the Office 62.5% of its 1.62% share of Tax Increment Revenues allocated to the Southwest Project Area. ChuIa Vista Elementary School District. The Agency has entered into a Tax Sharing Agreement with the Chula Vista Elementary School District. Pursuant to the agreement, the Agency is required to reimburse the District 40% of its 27.45% share of Tax Increment Revenues allocated to the Southwest Project Area. The Agency will also reimburse all taxing agencies in the Southwest Project Area for Tax Increment Revenues attributable to voter-approved indebtedness. 42 or DEBT STRUCTURE Outstanding Indebtedness of the Merged Project Area The Merged Project Area had the following outstanding indebtedness as of June 30, 2000: Category of Indebtedness Original Project Area Amount Outstanding Final Maturity $ (I) Advances from the City - General Fund (2) Reimbursement Agreement with City (3) Advances from the Agency - Bayfrom Project (4) Reimbursement - Housing Fund (5) Advances from the Agency - Bayfrom Project (6) Advances from the Agency - Bayfront Project (7) Advances from the Agency - OlaY Valley Project (8) Advances from the City - General Fund (9) Advances from the City - Sewer Fund Town Cenrre II Town Cenrre II T owa Cearre II Town Cearre II OlaY Valley Road Southwest Southwest Southwest Southwest 610,960 12,228,205 3,681,667 155,605 11,465,848 717,544 300,450 671,144 1,043,391 N/A N/A N/A 2001 N/A N/A N/A N/A N/A (1) The City has adyanced funds to the Agency to finance certain operations. The Agency intends to repay this advance with proceeds of the Bonds. (2) The Agency entered into a reimbur;ement agreement with the City to reimburse the City for debt service paid on the City's 1993 Certificates of Participation, used to finance a public parking facility located in the To...n Centre II Project Area. Repayment of this obligation plus interest is to be made as funds become available and is subordinate to the Bonds. (3) The Agency's Bayfront Project Area has advanced funds to the Town Centre 11 Project Area to finance certain operations. The Agency intends to repay this advance with proceeds of the Bonds. (4) In 1994, the Low and Moderate Income Housing Fund made a loan to the Town Centre II Project Area. The Housing Fund Reimbursement has a lien on the Tax Revenues subordinate to the Bonds. (5) The Agency's Bayfront Project Area has advanced funds to the Otay Valley Road Project Area to finance certain operations. The Agency intends to repay a portion of this advance with proceeds of the Bonds. Repaymem of this balance of this obligation plus interest is to be made as funds become ayailable and is subordinate to the Bonds. (6) The Agency's Bayfront Project Area has advanced funds to the Southwest Project Area to finance certain operations. The Agency intends to repay a portion of this advance with proceeds of the Southwest Project Bonds. Repayment of this balance of this obligation plus interest is to be made as funds become ayailable and is subordinate to the Bonds. (7) The Agency's Otay Valley Road Project Area has advanced funds to the Southwest Project Area to finance certain operations. The Agency intends to repay a portion of this advance with proceeds of the Bonds. Repayment of this obligation plus interest is to be made as funds become ayailable and is subordinate to the Bonds. 43 or (8) The Agency entered into a disposition and deyelopment agreement with Cypress Creek Co. for the reimbursement of an amount equal to one-half of the sales tax generated by the Palomar Trolley Center and received by the City's General Fund. The agreement has no lien on Tax Increment Revenues of the SouthweSt Project Area. The City has been advancing funds to the Southwest Project Area to make the payments due under the agreement. Repayment of this obligation to the City's General Fund is to be made as funds become available and is subordinate to the Bonds. (9) The City's Sewer Fund has advanced funds to the Agency to finance certain operations. The Agency intends to repay this advance with proceeds of the Bonds. 44 -r Scheduled Debt Service on the Bonds The following is the scheduled Debt Service on the Bonds. Interest Payment Date Principal 45 ., Interest Annual Debt Service Additional Agency Indebtedness Parity Debt. The Agency may issue or incur "Parity Debt", including any loans, bonds, notes, adyances or indebtedness payable from Tax Revenues on a parity basis with the Bonds, subject to the following specific conditions. The Trustee shall receive, prior to the delivery of any Parity Debt: (a) The Agency shall be in compliance with all covenants set forth in the applicable Indenture and all Supplemental Indentures. (b) The Tax Reyenues estimated to be received for the then current Fiscal Year based upon the most recent assessed valuation of property within the Merged Redevelopment Project as evidenced in wrinen documentation from an appropriate official of the County, shall be at least equal to one hundred forty-five percent (145%) of Maximum Annual Debt Seryice on all Bonds which will be Outstanding immediately following the issuance of such Parity Debt. (c) The Supplemental Indenture providing for the issuance of such Parity Debt shall provide that interest thereon shall not be payable on any dates other than September I and March I, and principal thereof shall be payable on September I in any year in which principal is payable. (d) The Supplemental Indenture providing for the issuance of such Pari", Debt shall provide for the deposit into the Reserve Account of an amount required to cause the balance therein to equal the full amount of the Reserve Requirement (which may be maintained in whole or in part in the form of a Qualified Reserve Account Credit Instrument). (e) The issuance of such Parity Debt shall not cause the Agency to exceed any applicable Plan Limitations. (1) In the event that such Parity Debt shall bear interest at a variable rate, (i) for purposes of meeting the requirements of the preceding clause (b), such Parity Debt shall be assumed to bear interest at a fixed rate equal to the maximum rate permined to be borne by such Parity Debt under the Supplemental Indenture providing for the issuance thereDf, and (ii) for purposes of meeting the requirements of the preceding clause (d), such Parity Debt shall be assumed to bear interest at a fixed rate equal to the most recently published 25 Bond Revenue Index in The Bond Buyer (or, if such index is not published as of the date of issuance of such Parity Debt, in the most recent publication of a comparable index selected by the Agency) plus tifty (50) basis points. (g) The Agency shall deliver to the Trustee a Certificate of the Agency (which may be based in part on an opinion of Bond Counsel), that the conditions precedent to the issuance of such Parity Debt set forth in the Indenture have been satisfied. Subordinate Debt. In addition to the Bonds and any Parity Debt, from time to time the Agency may issue or incur Subordinate Debt in such principal amount as may be determined by the Agency, provided that the issuance of such Subordinate Debt will not cause the Agency to exceed any applicable Plan Limitations. 46 or (b) (c) SUMMARY OF TIlE INDENTURE The following is a swrunary of cenain provisions of the Indenture and does not purpon 10 be a complete restatement thereof Reference is hereby made to the Indenture for rhe complere renns rhereof Copies of the Indenture are available from the Agency upon requesr. Establishment of Funds Special Fund; Deposit of Tax Revenues. The Agency will establish and hold a Special Fund, separate and apart from other accounts of the Agency, and will deposit into it all of the Tax Revenues received in any Bond Year promptly upon receipt, until such time during such Bond Year as the amounts on deposit in the applicable Special Fund equal the aggregate amounts required to be transferred to the Trustee for deposit into the Interest Account, the Principal Account, the Sinking Account, Reserve Account, and the Redemption Account in such Bond Year as described below and for deposit in such Bond Year in the funds and accounts established by any Supplemental Indenrure for any Parity Debt with respect to the Bonds. All Tax Revenues received by the Agency during any Bond Year in excess of the amount required to be deposited in the Special Fund during such Bond Year will be released from the pledge and lien of the Indenture for the security of the Bonds. Debt Service Fund. The Trustee will establish and hold the Debt Service Fund. The Agency will transfer moneys in the Special Fund to the Trustee in the follo'W'ing amounts at the following times, for deposit by the Trustee in the following special accounts within the Debt Service Fund, in the following order of priority: (a) Interest Account. On or before the Business Day preceding each date on which interest on the Bonds is due and payable, the Agency will withdraw from the Special Fund and transfer to the Trustee for deposit in the Interest Account an amount which, when added to the amount then on deposit in the Interest Account, will be equal to the aggregate amount of the interest coming due and payable on the outstanding Bonds and any Parity Debt on such date. Subject to certain rights of the Trustee, all moneys in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds and any Parity Debt as it comes due and payable. Principal Account. On or before the Business Day preceding each date on which principal of the Bonds is due and payable at maturity, the Agency will withdraw from the Special Fund and transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then on deposit in the Principal Account, will be equal to the amount of principal coming due and payable on such date on the outstanding Bonds and any Parity Debt. Subject to certain rights of the Trustee, all moneys in the Principal Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds and any Parity Debt upon the marurity thereof. Sinking Account. On or before the Business Day preceding each date on which any outstanding term Bonds become subject to mandatory Sinking Account redemption, the Agency will withdraw from the Special Fund and transfer to the Trustee for deposit in the Sinking Account an amount which, when added to the amount then COntained in the Sinking Account, will be equal to the aggregate principal amount of the term Bonds and any Parity Debt subject to mandatory Sinking Account redemption on such date. Subject to certain rights of the Trustee, all moneys on deposit in the Sinking Account will be used and withdrawn by the Trustee for the sole purpose of paying the principal of the term Bonds and any Parity Debt as it comes due and payable upon the mandatory Sinking Account redemption thereof. 47 or (d) Reserve Account. In the event of a deficiency in the Reserve Account, the Trustee will promptly notify the Agency of such tact. Promptly upon receipt of any such notice, the Agency will restore such deticiency from Tax Revenues as soon as possible. Subject to certain rights of the Trustee, amounts in the Reserye Account will be used and withdrdwn by the Trustee solely for the purpose of making transfers to the foregoing accounts on any date which the principal of or interest on the Bonds and any Parity Debt becomes due and payable, in the event of any deficiency at any time in any of such accounts, or for the retirement of all the Bonds Outstanding. Amounts in the Reserve Account in excess of the Reserve Requirement will be transferred to the Interest Account. The Agency has the right at any time to release funds from the Reserve Account, in whole or in part, by tendering to the Trustee a Qualified Reserve Account Credit Instrument, and certain other documents as specified in the Indenture; whereupon the Trustee will transfer amounts on deposit in the Reserve Account to the Agency to be used for authorized purposes. Upon the expiration of any Qualified Reserve Account Credit Instrument, the Agency will either (i) replace such Qualified Reserve Account Credit Instrument with a new Qualified Reserve Account Credit Instrument, or (ii) deposit or cause to be deposited with the Trustee an amount of funds equal to the Reserye Requirement, to be derived from the first available Tax Revenues. (e) Redemption Account. On or before the Business Day preceding each date on which any outstanding Bonds become subject to redemption, other than Sinking Account redemption, the Agency will withdraw from the Special Fund and transfer to the Trustee for deposit in the Redemption Account an amount required to pay the principal of and premium, if any, on the Bonds to be so redeemed on such date. All moneys on deposit in the Redemption Account will be used and withdrawn by the Trustee for the sole purpose of paying the principal of and premium, if any, on the Bonds upon the redemption thereof, on the date set for such redemption, other than mandatory Sinking Account redemption of Term Bonds. Investment of Funds Amounts held by the Trustee in the funds and accounts established under the Indenture will be invested by the Trustee in Permitted Investments specified in the written request of the Agency. In the absence of any such direction from the Agency:the Trustee will inyest any such moneys solely in certain money market funds or portfolios investing in short-term U.S. Treasury securities, rated AAAm or AAAm-G by Standard & Poor's (described in clause (d) of the definition of Permitted Investments). Moneys in the Reserve Account shall be invested in investments with a maturiry of not greater than 5 years or alternatively in an investment agreement which permits withdrawals or deposits without penalty at such time as such money will be needed or in order to replenish the Reserve Account. All moneys in the Redevelopment Fund or the Special Fund will be inyested by the Agency in any investments authorized for the investment of Agency funds under the laws of the State of California. The Agency currently invests all cash on hand in the investments authorized by the Government Code. All interest or gain deriyed from the investment of amounts in any fund or account will be retained therein; provided that all interest or gain from the investment of amounts in the Reserve Account will be deposited by the Trustee in the Interest Account to the extent not required to cause the balance in the Reserve Account to equal the Reserve Requirement. The funds and accounts held by the Trustee shall be valued no less frequently than semi-annually by the Trustee. .~~ 48 i Other Covenants of the Agency Punctual Payment. The Agency will punctually payor cause to be paid the principal, premium (if any) and interest to become due in respect of all the Bonds in striCt conformity with the terms of the Bonds and of the Indenture. The Agency agrees that it will fdithfully observe and perform all of the conditions, Coyenants and requirements of the Indenture, and all Supplemental Indentures. Limitation on Additional Indebtedness. The Agency covenants that it will not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur any indebtedness, which is in any case payable from all or any part of the Tax Revenues, excepting only the Bonds, any Parity Debt and any Subordinate Debt. Plan Limit. The Agency agrees to manage its fiscal affairs in a manner which ensures that it will have sufficient Tax Revenues available under the Plan Limitations in the amounts and at the times required to enable the Agency to pay the principal of and interest and premium (if any) on the Bonds and any Parity Debt when due. Books and Accounts; Financial Statements. The Agency will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Agency and the City in which complete and correct entries are made of all transactions relating to the Merged Redevelopment Project, Tax Revenues and the Special Fund. Such books of record and accounts will at all times during business hours be subject to the inspection of the Owners of not less than 10% in aggregate principal amount of the Bonds then Outstanding, or their representatives authorized in WTiting. The Agency will cause to be prepared annually, within 180 days after the close of each fiscal year so long as any of the Bonds are Outstanding, complete audited financial Statements with respect to such fiscal year, and will furnish a copy of such statements to any Bondowner upon reasonable request and at the expense of such Bondowner. Maintenance of Tax Revenues. The Agency will comply with all requirements of the Redevelopment Law to insure the allocation and payment to it of the Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of San Diego County and the State of California. The Agency will not amend any of the Redevelopment Plans in a manner that will reduce Tax Revenues in any future Fiscal Year unless the Agency first obtains the report of an Independent Redeyelopment Fiscal Consultant stating that the applicable Tax Reyenues for the then current Fiscal Year (calculated on the assumption that such reduction of Tax Revenues was in effect throughout such Fiscal Year), are at least equal to the same percent of Maximum Annual Debt Service on the Bonds which will be Outstanding immediately following the effective date of such amendment as required for the issuance of Parity Debt. Amendments resulting in payments pursuant to the Tax Sharing Statues shall be permitted so long as . The Agency will not enter any agreement with the County or any other governmental or private entity, which would have the effect of reducing the amount of Tax Revenues otherwise available to the Agency for payment of the Bonds, unless such agreement or amendment constitutes Subordinate Debt. [The Agency reserves the right (but shall be under no obligation) to make findings under Section 33334.6(d) of the Law at any future date to the extent applicable]. Tax Covenants. The Agency will take no action or refrain from taking any action with respect to the proceeds of any of the Bonds which would cause any of the Bonds to be "arbitrage bonds", "private activity bonds" or "federally guaranteed" within the meaning of applicable federal tax law. The Agency will cause to be calculated all excess investment earnings which are required to be rebated to the United States of America under applicable federal tax law, and will cause all required amounts to be rebated from available funds of the Agency. 49 or Continuing Disclosure. The Agency covenantS that it will comply with and carry out all of the its obligations under the Continuing Disclosure Certificate. Notwithstanding any other provision of the Indenture, failure of the Agency to comply with the Continuing Disclosure Certificate shall nOt be considered an Event of Default; however, any Participating Underwriter (as detined in the Certiticate) or 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 Agency to comply with its obligations under this provision of the Indenture. Amendment of Indenture The Indenture and the rights and obligations of the Agency and the Owners may be modified or amended at any time without the consent of any Owners, to the extent permined by law, but only for anyone or more of the following purposes: (a) to add covenants and agreementS of the Agency or to limit or surrender any rights or power reserved to or conferred upon the Agency; (b) to cure any ambiguity, or to cure, correct or supplement any defective provision, or in a.rlY other respect as the Agency may deem necessary or desirable, proYided under any circumstances that such modifications or amendments do not materially adversely affect the interests of the Owners in the opinion of Bond Counsel; (c) to provide for the delivery of a Qualified Reserve Account Credit Instrument; (d) to provide for the issuance of Parity Debt (as permined by the applicable Indenture) and to provide the terms and conditions under which such Parity Debt may be issued; or (e) to amend any provision relating to the requirements of or compliance with the Tax Code. The Indenture may be amended at any time with the wrinen consent of the Owners of a majority in aggregate principal amount of the outstanding Bonds. No such amendment may (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Agency to pay the principal or interest at the time and place and at the rate and in the currency provided therein of any Bond without the express wrinen consent of the owner of such Bond, (b) reduce the percentage of Bonds required for the wrinen consent to any such amendment, or (c) without its wrinen consent thereto, modify any of the rights or obligations of the Trustee. Events of Default and Remedies Events of Default Defined. The following events constitute EventS of Default under the Indenture: (a) Failure to pay any installment of the principal of any Bonds when and as the same shall become due and payable, whether at maturity, by proceedings for redemption, by acceleration or otherwise. (b) Failure to pay any installment of interest on any Bonds when and as the same shall become due and payable. (c) Failure by the Agency to observe and perform any of the other covenantS, agreements or conditions contained in the Indenture or in the Bonds, if such failure continues for a period of 60 days after wrinen notice thereof has been given to the Agency by the Trustee or to the Agency and the Trustee; proYided that if in the reasonable opinion of the Agency the failure stated in the notice can be corrected, but not within such 60 day period, such failure will not constitute an event of default if corrective action is instituted by the Agency within such 60 day period and the Agency thereafter diligently and in good faith cures such failure in a reasonable period oftime. (d) Filing by the Agency of a petition in bankruptcy. 50 or Remedies. If an Event of Default has occurred and is continuing, the Trustee may, and at the wrinen direction of the Owners of a majority in aggregate principal amount of the Bonds at the time Outstanding shall, (a) upon notice in writing to the Agency, declare the principal of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and (b) upon receipt of indemnification satisfactory to it from any liability or expense, including payment of the fees and expenses of its counsel, exercise any other remedies available to the Trustee or the Owners in law or in equity. The Trustee is appointed as the true and lawful anorney-in-fdct of the Owners for the purpose of bringing any suit, action Or proceeding and to do and perform any and all acts fOr and on behalf of the Owners, as may be necessary Or adyisable in the opinion of the Trustee, subject to the provisions of the Indenture and applicable provisions of any law. In the eyent that the Trustee, upon the happening of and Event of Default, shall have taken any action, by judicial proceedings Or otherwise, pursuant to its duties under the Indenture, whether upon its own discretion Or upon the request of the Owners of a majority in principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a wrinen request signed by the Owners of a majority in principal amount of the Outstanding Bonds opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation. All of the Tax Revenues and all sums in the funds and accounts established and held by the Trustee under the Indenture upon the date of the declaration of acceleration, and all sums thereafter received by the Trustee under the Indenture, shall be applied by the Trustee as follows and in the following order: (a) To the payment of any fees, COSts and expenses incurred by the Trustee to protect the interests of the Owners of the Bonds; payment of the fees, COSts and expenses of the TruStee (including fees and expenses of its counsel) incurred in and about the performance of its powers and duties under the Indenture and the payment of all fees, COstS and expenses owing to the Trustee. (b) To the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal with interest on such overdue amounts at the respective rates of interest borne by the Outstanding Bonds, and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue amounts without preference Or priority among such interest, principal and interest on overdue amounts ratably to the aggregate of such interest, principal and interest on overdue amounts. Limitations of Owners' Rights. No Owner has the right to institute any suit, action or proceeding at law or in equity, for any remedy under the Indenture, unless (a) such Owner has preyiously giyen to the Trustee wrinen notice of the occurrence of an Eyent of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding have requested the Trustee in writing to exercise its powers under the Indenture; (c) said Owners have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the COStS, expenses and liabilities to be incurred in compliance with such requeSt; and (d) the Trustee has refused or failed to comply with such request for a period of 60 days after such wrinen requeSt has been received by the Trustee and said tender of indemnity is made to the Trustee. 51 --r Defeasance of Bonds If the Agency shall pay and discharge the entire indebtedness of any Bonds in anyone or more of the following ways: (a) by paying or causing to be paid the principal of and interest On such Bonds, as and when the same become due and payable; (b) by irrevocably depositing with the Trustee or another fiduciary, in trust, at or before maturity, money with, together with the available amounts then on deposit in the funds and accounts established pursuant to the Indenture and all Supplemental Indentures, in the opinion or report of an Independent Accountant is fully sufficient to pay such Bonds, including all principal, interest and redemption premium, if any; (c) by irrevocable depositing with the Trustee or another fiduciary, in trust, non-callable Defeasance Securities in such amount as an Independent Accountant shall determine will, together with the interest to accrue thereon and available moneys then on deposit in any of the funds and accounts established pursuant to the Indenture and all Supplemental Indentures, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiwn, if any, at or before maturity; or (d) by purchasing such Bonds prior to maturity and tendering such Bonds to the Trustee for cancellation; and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been duly giyen or provision satisfactory to the Trustee shall have been made for the giving of such notice, then, at the election of the Agency, and notwithstanding that any such Bonds shall not have been surrendered for payment, the pledge of the Tax Revenues and other funds proyided for in the Indenture and all other obligations of the Trustee and the Agency under the Indenture with respect to such Bonds shall cease and terminate, except only (a) the obligation of the Agency and the Trustee with respect to rebate of Rebatable Arbitrage, (b) the obligation of the Trustee to transfer and exchange Bonds, (c) the obligation of the Agency to payor cause to be paid to the Owners of such Bonds, from the amounts so deposited with the Trustee, all sums due thereon, and (d) the obligations of the Agency to compensate and indemnify the Trustee. Notice of such election shall be filed with the Trustee. Any fund thereafter held b the Trustee, which are nor required for said purpose, shall be paid over to the Agency. 52 or 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 or any Other document described herein are in many respectS dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documentS may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified to the extent that the enforceability of certain legal rights related to the Indenture 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 which states that the Indenture is a yalid and binding contract of the Agency and enforceable in accordance with its terms. The legal opinion of Bond Counsel will be subject to the effect of bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights and to the exercise of judicial discretion in accordance with general principles of equity. The Agency has no knowledge of any fact or other information which would indicate that the Indenture is not so enforceable against the Agency, except to the extent such enforcement is limited by principles of equity and by state and federal laws relating to bankruptcy, reorganization, moratorium or creditors' rightS generally. Certain legal maners will be passed on for the Agency by the City Anorney and by Stradl ing Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel. Fees' payable to Bond Counsel and Disclosure Counsel are contingent upon the sale and delivery of the Bonds. Tax Matters In the opinion of Stradling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on indiyiduals and corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax. Bond Counsel notes that, with respect to corporations, interest on the Bonds will be included as an adjustment in the calculation of alternatiye minimum taxable income, which may affect the alternative maximum taxable liability of such corporations. In addition, the difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the Stated redemption price at maturity of such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash anributable to such excludable income. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the owner of a Bond is excludable from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax. 53 or Bond Counsel's opinion as to the exclusion from gross income for rederal income tax purposes or interest (and original issue discount) on the Bonds is based upon certain representations of fact and certitications made by the City, the Underwriter and others and is subject to the condition that the City complies with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds to assure that interest on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactiye to the date of issuance of the Bonds. The City has covenanted to comply with all such requirements. Should the interest (and original issue discount) on the Bonds become includable in gross income for rederal income tax purposes, the Bonds are not subject to early redemption as a result of such occurrence and will remain outstanding until maturity or until otherwise redeemed in accordance with the Fiscal Agent Agreement. Bond Counsel's opinion may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date of issuance or the Bonds. Bond Counsel has not undertaken to dete;mne, or to inform any person, whether any such action or events are taken or do occur. Although Bond Counsel has rendered an opinion that interest (and original issue discount) on the Bonds is excluded from gross income for rederal income tax purposes provided that the City continues to comply with certain requirements or the Code, the accrual or receipt of interest (and original issue discount) on the Bonds may otherwise affect the tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient's particular tax statuS and other items of income or deductions. Bond Counsel expresses no opinion regarding any such consequences. Accordingly, all potential purchasers should consult their tax advisors berore purchasing any of the Bonds. The form of Bond Counsel's opinion is set foITh in "APPENDIX E" hereto. Absence of Litigation The Agency will furnish a certificate dated as of the date of delivery of the Bonds that there is not now known to be pending or threatened any litigation restraining or enjoining the execution or delivery of the Indenture or the sale or delivery of the Bonds or in any manner questioning the proceedings and authority under which the Indenture are to be executed and delivered or the Bonds are to be delivered or affecting the validity thereof. 54 , CONCLUDING INFORMATION Ratings on the Bonds Standard & Poor's Ratings Services and Moody's Inyestors Service have assignd their ratings of "AAA" and "Aaa", respectiyely, to the Bonds with the understanding that a Financial Guaranty Insurance Policy insuring payment when due of the principal of and interest on the Bonds will be issued on the closing date by Financial Security Assurance Inc. 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 insurance and the information and materials furnished to it and on investigations, studies and assumptions of its own. 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 reyision or withdrawal of such rating may have an adverse effect on the market price of the Bonds. The Financing Consultant The material contained in this Official Statement was prepared by Rod Gunn Associates, Inc., Seal Beach, California, an independent financial consulting firm, who advised the Agency as to the financial srructure and certain other financial mallers relating to the Bonds. The infonnation set forth herein has been obtained by Rod Gunn Associates, Inc. from sources which are believed to be reliable, bur such infonnation is not guaranteed by Rod Gunn Associates, Inc. as to accuracy or completeness, nor has it been independently verified. Fees paid to Rod Gunn Associates, Inc. are contingem upon the sale and delivery of the Bonds. Additional Information The summaries and references contained herein with respect to the Indenture, the Bonds, statutes and other documents, do not purpOrt to be comprehensive or definitive and are qualified by reference to each such document or statute and references to the Bonds are qualified in their entirety by reference to the form hereof included in the Indenture. Definitions of certain terms used herein are set forth in "APPENDIX A". Copies of the Indenture are ayailable for inspection during the period of initial offering on the Bonds at the offices of the Financing Consultant, Rod Gunn Associates, Inc., 3010 Old Ranch Parkway, Suite 330, Seal Beach, California 90740, telephone (562) 598-7677. Copies of these documents may be obtained after delivery of the Bonds from the City at 276 Fourth Avenue, Chula Vista, California 91910. References Any statements in this Official Statement involving mallers 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 consrrued as a contract or agreement between the Agency and the purchasers or Owners of any of the Bonds. 55 , Execution The execution of this Official Statement by the Treasurer has been duly authorized by the Redevelopment Agency of the City of Chula Vista. REDEVELOPMENT AGENCY OF THE CITY OFCHULA VISTA By: Treasurer 56 or APPENDIX A DEFINITIONS OF CERTAIN TERMS Unless otherwise defined in this Official Statement, the following terms have the following meanings. "Annual Debt Service" means, for each Bond Year, the sum of (a) the interest payable on the OutStanding Bonds in such Bond Year, and (b) the principal amount of the Outstanding Bonds scheduled to be paid in such Bond Year upon the maturity or mandatory Sinking Account redemption thereof. "Bond Insurer" means Financial Security Assurance, Inc. including itS successors, as issuer of the Insurance Policy. "Bond Year" means any twelve-month period beginning on _ in any year and extending to the next succeeding September 1, both dates inclusiye; except that the first Bond Year shall begin on the Closing Date and end on September 1, 200 1. "Business Day" means a day of the year (other than a Saturday or Sunday) on which banks in California, are not required or permitted to be closed, and on which the Federal R;:serve banking system is open. "Certificate of the Agency" means a certificate in writing signed by the Chair, E'Cecutive Director, Deputy Executive Director, Finance Officer or Secretary of the Agency, or any othe: officer of the Agency duly authorized by the Agency for that purpose. "Defeasance Securities" means any of the following, or any combination thereof: (a) cash, (b) State and Local Government Series securities issued by the United States Treasury, ((I United States Treasury bills, notes and bonds, as traded on the open market, (d) zero coupon United States Treasury Bonds, and (e) any other investmentS approYed by the Bond Insurer as Defeasance Securities. "Federal Securities" means any direct obligations of the United States of America and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America, provided, that the full faith and credit of the United States of America m= be pledged to any such direct obligation or guarantee. "Fiscal Year" means any twelve-month period beginning on July I in any year and extending to the next succeeding June 30, both dates inclusive, or any other twelve-month period selected and designated by the Agency as itS official fiscal year period pursuant to a Certificate of the Agency filed with the Trustee. "Independent Accountant" means any certified public accountant or firm of such certitied public accountantS duly licensed or registered or entitled to practice and practicing as such under the laws of the State, appointed by or acceptable to the Agency, and who, or each of whom: (a) is in fact independent and not under domination of the Agency; (b) does not haye any substantial interest, direct or indirect, with the Agency; and (c) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency. "Independent Redevelopment Fiscal Consultant" means any consultant or tirm of such consultants appointed by or acceptable to the Agency and who, or each of whom: (a) is judged by the Agency to haye substantial expertise in matters relating to the collection, estimation and projection of Tax Revenues or otherwise with respect to the financing of redevelopment projectS: (b) is in fact independent and not under domination of the Agency; (c) does not have any substantial interest, direct or indirect, with the Agency other than as the Original Purchaser, and (d) is not connected with the A-I or Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency. "Infonnation Services" means Financial Infonnation, Inc.'s "Daily Called Bond Service", 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Anention: Editor; Kenny Information Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, New York 10006; Moody's Investors Service "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Anention: Municipal News Repons; Standard & Poor's Corporation "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to the redemption of bonds as the Agency may designate in a Request of the Agency delivered to the Trustee. "Interest Payment Date" means September 1, 2000, and each September 1 and March 1 thereafter so long as any of the Bonds remain unpaid. "Maximum Annual Debt Service" means, as of the date of calculation, the largest amount of Annual Debt Service on all Outstanding Bonds for the current or any furnre Bond Year. For purposes of such calculation, there shall be excluded a pro rata portion of each installment of principal of any Parity Debt, together with the interest to accrue thereon, in the event and to the extent that the proceeds of such Parity Debt are deposited in an escrow fund from which amounts may not be released to the Agency unless the Agency meets the requirements of Section 3.5 for the issuance of Parity Debt at the time of such release, taking the released proceeds into account. "Moody's" means Moody's Investors Service, of New York, New York, and its successors. "Outstanding" when used as of any particular time with reference to Bonds, means (subject to the provisions of the Indenrnre) all Bonds except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds paid or deemed to have been paid within the meaning of the Indenrnre; and (c) Bonds in lieu of or in substirntion for which other Bonds shall have been authorized, executed, issued and delivered by the Agency pursuant to the Indenrnre. "Owner" or "Bondowner" means, with respect to any Bond, the person in whose name the ownership of such Bond shall be registered on the Registration Books. "Parity Debt" means any bonds, notes, loans, advances or other indebtedness issued or incurred by the Agency on a parity with the Bonds pursuant to the Indenture. "Pennitted Investments" means any of the following which at the time of invesonent are legal inyesnnents under the laws of the State for the moneys proposed to be inyested therein: (a) Direct obligations of the United States of America (including obligations issued or held in book- entry form on the books of the Depanment of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. (b) Bonds, debenrnres, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (i) U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership A-2 or (ii) Farmers Home Administration (FmHA) Certificates of beneficial ownership (iii) Federal Financing Bank (iv) Federal Housing Administration Debentures (FHA) (v) General Services Administration Pan:icipation cen:ificates (vi) Goyernment National Mortgage Association (GNMA or "Ginnie Mae") GNMA-guaranteed mortgage-backed bonds GNMA-guaranteed pass-through obligations (vii) U.S. Maritime Administration Guaranteed Tide XI financing (viii) U.S. Depamnent of Housing and Urban Development (HUD) Project Notes Local Agency Bonds New Communities Debentures - U.S. goyernment guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds (c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): (i) Federal Home Loan Bank System Senior debt obligations (ii) Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") Pan:icipation certificates Senior debt obligations (iii) Federal National Mortgage Association (FNMA or "Fannie Mae") (iy) Student Loan Marketing Association (SLMA or "Sallie Mae") Senior debt obligations (v) Resolution Funding Corp. (REFCORP) obligations (vi) Farm Credit System Corp. - Consolidated system-wide bonds and notes A-3 -r (d) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G, AAAm or AAm and if rated by Moody's rated Aaa, AaI or Aa2 (including those of the Trustee and its affiliates). (e) Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such ceniticates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third pany and the Bondholders must have a perfected first security interest in the collateral. (f) Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF (including those of the Trustee and its affiliates). (g) Investment Agreements approved by the Bond Insurer, with prior wrinen notice to Moody's and S&P, with an entity, or guaranteed by an entity, whose long-term debt is rated not less than AA by S&P and Moody's at the time of execution of such agreement and which permits the withdrawal of all funds and accrued interest to the date of withdrawal, without penalty, in the event that such long-term rating is less than" AA." (h) Commercial paper rated, at the time of purchase, "Prime - 1" by Moody's and "A-I" or bener by S&P. (i) Bonds or notes issued by any state or municipality which are rated by Moody's and S&P in one of the twO highest rating categories assigned by such agencies. . G) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured or unguaranteed obligation rating of "Prime - I" or "A3" or bener by Moody's and "A-I" or "A" orbenerbyS&P. (k) _ Repurchase agreements approved by the Bond Insurer with prior wrinen notice to Moody's and S&P providing for the transfer of securities from a dealer bank or securities firm (sellerlborrower) to the Agency or the Trustee, and the transfer of cash from the Agency or the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the Agency, or the Trustee, in exchange for the securities at a specified date or dates. (I) The Local Agency Investment Fund of the State of California, created pursuant to Section 16429.1 of the California Government Code. (m) Any other investment which the Agency is pennined by law to make, but only with the prior wrinen consent of the Bond Insurer and prior wrinen notice to Moody's and Standard and Poor's. "Plan Limitations" means the limitations contained or incorporated in the respective Redevelopment Plan on (a) the aggregate principal amount of indebtedness payable from Tax Revenues which may be outstanding at any time, (b) the aggregate amount of taxes which may be divided and allocated to the Agency pursuant to the Redevelopment Plan, (c) the period of time for establishing or incurring indebtedness payable from Tax Revenues and (d) the period of time for receiving Tax Revenues for any purpose, established pursuant to Section 33333.4 or 33333.6 of the Redevelopment Law. A-4 or ~QuaJified Reserve Account Credit Instrument" means any irrevocable standby or direct-pay letter ot' credit or surety bond issued by a commercial bank or insurance company and deposited with the Trustee pursuant to the Indenture, provided that all ot' the tollowing requirements are met: (a) the long- term credit rating ot' such bank or insurance company is in one ot' the two highest rating categories by S&P and Moody's; (b) such letter of credit or surety bond has a term of at least twelye (12) mon:hs; (c) such letter of credit or surety bond has a stated amount at least equal to the portion ot' the Reserve Requirement with respect to which funds are proposed to be released pursuant to the Indenture: (d) the Trustee is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Interest Account, the Principal Account or the Sinking Account for the purpose of making payments required pursuant to the Indenture; (e) the Bond Insurer has approyed in writing such Qualitied Reserve Account Credit Instrument; and (f) written notice of the posting of such Qualified Reserve Account Credit Instrument is given to S&P and Moody's. "Record Date" means, with respect to any Interest Payment Date, the close of business on the fifteenth (15th) calendar day of the month preceding such Interest Payment Date, whether or not such fifteenth (15th) calendar day is a Business Day. "Redevelopment Law" means the Community Redevelopment Law of the State, constituting Part I of Division 24 of the Health and Safety Code of the State, and the acts amendatory thereof and supplemental thereto. "Request of the Agency" means a request in writing signed by the Chair, Executive Director, Deputy Executiye Director, Finance Officer or Secretary of the Agency, or any other officer of the Agency duly authorized by the Agency for that purpose. . "Reserve Requirement" means, as of the date of any calculation by the Agency, the lesser of (a) Maximum Annual Debt Service, (b) 125% of average Annual Debt Service on the Bonds, or (c) 10% of the original principal amount of the Bonds (less original issue discount if in excess of two percent (2 %) of the stated redemption amount at maturity). "S&P" means Standard & Poor's Ratings Seryices, a division of the McGraw-Hill Companies, bc., of New York, New York, and its successors. "Supplemental Indenture" means any resolution, agreement or other instrument which amends, supplements or modifies the Indenture and which has been duly adopted or entered into by the .-'.gency; but only if and to the extent that such Supplemental Indenture is specifically authorized under the Indenture. "Tax Code" means the Internal Revenue Code of 1986, as in effect on the date of issuance ot' the Bonds or (except as otherwise referenced in the Indenture) as it may be amended to apply to obligations issued on the date of issuance of the Bonds, together with applicable proposed, temporary and tinal regulations promulgated, and applicable official public guidance published, under the Tax Code (including the Tax Regulations). "Tax Regulations" means temporary and permanent regulations promulgated under Section 103 and all related provisions of the Tax Code. "Tax Revenues" means all taxes annually allocated to the Agency with respect to the Town Centre II Project Area, the Otay Valley Road Project Area and the Southwest Project Area, comprising the Merged Redevelopment Project, following the Closing Date within the Plan Limitations pursuant to Article 6 of Chapter 6 (commencing with Section 33670) ot' the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State and as provided in each Redevelopment Plan, including (a) all payments, subventions and reimbursements (if any) to the Agency specitically attributable to ad A-5 -r valorem taxes lost by reason of tax exemptions and tax rate limitations, and (b) all amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund in any Fiscal Year pursuant to Section 33334.3 of the Redevelopment Law, but only to the extent such amounts are specifically pledged to the payment of principal, interest and premium (if any) with respect to any Parity Debt but excluding (i) all amounts of such taxes required to be deposited in the Low and Moderate Income Housing Fund (and not includable as set forth in (h) above), (ii) all amounts of such taxes which are payable to entities other than the Agency pursuant to the Tax Sharing Statutes to the extent such Tax Sharing Statutes or Tax Sharing Agreements create a prior lien on such taxes and such entities other than the Agency have not subordinated their right to receive payments, and (iii) amounts, if any, payable by the State to the Agency under and pursuant to the provisions of Chapter 1. 5 of Part I of Division 4 of Tide 2 (commencing with Section 16110) of the Government Code ofthe State. "Tax Sharing Statutes" means Section 33607.7 of the Redevelopment Law and, to the extent incorporated pursuant to such Section 33607.7, Section 33607.5 of the Redevelopment Law. A-6 i APPENDIX B CITY OF CHULA VISTA INFORMATION STATEMENT The following information concerning the City of Chula Vista is presented as general background data. The Bonds are payable solely from Tax Reyenues as described in the Official Statement. The Bonds are not an obligation of the City, and the taxing power of the City is not pledged to the payment of the Bonds. General Information The City of Chula Vista is located on San Diego Bay in Southern California, 8 miles south of San Diego and 7 miles north of the Mexico border in an area generally known as ~South Bay". City limitS cover approximately 50 square miles. Chula Vista is the second largest city in San Diego County. In addition to the City of San Diego, neighboring communities include Imperial Beach, La Mesa and National City. Government Services The City of Chula Vista was incorporated March 17, 1911, and became a charter city in 1949. Chula Vista operates under a Council/Manager form of municipal government and provides the following services: public safety, community services, engineering services, planning services, public works, general administrative services and capital improvementS. The City of Chula Vista currently employs 895 full-time and 467 part-time employees. The City has a class 3 fire rating. Transportation U.S. Highways 5 (along the coast) and 805 (inland) provide full freeway access from the City north to San Diego and south to the Mexican border. Commuter rail service is provided by the San Diego Trolley, a light rail system started in 1981 and eleven bus routes coyering the City. Daily bus connections serve the City, and Southern Pacific Railway and San Diego's Lindbergh International AirpOrt are fifteen minutes to the north of the City. Community Information There are two acute-care hospitals, two psychiatric hospitals and three convalescent hospitals, and more than 400 medical doctors and allied professionals in Chula Vista. There are two daily, one weekly and one semi-weekly newspapers published and circulated in the City. The City has one main public library and two branch libraries. Recreational facilities within or near the City include twenty-four parks, four community centers, six ~tot lotS", two ballfields, twenty-eight tennis courtS, three golf courses, four municipal swimming pools, two gymnasiums and boat launching facilities. The City bayfront area contains a marina which houses 552 boatS and miles of public beaches. The City also provides many trails for bicycling, hiking and jogging. The City is also the home of the United States Olympic Training Center. This is the third such training center in the nation and the only year round training facility. The center is located on a 150-acre site donated by Easdake Development Company adjacent to the Otay Lake reservoir. The City has more than sixty churches and nearly 100 service, fraternal and ciyic organizations. B-1 -1 Public Educational instruction from Kindergarten through high school is provided by the Chula ViSta Elementary School District and Sweetwater Union High school District. These districts administer twenty-six elementary schools, nine junior high schools and eight senior high schools. Southwestern College, a two year Corrununity College, has an enrollment of more than 15,000. There are also four adult education schools and twelve private schools. There are seven universities or colleges within 30 minutes commuting distance from Chula Vista in the San Diego Metropolitan Area. The City has proposed a University of California campus in Chula Vista, to be located on a 400-acre site adjoining the Olympic Training Center. B-2 i Population The following charts provide a comparison of population growth for Chula Vista, surrounding cities and San Diego County between 1995 and 1999. TABLE NO. B-1 CHANGE IN POPULATION CHULA VISTA, SURROUNDING CITIES AND SAN DIEGO COUNTY 1995 - 1999 14.0% 11.4% 12.0% 10.0% 7.3% 8.0% 6.0% 3.1% 4.0% 2.0% 0.0% Chuia Vista Surrounding Cities San Diego County CHULA VISTA SURROUNDING CITIES SAN DIEGO COUNTY Percentage Percentage Percentage Year Population Cbange Population Change Population Change 1995 149,800 173,850 2,658,600 1996 152,700 1.9 % 174,800 0.5 % 2,682,100 0.9 % 1997 156,400 2.4 % 178,550 2.1 % 2,729,100 1.8 % 1998 162,100 3.6 % 175,700 (1.6)% 2,795,800 2.4 % 1999 166,900 3.0 % 179,200 2.0 % 2,853,300 2.1 % % Increase Between 1995-1999 11.4 % 3.1 % 7.3 % Surrounding cities include El Cajon, Coronado and National City. Source: State of California Depamnent of FInance, Population Research Unit, 'City/County PopulatiulI Estimates With Annual Percent Challge', published annually in May for current year. B-3 , Personal Income Median personal income information for the City of Chula Vista, San Diego County, the State of California and the United States are summarized in the following chartS. TABLE NO. B-2 EFFECTIVE BUYING INCOME CITY OF CHULA VISTA, SAN DIEGO COUNTY, CALIFORNIA AND UNITED STATES 1994 - 1998 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 1998 DChuIa Vista o San Diego County fBState of California i1United States . Year Chula VISta San Diego County State of California United States 1994 37,053 39,542 40,969 37,070 1995 (I) 31,341 33,679 34,533 32,238 1996 32,128 34,445 35,216 33,482 1997 33,267 35,725 36,483 34,618 1998 33,911 36,296 37,091 35,377 (I) Prior to 1995, Effective Buying Income was based on "Personallncome" rather than "Money Income" and is not directly compar..ble with 1995 Effective Buying Income. Source: Sales and Marketing Management, "Survey of Buying Power", published annually in August for prior year. B-4 '1 Employment and Industry The City is located in the San Diego COUnty MSA labor market. Four major job categories constitute 83.0% of the work force. They are services (32.5%), wholesale and retail trade (22.1 %) government (17.4%) and manufacturing (11.0%). The January, 2000 unemployment rate in the San Diego County area was 3.0%. The State of California January, 2000 unemployment rate (unadjusted) was 5.4%. TABLE NO. B-3 SAN DIEGO COUNTY MSA WAGE AND SALARY WORKERS BY INDUSTRY'" (in thousands) Industry 1996 1m 1998 1999 2000 Government 188.8 191.5 192.4 198.0 203.1 Services 308.4 324.9 345.1 362.5 380.7 Finance, Insurance & Real Estate 55.9 58.6 62.0 67.7 68.3 Wholesale & Retail Trade 232.6 235.0 243.6 248.5 258.2 Transportation & Public Utilities 37.1 39.6 43.1 50.3 52.9 Manufacturing: Nondurable goods 31.5 32.7 34.7 35.9 37.4 Durable goods 83.7 86.2 89.9 91.0 91.2 Construction and Mining 43.0 47.0 55.9 62.5 68.4 Total Nonagricultural 981.0 1,015.5 1,066.7 1,116.4 1,160.2 Agriculture, forestry & fisheries' 9.5 9.6 9.3 9.4 10.1 Total (all industries) 990.5 1,025.1 1,076.0 1,125.8 1,170.3 % OF TOTAL WORKERS - Industry 1996 1997 1998 1999 2000 Government 19.1 % 18.7 % 17.9 % 17.6 % 17.4 % Services 31.1 % 31.7 % 32.1 % 32.2 % 32.5 % Finance, Insurance & Real Estate 5.6 % 5.7 % 5.8 % 6.0 % 5.8 % Wholesale & Retail Trdde 23.5 % 22.9 % 22.6 % 22.1 % 22.1 % Transportation & Public Utilities 3.7 % 3.9 % 4.0 % 4.5 % 4.5 % Manufacturing: Nondurable goods 3.2 % 3.2 % 3.2 % 3.2 % 3.2 % Durable goods 8.5 % 8.4 % 8.4 % 8.1 % 7.8 % Construction and Mining 4.3 % 4.6 % 5.2 % 5.6 % 5.8 % Total Nonagricultural 99.0 % 99.1 % 99.1 % 99.2 % 99.1 % Agriculture, forestry & fisheries' 1.0 % 0.9 % 0.9 % 0.8 % 0.9 % Total (all industries) 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % (I) Annually, as of January. Due to the change in the estimating method, fdnn employment data prior to January, 1997 may nOt be strictly compamble to current fann employment estimates. Source: State of California Employment Development Depanmem, "Annual PlaJl/ling Information" and 'Califomia Labor Market Bulletin". * B-5 or The major employers operating within the City and their respective number of employees as of June 1999, are as follows: "--'" TABLE NO. B4 CITY OF CHULA VISTA TOP BUSINESS INDUSTRIAL/OFFICE EMPLOYMENT Number of Emplovees Tvpe of Business Emplover BFGoodrich Aerospace Aerosuucrures Group Sharp Chula Vista Medical Center Scripps Memorial Hospital White Water Canyon American Fashion Inc. Sunrise Medical Inc. Eco Building Systems 2,075 800 650 500 500 450 210 CITY OF CHULA VISTA TOP GOVERNMENT EMPLOYMENT Emplover United Stated Border Parrol SouthweStern Community College City of ChuIa Vista Department of Social Services Sweetwater Union High School District Number of Emplovees 2,700 1,100 825 300 260 Emplover Sears Price Costco Macy's Big Kmart Fuller Honda CITY OF CHULA VISTA TOP RETAil. EMPLOYMENT Number of Employees 360 250 250 200 200 Source: City of Chula Vista. B-6 or Aerospace Manufacturer Hospital Hospital Amusement Park Clothing Manufacrurer Medical Offices Modular Building ManufactUrer Type of Business Government Agency Community College Municipal Government Social Service Agency Secondary School District Type of Business Department Store General Merchandise Department Store General Merchandise Automotiye Retailer Commercial Activity The following charts surrunarize the volume of retail sales and taxable transactions for the City of Chula Vista for 1994 through 1998. TABLE NO. 8-5 CITY OF CHULA VISTA TOTAL TAXABLE TRANSACTIONS (in thousands) 1994 - 1998 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 1994 1995 L\1 Retail Sales 1996 1998 1997 CJAll Other OutletS Total Taxable Retail Sales Retail Sales Transactions Issued Sales Year ($OOO's) % Change Permits ($000'5) % Change Permits 1994 974,901 1,454 1,102,748 3,236 1995 928,341 (4.8)% 1.553 1,063,911 (3.5)% 3,364 1996 987,211 6.3 % 1,594 1,133,092 6.5 % 3,401 1997 1,042,195 5.6 % 1,643 1,213,423 7.1 % 3,507 1998 1,120,534 7.5 % 1,660 1,320,195 8.8 % 3,535 Source: State Board of Equalization, . Taxable Sales in California", published annually in November for prior year. B-7 -r Taxable transactions by type of business for the City of Chula Vista for 1994 through 1998 are summarized below. TABLE NO. B-6 CITY OF CHULA VISTA TAXABLE TRANSACTIONS BY TYPE OF BUSINESS (in thousands) 1993 - 1997 1994 1995 1996 1997 1998 Retail Stores Apparel Stores $ 61,828 $ 54,%8 $ 61,487 $ 64.979 $ 63,414 GencrnI Merchandise Stores 294.436 260,114 287,235 337,230 382,944 Drug Stores 24,658 21,574 23,220 . . Food Stores 73,701 70,276 . 72,388 81,503 81,006 Packaged Uquor Stores 7,381 6,683 5,948 . * Eating/Drinking Places 117,290 118,053 121,494 126,357 131,661 Home Furnishings and Appliances 46,258 46,507 43,600 47.004 55,856 Building Materials and Farm Implements 73,622 68,448 68,119 70,930 75.im Auto Dealers/Suppliers 86,077 86,341 92,235 89,986 107,808 Service Stations 94,317 99,657 101,821 103,994 88,570 Other Retill Stores 95,333 95,720 100,664 120.212 133,463 Total Retail Stores 974,901 928,341 987,211 1,042,195 I,UO,534 Ail Other Outlets 127.847 135 .570 145.881 171 ,228 199,661 Total All Outlets $ 1,102,748 $ 1,063,911 $ 1,133,092 $ 1,213,423 $ 1,320,195 As of 1997, Drug Stores have been merged with General Merchandise Stores and Packaged Liquor Stores have been merged with Other Retail Stores. Source: Slare Board of Equalization. "Taxable Sales in California", published annually in November for prior year. . B-8 -r The following charts summarize the change in taxable transactions for the City of Chula Vista and surrounding cities. 30.0 % 25.0 % 20.0 % 15.0 % 10.0 % 5.0 % 0.0 % TABLE NO. B-7 CITY OF CHULA VISTA AND SURROUNDING CITIES CHANGE IN TOTAL TAXABLE TRANSACTIONS (in thousands) 1994 - 1998 24.6 % 19.7 % 20.2 % 13.5 % National City Coronado % Change from City 1994 1995 1996 1997 1998 1994-1998 OfULA VISTA $1,102,748 $1,063,911 $ 1,133,092 $1,213,423 $1,320,195 19.7% E Cajon l,l04,21D 1,126,185 1,165,861 l,24D,538 1,327,520 20.2% Coronado 123,255 128,358 135,109 146,658 153,621 24.6% National City 886.360 869,511 891,234 910,232 1,006,266 13.5% Chula Vista E Cajon Source: State Board of Equalization, "Taxable Sales III California" , published annually in November for prior year. B-9 -I Building Activity ..- The following chans summarize building activity valuations for the City of Chula Vista for the five- year period from 1994 through 1998. TABLE NO. B-8 CITY OF CHULA VISTA BUILDING ACTIVITY AND VALUATION (in thousands) 1994 . 1998 1994/95 I . ..,~~~",:.>>>:.:.",;. :.;.:<.,,..,>>:.>:.:.>>:~.:.:-:-:.~ :.;. uN '~..w...v.,.'.:..w.. .....:......~~...... "'"W. ..._.w...... .~....,-.-:.;- 1995/96 ..<"'........,.-=... ""'W'-", ''''"........,.:.....n_.....w.''"w ""v.......w,,^ 1996/97 .~.:._.;*""<w.'..:*'~'..."(>;*X{>(<<<*:.:<-:N:.:+:~<<-;<<<<<*:-:<<<<'..:<<<<*:.>:. 1997/98 1998/99 $0 $1,000,000 $2,000,000 $3,000,000 Source: City of Chula Vista and Economic Sciences Corporation, "California Residential Building Permit Activity", published annual in March for prior year. B-lO I APPENDIX C AGENCY AUDITED FINANCIAL STATEMENTS C-l "i ... APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate"), dated as of October 15, 2000, is executed and delivered by the Chula Vista Redevelopment Agency (as the "Issuer") and U.S. Bank Trust National Association, (as the initial "Dissemination Agent") in connection with the issuance of the $ Chula Vista Redevelopment Agency, 2000 Tax Allocation Bonds (Merged Redevelopment Project) (the "Bonds"). The Bonds are being issued pursuant to an Indenture of Trust, dated as of October 15, 2000 (the "Indenture") between the Issuer and U.S. Bank Trust National Association, as Trustee. The Issuer and the Dissemination Agent coyenant and agree as follows: SECTION 1. Purpose of the Disclosure Cenificate. This Disclosure Certiticate is being executed and delivered by the Issuer and the Dissemination Agent for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5). SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized tenns shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vOle or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bond for federal income taX purposes. "Disclosure Representative" shall mean the Treasurer of the Issuer or his or her designee, or such other officer or employee as the Issuer shall designate in writing to the Dissemination Agent from time to time. "Dissemination Agent" shall mean the U.S. Bank Trust National Association, in its capacity as Dissemination Agent, or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Trustee a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Cenificate. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purpose of the Rule. Currently, the following are National Repositories: Bloomberg Municipal Repositories 100 Business Park Driye P,O. Box 840 Princeton, NJ 08542-0840 (609) 279-3200 FAX: (609) 279-5962 E-mail: Munis@Bloomberg.com D-l 'r Standard & Poor's J. J. Kenny Repository 55 Water Street 45" Floor New York, NY 10041 (212) 4384595 FAX: (212) 438-3975 E-mail: nnnsirJepository@sandp.com DPC Data Inc. One Executive Driye Fort Lee, NJ 07024 (20 I) 346-0701 FAX: (201) 947-0107 E-mail: nnnsir@dpcdata.com Interactive Data Attention: Repository 100 Williams Street New York, NY 10038 (212) 771-6899 FAX: (212) 771-7390 E-mail: NRMSIR@InteractiveData.com Website: http://www.lnteractiYeData.Com "Owner" shall mean a registered owner of the Bonds. "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository" shall mean each National Repository and the State Repository. "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 Repository" shall mean any public or private repository or entity designated by the State of California as a State repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Agreement, there is no State Repository. "Trustee" shall mean U.S. Bank Trust National Association, in Los Angeles, California, or any successor thereto. SECTION 3. Proyision of Annual Reports. (a) The issuer shall, or, upon written direction, shall cause the dissemination agent to, not later than nine months after the end of the Issuer's Fiscal Year (which fiscal year presently ends June 30), commencing with the report for the 2000-01 fiscal year, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Issuer may be submitted separately from and later than the balance of the Annual Report if they are not ayailable by the date required above for the filing of the Annual Report. The Dissemination Agent shall have no duty to review or approye the content of the Annual Report, D-2 -T or any part thereof. If Issuer's tiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5. r"" (b) Not later than fifteen (15) Business Days prior to the latest date specitied in subsection (a) for providing the annual report to repositories, the Issuer shall provide the Annual Report to the Dissemination Agent. If by the latest date specified in subsection (a), the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall notify the Issuer. (c) If the Dissemination Agent is unable to verify that an Annual Report has been proyided to Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to each Repository in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and the State Repository, if any; and (ii) to the extent it can confirm such fIling of the Annual Report, fIle a report with the Trustee and the Issuer certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, Stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Content of Annual Reports. The Issuer's Annual Report shall contain or include by reference the following: (a) The audited financial statementS of the Issuer for the most recently ended fIScal year, prepared in accordance with generally accepted accounting principles applicable from time to time to the Issuer. If the Issuer'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 fonnat similar to the fmancial 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) Other financial information and operating data relating to the Merged Redevelopment Project contained in the Official Statement for the Bonds under the heading "THE MERGED REDEVELOPMENT PROJECT" and "HISTORICAL ASSESSED VALUATION AND TAX INCREMENT REVENUES" for the previous Fiscal Year, and, where such infonnation or data is in tabular form, for the five most recent Fiscal Years for which the information is available; provided, however , [discuss scope of disclosure]. (c) Any or all of the items listed aboye may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been submined to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a fmal official statement, it must be available from the Municipal Securities Rulemaking Board. The Issuer shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if the Issuer determines that such event is material: (1) principal and interest payment delinquencies; D-3 or (2) non-payment related detaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting tinancial difficulties; (5) substitution of credit or liquidity proYiders, or their failure to perform; (6) adverse tax. opinions or eyents adversely affecting the tax-exempt status of the Bonds; (7) modifications to rights of Owners of Bonds; (8) bond calls; (9) defeasances; (10) release, substitution or sale of property securing repayment of the Bonds; and (11) rating changes. (b) Whenever the Issuer'obtains knowledge of the occurrence of a Listed Event, the Issuer shall as soon as possible determine if such eyent would be material under applicable federal securities laws. The Dissemination Agent shall have no responsibility for such determination and shall be entitled to conclusiyely rely on the Issuer's determination. (c) If the Issuer has determined that the occurrence of a Listed Event would be material' under applicable federal securities laws, the Issuer shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (e). (d) If, under subsection (b), the Issuer determines that the Listed Event would not be material under applicable federal securities laws, the Issuer shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (e). (e) If the Dissemination Agent has been instructed by the Issuer to report the occurrence of a Listed Eyent and has received a notice of the occurrence in a format suitable for filing with each Repository, the Dissemination Agent shall file a notice of such occurrence with the Repositories and the State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Indenture. Notice of a Listed Eyent is only required under this Section 5 following the occurrence of the Listed EYent. (f) The Dissemination Agent may conclusively rely on an opinion of counsel that the Issuer's instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule. SECTION 6. Termination of Reporting Obligation. The Issuer's and the Dissemination Agent's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. D-4 -T SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its ohligations under the Disclosure Certiticate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Certificate. The Dissemination Agent may resign by providing thirty days wriuen notice to the Issuer. If at any time there is no designated Dissemination Agent appointed by the Issuer, or if the Dissemination Agent so appointed is unwilling or unable to perform the duties of Dissemination Agent hereunder, the Issuer shall be the Dissemination Agent and undertake or assume its obligations hereunder. Any person succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act. The Dissemination Agent may resign its duties hereunder at any time upon notice to the Issuer. SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Issuer and the Dissemination Agent may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted. (b) The undertaking, as amended or waiyed, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The proposed amendment or waiver either (i) is approyed 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. (d) In the event of any 'amendment or waiver of a provision of this Disclosure Certificate, the Issuer 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 Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be giyen in the same manner as for a Listed Event under Section 5(t), 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 fmancial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The Dissemination Agent shall not be obligated to enter into any such amendment that modifies or increases its respectiye duties or obligations hereunder. The Dissemination Agent may rely on an opinion of counsel that the amendment or waiver complies with the requirements of the Rule. D-5 -r SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevem the issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Evem, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Report or norice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 10. Default. In the event of a failure of the Issuer or the Dissemination Agem to comply with any proYision of this Disclosure Certificate, the Ttustee at the written request of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Bonds, shall, but only to the extent it has been indemnified to its satisfaction from any COSt, liability or expense whatsoever, including, withour limitation, fees and expenses of its attorneys, or any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific perfonnance by court order, to cause the Issuer or Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer or the Dissemination Agent to comply with this Disclosure Certificate shall be an action to compel perfonnance. SECTION II. Duties. Immunities and Liabilities of Trustee and Dissemination Agent. All of the immunities, indemnities, and exceptions from liability in Article Xl of the Indenture insofar as they relate to the Trustee shall apply to the Dissemination Agent in this Disclosure Certificate. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the issuer agrees to indemnify and save the Dissemination Agent, and Trustee, their officers, directors; employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or perfonnance of its powers and duties hereunder, including the. COSts and expenses (including attorneys fees) of defending against any claim of liability, bur excluding liabilities due to the Dissemination Agent's or Trustee's negligence or willful misconduct. The Dissemination Agent may rely on and shall be protected in acting or refraining from acting upon any direction from the Issuer or an opinion of nationally recognized bond counsel. The Dissemination Agent shall be paid compensation by the Issuer for its services proYided hereunder in accordance with its schedule of fees as agreed to between the Dissemination Agent and the Issuer from time-to-time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties of hereunder. The Dissemination Agent and Trustee shall have no dury or obligation to review any information provided to them by the Issuer hereunder and shall not be deemed to be acting in any fiduciary capacity for the Issuer, the Owners, or Beneficial Owners or any other parry. The obligations of the Issuer under this section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Agreement. The Dissemination Agent shall not be liable under any circumstances for monetary damages to any person for any breach of this agreement. SECTION 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Trustee, the Dissemination Agent, the Participating Underwriters and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 13. Notices. Notices should be sent in writing to the following addresses. The following information may be conclusively relied upon until changed in writing. D-6 -r Disclosure Representative: Chula Vista Redevelopment Agency Attention: Dissemination Agent: [Trustee] Attention: SECTION 14. Counterparts. This Disclosure Certificate may be executed in several counterpartS, each of which shall be an original and all of which shall constitute but one and the same instrument. CHULA VISTA REDEVELOPMENT AGENCY, as Issuer By: Its: Treasurer U.S. Bank Trust as Dissemination Agent National Association, By: Its: D-7 or EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Chula Vista Redevelopment Agency 2000 Tax Allocation Bonds (Merged Redevelopment Project) Name of Bond Issue: Date of Issuance: ,2000 NOTICE IS HEREBY GIVEN that the Chula Vista Redevelopment Agency has not provided an Annual Report with respect to the above-named Bonds as required by the Indenture of Trust, dated as of October IS, 2000. [The Issuer anticipates that the Annual Report will be filed by .j Dated: [ Dissemination Agent ], on behalf of By: Its: cc: Issuer D-8 or APPENDIX E FORM OF BOND COUNSEL OPINION ,2000 Chula Vista Redevelopment Agency Chula Vista, California Re: $ Chula Vista Redevelopment Agency, 2000 Tax Allocation Bonds (Merged Redevelopment Project) Ladies and Gentlemen: We have examined certified copies of proceedings of the Chula Vista Redevelopment Agency (the "Agency"), and other information and documents submitted to us relative to the issuance and sale by the Agency of its 2000 Tax Allocation Bonds (Merged Redevelopment Project) in the aggregate principal amount of $ (the "Bonds") and such other information and documents 'as we consider necessary to render this opinion. In rendering this opinion, we also have relied upon cenain representations of fact and certifications made by the Agency, the purchasers of the Bonds and others. We have not undenaken to verify through independent investigation the accuracy of the representations and certifications relied upon bY us. The Bonds have been issued pursuant to the authority contained in Part 1 of Division 24 of the Healrh and Safety Code of the State of California (the "Act"), a resolution of the Agency adopted on , 2000 (the "Resolution") and in accordance with the terms and conditions of an Indenmre of Trust dated as of October 15, 2000 (the "Indenture"), by and between the Agency and [Trustee], as Trustee. All terms not defined herein have the meanings ascribed to those terms in the Indenmre. The Bonds are dated , 2000, and mature on the dates and bear interest at the rates per annum set forth in the lndenmre. The Bonds are registered Bonds in the form set forth in the Indenmre, redeemable in the amounts, at the times and in the manner provided for in the lndenmre. Based upon our examination of all of the foregoing, and in reliance thereon, and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that: 1. The Bonds have been duly and validly authorized by the Agency and are valid and binding special obligations of the Agency and, except as specitically limited in the Indenmre, payable solely from Tax Revenues and other sources as and to the extent provided for in the lndenmre. The Bonds are enforceable in accordance with their terms and the terms of the Indenture, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, fraudulent conveyance or transfer, insolvency or other similar laws affecting creditors' rights to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against public agencies in the State of California. The Bonds are special obligations of the Agency but are not a debt of the City of Chula Vista, the State of California E-I .,. or any other of its political subdivisions and neither the City of Chula Vista, the State of California nor any of its political subdivisions is liable for the paYment thereof, nor in any event shall the Bonds be payable out of any funds or propenies other than those of the Agency. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. 2. The Indenture has been duly authorized by the Agency, is valid and binding upon the Agency and is enforceable in accordance with its terms, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, fraudulent conyeyance or transfer, insolvency or other similar laws affecting creditors' rights to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against public agencies in the State of California. 3. The Indenture creates a valid pledge of that which the Indenture pUI-pOns to pledge, subject to the provisions of the Indenture, except to the extent that such pledge may be limited by moratorium, bankruptcy, reorganization, fraudulent conveyance or cransfer, insolvency or other sImilar laws affecting creditors' rights to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to the lImitations on legal remedies against public agencies in the State of California. 4. Under existing statutes, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, we note that, with respect to corporations, such interest on the Bonds will be included as an adjusonent in the calculation of alternative minimum taxable income which may affect such corporation's alternative minimum tax liability. 5. Interest on the Bonds is exempt from State of California personal income tax. The opinions set forn in paragraph 4 above are subject to the condition that the Agency comply with certain covenants and the applicable requirements of the Internal Revenue Code of 1986, as amended, that.must be satisfied subsequent to the issuance of the Bonds to assure that interest on the Bonds will remain excludable from gross income for federal income tax purposes. Failure to comply with such covenants and requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes recroactive to the date of issuance of the Bonds. The Agency has coyenanted to comply with all such requirements. We express no opinion regarding other tax consequences with respect to the Bonds. Certain requirements and procedures contained or referred to in the Indenture and the Tax Ceniticate may be changed, and certain actions may be taken, under the circumstances and subject to the terms and conditions set forn in such documents, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax-exempt obligations. We express no opinion as to the exclusion of interest on the Bonds from gross income for federal income tax purposes on and after the date on which any such change occurs or action is taken upon the adyice or approval of counsel other than Scradling Yocca Carlson & Rauth, a Professional Corporation. The opinions expressed herein are based on an analysis of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken (or not taken) or eyents occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Such actions or events may adversely affect the value or tax creaonent of the Bonds and we express no opinion with respect thereto. E-2 or We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement relating to the Bonds or other offering material relating to the Bonds and purchasers of the Bonds should not assume that we have reviewed the Official Statement on their behalf. Respectfully submitted, E-3 -r APPENDIX F SPECIMEN INSURANCE POLICY F-I or COUNCIL AGENDA STATEMENT Item Meeting Date 5" 8/15/00 ITEM TITLE: Resolution Waiving the competitive bidding process as impractical, authorizing the Mayor to execute a sole source contract with Motorola for 800 MHz infrastructure costs, equipment and related training, and appropriating funding therefore from various sources. SUBMITTED BY: :If\... Chief of Polic~\\<^- Fire Chief ~- Deputy City Manager Powell ::( A I Director of Management & Information Services tv City Manager P (415ths Vote: XX No -> REVIEWED BY: On March 7, 2000 Council approved joining the Regional Communication System (RCS) and directed staff to return to Council with the associated infrastructure and equipment costs required to convert to this system. This item is recommending approval of a sole source agreement with Motorola for equipment, installation and training to support radio operation for Police, Fire, Public Works, Parks, Recreation, Building and Housing and other related users, and appropriating the necessary funding from various funding sources, including the proceeds from long-term borrowing. RECOMMENDATION: Staff recommends that Council approve the resolution waiving the competitive bidding process as impractical, authorizing the Mayor to execute an agreement with Motorola for 800 MHz radio infrastructure costs, equipment and related training, and appropriating funding therefore from various sources. BOARDS/COMMISSIONS RECOMMENDATIONS: N/A BACKGROUND: In 1995, Dr. Henry Richter prepajed a radio system upgrade study for the Chula Vista Fire Department. That study recommended a migration plan from the 150 s-/ ---.-r Page ? Meeting Date - ,Item ~ 8/15/00 MHz Radio System to an 800 MHz Radio System, which ultimately would place the City of Chula Vista in the Regional Communications System (RCS). On March 7, 2000 the City Council authorized an expenditure of $4.1 million, including interest of $1.3 million, for the backbone buy-in costs associated with joining the RCS. At that time staff was directed to return to Council once additional infrastructure and equipment costs for the conversion and the related funding were identified. DISCUSSION: The City is a member of the Regional Communications System and will operate primarily on the RCS South Loop. Pathway connection to this loop will occur with a 10GHz microwave path to the Congregational Towers Building and a second spur of 6.7 GHz via microwave path to the San Ysidro View Park site. This pathway configuration yields double redundancy which is necessary in public safety communications systems. Additionally, the five fully functional dispatch positions will each have dedicated client computers with flat screen monitors to perform radio dispatch. Each position will also have a backup "Astro Spectra Control Station" at their position to be used in the event of a system failure. Employees in the field will be equipped with either Astro portable or mobile radios. The new public safety radios will have both digital and analog capability, in either the trunked or conventional operating system. The general government radios will operate in the analog mode. The new equipment is compatible with existing City mobile and portable equipment and mirrors the equipment purchased by other San Diego County communities operating in the RCS. Police and Fire will operate on the Digital Trunked Systems set aside for public safety. General government users will operate on the Analog Trunked System as established in the RCS protocol. These systems can be linked for direct communication by "push of a button" in the dispatch center in times of urgency. The system configuration allows for interagency operability at the user level without "push of a button" based on public safety or general government need. Any public safety radio user in the County can talk directly, requiring no dispatcher involvement, with another public safety counterpart. This is an extreme benefit in a variety of situations including task force operations, during a pursuit, when mutual aid is enacted, when neighboring agencies assist one another, or in the case of fire first responder when one fire apparatus is paired with another agency to handle a call. This interoperability allows for seamless transition of information between agencies. General government shares that same capability with their counterparts in other cities. S-dZ or Page 3 Meeting Date ..- ,Item ~ 8/15/00 Dr. Richter, Motorola and City staff has identified the equipment needs for both public safety and general city government use for inclusion in this radio system. Dr. Richter has also assisted the cities of Escondido, EI Cajon and La Mesa in their migration to the RCS. In addition to securing mobile and portable radio equipment, the City of Chula Vista identified and developed microwave linking and a replacement of all public safety dispatch equipment. Sole source award is recommended based on RCS requirements and design. The following is the pricing summary: Fixed networking equipment includes dispatcher center electronics network audio logging recorder, five dispatch Operator consoles, backup conventional repeater and other miscellaneous equipment Radio subscriber units: Police DepartlT!ent includes 100 mobile, 180 portable and 50 vehicle adapters and accessories Fire Department includes 16 mobiles, 36 portables, 25 mobile chargers and 25 alphanumeric pagers EQUIPMENT TOTAL 7.75% Sales Tax System Installation, documentation, and acceptance Testing Contingency SYSTEM TOTAL SYSTEM TOTAL WITH DISCOUNT $ 925,597 $1,107,069 $ 201,993 $ 2,234,659 $ 173,186 $ 579,589 $ 150,000 $ 3,137,434 $ 3,037,434 Staff has negotiated a $100,000 discount pending Council approval by August 22, 2000. Also included in the pricing summary is the removal of existing radio equipment in the general government vehicles and the reinstallation of existing 800 MHz analog radios by Motorola or an approved subcontractor. Not included in the pricing summary is an option to purchase the MOSCAD system. This system is a new method for toning and alerting fire stations and would better support the new 800 MHz system than what is currently being used. Since the Fire Department is currently researching several options for dispatching Fire personnel more effectively, MOSCAD is included in the agreement as an option in order to establish the pricing. The options being considered include the purchase of MOSCAD as well as being dispatched by another agency (i.e. Heartland Fire Authority). Should MOSCAD eventually be chosen as the option for toning and alerting fire stations, staff will return to Council for additional funding, currently estimated at $497,000. 5-3 or Page 4 Meeting Date ,Item S 8/15/00 Contract The terms and conditions of the Motorola Communications System Agreement are outlined in Attachment A. They include a Software License Agreement, System Description, Acceptance Test Plan, Equipment List, Statement of Work and Service Agreement. Proiect Timeline The radio system installation and acceptance is slated to be accomplished in 180 days. This includes the removal of existing radios from all public safety vehicles and transitioning those 800 MHz radios into the general government fleet. The installation and testing of the digital 800 MHz radios in the public safety vehicles will be accomplished within the first 120 days. Occurring simultaneously, will be the conversion of the general government fleet to the analog 800 MHz radios. During this same time period, installation of new base station radios in the Police Department Communications Center will take place. This involves the installation of new radios, workstations and wiring to connect our microwave link in the RCS loop. Acceptance testing of the RCS System will occur during the first quarter of calendar year 2001. A migration plan is currently being developed by Public Works, Police and our consultant in order to optimize utilization of existing public safety radios for general government usage and to develop a removal and installation program for those radios. This migration plan will allow for the entire City to operate on the RCS 800 MHz radio system. This plF.ln fully outfits all City vehicles and will include an inventory of existing equipment for use in emergency situations or as an existing parts inventory for the general government fleet. Proposed Fundina The total cost of this phase of the project excluding the MOSCAD system for fire dispatch amounts to $3,037,434. Although paying this entire amount out of available resources is not being recommended, in order to minimize financing costs it is recommended that $1 ,537,434 be paid from the following sources: General Fund Available Fund Balance ........................$ 610,000 Residential Construction Tax AvailablE, Fund Balance.....$ 226,499 Asset Seizure Available Fund Balance ........................$ 309,266 Sewer Service Revenue Fund Available Fund Balance...$ 225,305 Various Open Space Funds Available Fund Balance......$ 90,423 Available Appropriations in Existing 800M Hz CIP.......... $ 75,941 Total: $1,537.434 :;-'-1 .,. Page 5 Meeting Date .- ,Item ~ 8/15/00 The amount recommended from the General Fund is expected to be more than offset by a pending loan repayment from the Agency as part of the financial restructuring. The remaining $1.5 million ($3,037,434 - $1,537,434) is recommended to be financed along with the Corporation Yard Project by issuing long-term debt with the portion of such debt related to this project having a final maturity of 7 years and a cost of approximately $292,100. The semi-annual debt service payments will be approximately $141,000, with only one due during this fiscal year and the final one due during fiscal year 2008. It is recommended that the current year debt service payment ($26,540) be funded by an appropriation from the Residential Construction Tax Available Fund Balance. The ongoing annual debt service funding will be included in future year's proposed budgets and is tentatively recommended to be funded from a combination of Asset Seizure ($100,000), Residential Construction Tax ($102,238), and Gas Tax ($79,762) revenues. FISCAL IMPACT: In March, the Council approved funding in the amount of $2.8 million, plus interest of $1.3 million for joining the RCS. This item is recommending approval of an additional $3.0 million in funding for infrastructure, equipment, and implementation services, including approximately $292,100 in long-term borrowing interest costs for this communication system project, bringing the total to $7.5 million. The funding is being proposed from various sources as follows: Asset Seizure........ ............................. ..... $3,774,084 Residential Construction Tax..........."............ 632,355 Gas Tax.................................................... 438,731 General Fund............................................. 610,000 Sewer Service Revenue............................... 225,305 Open Space Districts................................... 90,423 Existing CIP Appropriation Savings................ 75,941 Project Total: $5,846,839 Estimated Financing Costs 1,622,966 Total Estimated cost $ 7,469,805 It should be noted that according to federal guidelines, future asset seizure funds cannot be pledged or dedicated, until actually received. Therefore, the amount shown is only an indication of the possibility of a future funding source. .::)-s- .,. Page ~ Meeting Date ,/ ,Item ~ 8/15/00 Ongoing network operating cost (NOC) for the RCS System is estimated at $138,964 annually, based on $22.10 monthiy charge per radio. Ongoing costs for maintenance and replacement of radios during the next three years will be minimal due to a 3-year maintenance warranty. Staff is in the process of developing a replacement schedule based on the life cycle for the proposed equipment. These costs are unknown at this time and will be added to subsequent budgets. The source of funding for these ongoing costs will be determined during the budget preparation process, but will most likely be primarily General Fund for the public safety equipment and primarily the special funds listed above for general government equipment. 800MhzFinal(18Rev) FINAL $-Co .,. RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA WAIVING THE COMPETITIVE BIDDING PROCESS AS IMPRACTICAL, AUTHORIZING THE MAYOR TO EXECUTE A SOLE SOURCE CONTRACT WITH MOTOROLA FOR 800 MHz INFRASTRUCTURE COSTS, EQUIPMENT AND RELATED TRAINING, AND APPROPRIATING FUNDING THEREFORE FROM VARIOUS SOURCES. WHEREAS, on March th, 2000, the City Council approved joining the Regional Communications System (RCS) and directed staff to return to Council with the associated equipment costs; and, WHEREAS, the City will become a member of the Regional Communications System and operate primarily on the Regional Communications South Loop; and, WHEREAS, Police and Fire will operate on the digital trunked system set aside for Public Safety and general government users will operate on the analog trunked system as established by the RCS protocol; and, WHEREAS, Dr. Henry Richter, along with City staff, have identified the equipment needs for both Public Safety and general City government use for inclusion in the radio system; and, WHEREAS, staff recommends that, because of the unique design and requirements of the RCS, the competitive bidding process be waived, and that Council authorize a sole source contract with Motorola; and, WHEREAS, Motorola agrees to provide the infrastructure equipment and training; and, WHEREAS, the radio installation acceptance is slated to be accomplished in 180 days and acceptance testing of the RCS system will occur during the first quarter of the calendar year 2001; and, 5-7 .,. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby waive the competitive bidding process as impractical, authorizing the Mayor to execute a sole source contract with Motorola for 800 MHz infrastructure costs, equipment and related training, and appropriating funding for this project. Project: General Fund ........................... $610,000 Residential Construction Tax............" $226,499 Asset Seizure ............................."" $309,266 Sewer Service Revenue................." $225,305 Various Open Space Districts'............. $ 90,423 Available Appropriations in PS146....... $ 75,941 Presented by Approved as to form by: Richard P. Emerson Police Chief ~/d- 1 See Attachment A for detail 5-g' .,. ATTACHMENT A 800 MHz COMMUNICATION SYSTEM PROJECT OPEN SPACE DISTRICT APPROPRIATION DETAIL Open Space District 800MHz No.1 No.2 No.3 No.4 No.5 No.6 No.7 No.8 No.9 No. 10 No.11 No. 14 No. 15 No. 17 No. 18 No. 20 No. 23 No. 24 No. 26 No. 31 Eastlake Assessment District Town Centre CFD 98-3 CFD 97-1 CFD 98-1 $1,452 307 1,153 1,675 893 436 288 1,282 1,711 1,726 3,385 7.580 449 101 3,300 18,783 354 610 175 2,829 6,158 803 11,676 21,937 1,360 $90,423 ..-::- Q '-' / .,. JOINT CITY COUNCIUFINANCING AUTHORITY AGENDA STATEMENT Item (p Meeting Date 8/15/00 ITEM TITLE: Resolution of the City of Chula Vista, authorizing the execution and delivery of documents relating to the sale and delivery of not to exceed $27,000,000 Certificates of Participation, Series A of 2000 (2000 Financing Project), and authorizing and directing certain actions in connection therewith. Resolution of the City of Chula Vista appropriating $21,447,577 to the Corporation Yard project (GG131) and $1,500,000 to the 800MHz Communication project based on anticipated proceeds from the issuance of Certificates of Participation, appropriating an additional $2,503,636 to the Corporation Yard project from unanticipated revenues in the Transit Fund ($999,022) and available fund balances in the Transit Fund ($1 million) and the Sewer Service Revenue Fund ($504,614), appropriating $454,438 for the first semi-annual debt service payment for the Corporation Yard project from the available balance in the Public Facilities Development Impact Fee (PFDIF) Fund, and $26,539 for the first semi- annual debt service payment for the 800 MHz project from the available balance in the Residential Construction Tax Fund. Resolution of the Chula Vista Financing Authority approving a lease/purchase agreement with the City of Chula Vista and certain other documents in connection with the execution and delivery of the Certificates of Participation, Series A of 2000 (2000 Financing Project) in a principal amount not to exceed $27,000,000. REVIEWED BY: Deputy City Manager powew-fJ City Manager ~ (4/5ths Vote: Yes X-No_) SUBMITTED BY: SUMMARY: The Council has previously approved a capital project to acquire and construct a new corporation yard and a second project to upgrade the existing 800M Hz Communication System, and directed staff to return with recommended financing for these projects. For the portion of these projects that will not be funded with existing resources, staff is recommending approval of a long-term borrowing by issuing Certificates of Participation in an amount not to exceed $27,0000000. RECOMMENDATION: Council: 1) Approve the resolution authorizing the execution and delivery of documents relating to the sale and delivery of not to exceed 0-1 Item ~ Page 2. Date 8/15/00 $27,000,000 Certificates of Participation, Series A of 2000 (2000 Financing Project), and authorizing and directing certain actions in connection therewith. 2) Approve the resolution appropriating $21,447,577 to the Corporation Yard project (GG131) and $1,5000000 to the 800M Hz Communication project based on anticipated proceeds from the issuance of Certificates of Participation, appropriating $2,503,636 to the Corporation Yard project from unanticipated revenues in the Transit Fund ($999,022) and available fund balances in the Transit Fund ($1 million) and the Sewer Service Revenue Fund ($504,614), and appropriating $454,438 for the first semi-annual debt service payment for the Corporation Yard project from the available balance in the Public Facilities Development Impact Fee (PFDIF) Fund, and $26,539 for the first semi-annual debt service payment for the 800 MHz project from the available balance in the Residential Construction Tax Fund. Authority: 1) Approve the resolution approving a lease/purchase agreement with the City of Chula Vista and certain other documents in connection with the execution and delivery of the Certificates of Participation, Series A of 2000 (2000 Financing Project) in a principal amount not to exceed $27,000,000. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable DISCUSSION: Corporation Yard ProjAc:t This project involves the acquisitiono renovationo and expansion of an existing facility that the City intends to use as its future Public Works Operations Facility and Corporation Yard. The existing facility, which was purchased from San Diego Gas and Electric Company in Septembero 1998, consists of an administrative office building, warehouse building and vehicle maintenance building located on a 25-acre site. The site also contains a fueling island, employee and visitor parking areas and yard areas for vehicle parking and equipment. The facility would house the Public Works Department/Operations Division Administration, Wastewater Maintenanceo Streets, Traffic, Vehicle Maintenance, Building Maintenance, Construction Inspection, Surveyo Parks Operations/Open Spaceo Communications and Central Stores function. Additionally, other City functions will utilize the facilityo such as: Engineering, Transit and Planning (Building Inspection and Plan Check). The project will include the following primary facilities: o Administration Building: modification of existing 31,100 SF single story building to accommodate administrative and office needs of Corporation Yard and addition of 11,200 SF of new space. t. - d.- "T Item ~ Page 3, Date 8/15/00 o Renovate existing warehouse: modify existing 14,200 SF single story building by adding a mezzanine level and subdividing the building to serve various divisions. o New addition: add 16,800 SF single story to existing Shops Building. o Warehouse: convert existing 11,400 SF single story garage building into a warehouse for the Central Stores Division of Purchasing by removing designated equipment and making minor renovations. o Maintenance Building: construct new 42,100 SF single story large vehicle repair facility with mezzanine space for storage, o Fueling island: construct 5,670 SF single story building and service canopy for refueling islands. o CNG Fueling Facility: includes compressors and storage. o Vehicle/Bus wash: construct 3,400 SF single story building and service canopy for washing transit buses. o Public CNG fueling area. o Household Hazardous Waste drop-off area. The project also includes landscaping, gradingo paving, utility and site improvements to the adjacent property and building additions. Over the last two years, staff has been working with RNL Design to prepare an updated Corporation Yard Master Plan, schematic design drawings, construction drawings, and related items necessary for construction of the needed improvements. The project's construction documents have been submitted and returned from second building permit plan check. On July 18, 2000, Council approved an agreement with Highland Partnership, Inc. for the provision of construction manager/constructor services, and the preliminary work to review the construction documents for determining the appropriate bid packageso and bidding out and awarding the actual construction contracts has begun. Groundbreaking is anticipated to occur in the next 60 to 90 days. The total cost of the project, excluding financing, is anticipated to be approximately $350051,986. This figure includes the acquisition cost of $7 million. Staff has determined that a reasonable allocation of the project cost among eligible funding sources would be as follows: Public Facilities Development Impact Fees .............$16,502,014 (47%) Transit ...........................................................................7,061,883 (20%) Gas Tax .........................................................................5,098,203 ( 15%) Sewer Service ................................................................4,343,014 ( 12%) General Fund .....................................,...........................1 0136,324 ( 3%) Open Space Districts ...................................,................. !=J10 !'i4il ( ~%) Total !l:~!'i O!'i1 !=Jill'; (100%) 0-3 .,. Item ~ Page 4, Date 8/15/00 In the recent update of the PFDIF. the total cost of this project was estimated at only $23.3 million. with a PIFDIF share of $13.9 million. Unless there are cost decreases in other PFDIF components, it is likely that the increase in the corporation yard project costs will necessitate a further increase in the PIFDIF in order to provide sufficient revenue to fund that portion of the project attributed to growth in the community. To date, appropriations for this project total $1006500773. including $5.062,861 from Transit, $1,749.512 from PFDIF, and $3.838,400 from Sewer. Staff is recommending that long-term financing be obtained to provide approximately $21,447,577. including $14,752.502 for the PFDIF commitment. $5,098,203 for the Gas Tax commitment. $910,548 for the Open Space District commitment, and $6860324 for the General Fund commitment. The remaining General Fund commitment will be funded through staff time spent on the project estimated at $450,000. The estimated cost of the borrowing in the form of interest and issuance costs is $13.4 million. 800 MHz Communication System Project This project includes the initial cost of joining the County Regional Communication System (RCS) and upgrading the City's infrastructure and equipment to be compatible with the regional system. Council approved joining the RCS in March of this year and directed staff to return with the associated infrastructure and equipment costs required for the conversion. There is an item on the regular Council Agenda tonight recommending execution of an agreement with Motorola for equipment. installation 0 and training to support radio operation for Police. Fire, Public Works, Parks & Recreation, Building & Housing and other related users. The total cost of the project, excluding financing, is anticipated to be approximately $50846.839, including $2,809,405 for joining the RCS and $3.037,434 for infrastructure, equipment, etc, Staff has determined that a reasonable allocation of the project cost among eligible funding sources would be as follows: Asset Seizure............................................................ $30774,084 (65%) Residential Construction Tax .........................................632,355 (11 %) Gas Tax ...................................................................... 438,731 (8%) General Fund .................................................................610.000 (10%) Sewer Service Revenue.................................................2250305 ( 4%) Open Space Districts .......................................................90,423 ( 1 %) Existing CIP Appropriation Savings ..,......................... 7fi,~41 (1%) Project Total: $fi.R4R R:l~ (100%) ~ -<-I Item ~ Page 5, Date 8/15/00 In March, the Council approved funding the RCS buy-in costs through a long-term agreement with the RCS over a period of 14 years at an interest rate of 5.65%, resulting in an interest cost of approximately $1.3 million. The annual payment on this portion of the project amounts to $295,734 and has been appropriated from the Asset Seizure Fund. It is anticipated that this funding source will also be used to meet this requirement for the remaining 13 years. The cost of the Motorola agreement plus a small contingency amounts to $3,037,434. Although paying this entire amount out of available resources is not being recommended, in a related item on the agenda tonight, it is recommended that $1,537,434 be paid from available resources in order to minimize financing costs. Staff is recommending that the remaining $1.5 million ($3,037,434 - $1,537,434) be financed along with the Corporation Yard Project by issuing long-term debt with the portion of such debt related to this project having a final maturity of 7 years, The estimated cost of the borrowing including interest and cost of issuance is estimated at $2920100. Long-TArm Financing In September, 19980 the Council approved an agreement with Sutro & Co. to provide financial advisory services for determining the most appropriate borrowing structure and for executing a long-term financing transaction to provide funding for the corporation yard project. When staff determined that the timing on the 800 MHz Communication System project was similaro it was suggested, and the financial advisor concurred that it would be most cost effective to include both projects in the same borrowing. Sutro & Co. is recommending that the necessary funds be obtained through a standard competitively bid certificate of participation issueo which is a vehicle that the City/Agency has used in the past for financing such projects as the shopping center remodeling, the downtown parking structure, etc. The typical structure is such that certain assetso are leased to a separate legal entity, in this case the Financing Authority, which then leases the assets back to the City. The Financing Authority then borrows money through the municipal market by "selling" certificates of participation 0 which entitle the holder to a proportionate share of the lease payments (i.e. principal & interest), The lease payments from the City are established at a level sufficient to pay the debt service payments due to the certificate holders. In order to make this structure as inexpensive as possible by avoiding the cost of borrowing the interest expense to be incurred during the construction period (capitalized interest), Sutro & Co. has further recommended that the City lease assets of an estimated value roughly equivalent to the par value of the certificateso such assets to be released when replaced by the completed corporation yard upon occupancy. In addition to the corporation yard, staff is recommending as assets to be assigned as collateral in this transaction the City Hallo the Public Services Building, the Main Libraryo and the South Chula Vista Library. b -S- Item ~ Page 6. Date 8/15/00 In order to generate the total amount of proceeds required to fund these projectso $23 million, it is estimated under current market conditions that a borrowing of approximately $25.5 million will be necessary. It is estimated that for a Certificate issue of this size, with a 20 year final maturityo the net total debt service amount to approximately $36.7 million, for a net financing cost of $13.7 million ($36.7 million less $23 million). This figure includes an estimated net interest cost of $13.1 milliono a one percent underwriter's discount of $255,000, an insurance premium of $206,000, and miscellaneous costs of issuance including financial advisory services, legal services, etc. of approximately $177,000. The annual debt service payments will vary year to year, but the average payment during the first seven years until the portion attributable to the 800 MHz project is paid off is estimated at $2.1 milliono and from year 8 through year 20 the average payment is estimated at approximately $1,860,000. It is felt that these figures are somewhat conservative and that the actual costs should be slightly less if market conditions remain fairly stable until the date of sale for the Certificates. The financing-related resolutions approve the competitive sale of Certificates in a total amount not to exceed $27 million, and also, approve the Lease/Purchase Agreement, Preliminary Official Statemento Trust Agreement, and other necessary documents in the form on file, and authorize them to be executed and distributed in connection with the sale of the Certificates. In addition. the resolutions authorize the Deputy City Manager to solicit and obtain insurance on the transaction if it is found to be economically advantageous. Finally, the resolutions authorize staff to take all actions as may be necessary to close the transaction, including execution of all required closing documents. FISCAL IMPACT: Adoption of these resolutions will authorize the expenditure of $23,951,213 in additional project funds, and approximately 13.4 million for borrowing costs, on the new corporation yard, and $1,500,000 in additional project funds, and approximately $2920100 for borrowing costs, on enhancements to the public safety communication system. The recommended funding sources for these costs are indicated under the discussion of the individual projects. t. -~ "T CITY COUNCIL CITY OF CHULA VISTA RESOLUTION NO. RESOLUTION AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATING TO THE SALE AND DELIVERY OF NOT TO EXCEED $27,000,000 CERTIFICATES OF PARTICIPATION, SERIES A OF 2000 (2000 FINANCING PROJECT), AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION THEREWITH WHEREAS, the City of Chula Vista (the "City") is a municipal corporation and a 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 desires to acquire and construct certain new projects and acquire certain property and equipment including a corporate yard and an emergency communications system (collectively, the "Project"); and WHEREAS, the City wishes to enter into certain leases and authorize the sale of Certificates of Participation, Series A of 2000 (2000 Financing Project) (the "Certificates") under the Trust Agreement described below in order to finance the Project, and WHEREAS, the City, in order to facilitate the issuance of the Certificates intends to lease to the Authority certain real property (collectively, the "Site") set forth in Exhibit A to the Site Lease (as defined below) and to lease the Site back from the Authority pursuant to the Lease (as defined below); and WHEREAS, all acts, conditions and things required by the Constitution and laws of the State to exist, to have happened and to have been performed precedent to and in connection with the consummation of the financing authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, it is resolved by the City Council of the City of Chula Vista as follows: SECTION 1. Findings. The City Council hereby specifically finds and declares that each of the statements, findings and determinations of the City set forth in the recitals set forth above and in the preambles of the documents approved herein are true and correct and that the financing of the Project will result in significant public benefits for the residents of the City. DOCSOC\ 7 55724v] \240360007 {,-7 SECTION 2. Authorization of Certificates. The City Council hereby expresses its intention of financing all or a portion of the acquisition, construction, and installation of the Project through the preparation, sale and delivery of Certificates in an amount not to exceed $27,000,000, SECTION 3. Lease/Purchase Agreement. The form of the Lease/Purchase Agreement between the City and the Chula Vista Public Financing Authority (the "Authority"), dated as of September 1, 2000 (the "Lease"), presented to this meeting and on file with the City Clerk (the "Clerk"), is hereby approved. Each of the Mayor of the City (the "Mayor"), the City Manager of the City (the "City Manager") and the Deputy City Manger/Director of Finance of the City (the "Deputy City Manager") or their designees (collectively, the "Authorized Officers"), is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Authority the Lease in substantially said form, with such changes therein as such officer or person or persons may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of such officers, SECTION 4. Appointment. U.S. Bank Trust National Association is appointed trustee (the 'Trustee") under the Trust Agreement (defined below) SECTION 5. Trust Agreement. The form of the Trust Agreement, dated as of September I, 2000 (the "Trust Agreement"), among the City, the Authority and the Trustee, presented to this meeting and on file with the Clerk, is hereby approved. Each of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Authority and the Trustee the Trust Agreement in substantially said form, with such changes therein as the Authorized Officers executing the Trust Agreement may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 6. Assignment Agreement. The Assignment Agreement dated September I, 2000 between the Trustee and the Authority in the form on file with the City Council is hereby approved for execution and delivery by the Authority. SECTION 7. Notice Inviting Bids. The Notice Inviting Bids is approved and the City's Financial Advisor is authorized to solicit bids for the sale of the Certificates by publishing once in a newspaper of general circulation in the State of California, not less than 15 days prior to receipt of bids, a short form of the Notice Inviting Bids and to mail to prospective purchasers of the Certificates the Notice Inviting Bids. The Deputy City Manager and his designee are authorized, on behalf of the City, to accept the bid of the lowest responsible bidder for the Certificates providing that (a) the principal amount of the Certificates does not exceed $27,000,000 and (b) the true interest cost of the Certificates does not exceed 7.5% per annum. The sale may be conducted through electronic means if the Deputy City Manager of the City determines that such process will assist the City in obtaining the lowest interest cost for the Project. SECTION 8. Bond Insurance. The Deputy City Manager and his designee are hereby authorized to (i) solicit bids on a municipal bond insurance policy, (ii) to negotiate the terms of such policy, (iii) to finalize, if appropriate, the form of such policy with a municipal bond insurer and (iv) if it is determined that the policy will result in interest rate savings for the City, to pay the insurance premium of such policy from the proceeds of the issuance and sale of the Certificates. 2 t, -f DOCSOC\755724vl \24036.0007 "T SECTION 9. Preliminary Official Statement. The form of the Preliminary Official Statement, presented to this meeting and on file with the Clerk, is hereby approved. The Deputy City Manager and his designee are hereby authorized to make such changes to the Preliminary Official Statement as are necessary to make it final as of its date and are authorized and directed to execute and deliver a certificate deeming the Preliminary Official Statement final as of its date in accordance with Rule 15c2-12 promulgated under the Securities Exchange Act of 1934. The Authorized Officers are hereby authorized and directed to execute, approve and deliver the final Official Statement in the form of the Preliminary Official Statement with such changes, insertions and omissions as the Authorized Officers executing said document may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 10. Continuing Disclosure Agreement. The form of the Continuing Disclosure Agreement between the City and the Trustee (the "Continuing Disclosure Agreement"), presented to this meeting and on file with the Clerk, is hereby approved. Each of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Trustee the Continuing Disclosure Agreement in substantially said form, with such changes therein as such Authorized Officers executing such document may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION II. Site Lease. The form of the Site Lease, dated as of September 1,2000 (the "Site Lease"), between the Authority and the City, presented to this meeting and on file with the Clerk, is hereby approved. Each of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Authority the Site Lease in substantially said form, with such changes therein as such Authorized Officers executing such document may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 12, Attestations. The Clerk or persons as may have been designated by the City Manager are hereby authorized and directed to attest the signature of the Authorized Officers designated herein to execute any documents described herein, and to affix and attest the seal of the City, as may be required or appropriate in connection with the execution and delivery of the Lease, the Trust Agreement, the Continuing Disclosure Agreement, the Site Lease and the Official Statement. SECTION 13, Reimbursement of Costs. The City hereby states its intention and reasonably expects to incur certain costs related to the project prior to the execution and delivery of the Certificates and to reimburse itself with proceeds of the Certificates for such costs. This resolution is being adopted not later than 60 days after the date (the "Expenditures Date or Dates") that the City expended monies for the costs of the Project to be reimbursed from proceeds of the Certificates. The expected date of issue of the Certificates will be within eighteen months of the later of the Expenditure Date or Dates and the date the project is placed in service. Proceeds of the Certificates to be used to reimburse for Project costs are not expected to be used, within one year of reimbursement, directly or indirectly to pay debt service with respect to any obligation (other than to pay current debt service coming due within the next succeeding one year period on any tax-exempt obligation of the City (other than the Certificates) or to be held as a reasonably required reserve or replacement fund with respect to an obligation of the City or any entity related in any manner to the City, or to reimburse any expenditure that was originally paid with the proceeds of any obligation, or to replace funds that are or will be used in such manner. This resolution is consistent with the 3 DOCSOC\ 7 55724v I \24036.0007 ~-Cj "T budgetary and financial circumstances of the City, as of the date hereof. No monies from sources other than the Certificates are, or are reasonably expected to be, reserved, allocated on a long-term basis, or otherwise set aside by the City (or any related party) pursuant to their budget or financial policies with respect to the project costs. This resolution is adopted as official action of the City in order to comply with Treasury Regulation ~ 1.150-2 and any other regulations of the Internal Revenue Service relating to the qualification for reimbursement to the City of Project costs incurred prior to the date of the execution and delivery of the Certificates, is part of the City's official proceedings, and will be available for inspection by the general public at the main administrative office of the City. SECTION 14. Other Actions. The Authorized Officers are each hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which each may deem necessary or advisable (including the payment of a premium for a municipal bond insurance policy, a debt service surety bond, or other form of credit enhancement) in order to consummate the sale, execution and delivery of the Certificates and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution, the Certificates, the Lease, the Trust Agreement, the Continuing Disclosure Agreement, the Site Lease, the Preliminary Official Statement, and the Official Statement. Such actions heretofore taken by such officers or designees are hereby ratified, confirmed and approved. SECTION IS. Effect. This Resolution shall take effect immediately upon its passage. Presented by Approved as to form by cJ Robert Powell Deputy City Manager H: \home \attorney\res\cyc 4 DOCSOC\ 7 55724v 1 \24036.0007 b -10 RESOLUTION NO. RESOLUTION OF THE CITY OF CHULA VISTA APPROPRIATING $21,447,577 TO THE CORPORATION YARD PROJECT (GG131) AND $1,500,000 TO THE 800MHz COMMUNICATION PROJECT BASED ON ANTICIPATED PROCEEDS FROM THE ISSUANCE OF CERTIFICATES OF PARTICIPATION, APPROPRIATING AN ADDITIONAL $2,503,636 TO THE CORPORATION YARD PROJECT FROM UNANTICIPATED REVENUES IN THE TRANSIT FUND ($999,022) AND AVAILABLE FUND BALANCES IN THE TRANSIT FUND ($1 MILLION) AND THE SEWER SERVICE REVENUE FUND ($504,614), APPROPRIATING $454,438 FOR THE FIRST SEMI- ANNUAL DEBT SERVICE PAYMENT FOR THE CORPORATION YARD PROJECT FROM THE AVAILABLE BALANCE IN THE PUBLIC FACILITIES DEVELOPMENT IMPACT FEE (PFDIF) FUND, AND $26,539 FOR THE FIRST SEMI-ANNUAL DEBT SERVICE PAYMENT FOR THE 800 MHZ PROJECT FROM THE AVAILABLE BALANCE IN THE RESIDENTIAL CONSTRUCTION TAX FUND WHEREAS, the Council has previously approved a capital project to acquire and construct a new corporation yard and a second project to upgrade the existing 800MHz Communication System and directed staff to return with recommended financing for these projects; and WHEREAS, for the portion of these projects that will not be funded with existing resources, staff is recommending approval of a long-term borrowing by issuing Certificates of Participation; and WHEREAS, staff has determined it is necessary to reallocate and appropriate funding. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby appropriate $21,447,577 to the Corporation Yard Project (GG131) and $1,500,000 to the 800 MHZ Communication Project based on anticipated proceeds from the issuance of Certificates of Participation, appropriating an additional $2,503,636 to the Corporation Yard Project from unanticipated revenues in the Transit Fund ($999,022) and available fund balances in the Transit Fund ($1 million) and the Sewer (,-(/ .., service Revenue Fund ($504,614), appropriating $454,438 for the first semi-annual debt service payment for the Corporation Yard project from the available balance in the Public Facilities Development Impact Fee (PFDIF) Fund, and $26,539 for the first semi-annual debt service payment for the 800 MHZ project from the available balance in the Residential Construction Tax Fund. Presented by Approved as to form by Robert Powell Deputy city Manager [H:\HOME\ATTORNEY\RESO\ COPS appropriation (August9,200Q(1:41pm)] 2 (; -I d- RESOLUTION NO. CHULA VISTA PUBLIC FINANCING AUTHORITY RESOLUTION OF THE BOARD OF DIRECTORS OF THE CHULA VISTA PUBLIC FINANCING AUTHORITY APPROVING A LEASE/PURCHASE AGREEMENT WITH THE CITY OF CHULA VISTA AND CERTAIN OTHER DOCUMENTS IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THE CERTIFICATES OF PARTICIPATION, SERIES A OF 2000 (2000 FINANCING PROJECT) IN A PRINCIPAL AMOUNT NOT TO EXCEED $27,000,000 WHEREAS, the Chula Vista Public Financing Authority is a joint exercise of powers authority organized and existing under the laws of the State of Cali fomi a (the "Authority") with the authority to assist in the financing of the acquisition, construction, installation and equipping of certain capital improvements on behalf of the City ofChula Vista (the "City"); and WHEREAS, in order to finance the acquisition and construction of certain capital facilities and equipment (the "Project"), the Authority and the City have determined that it would be in the best interests of the Authority, the City and residents of the City to authorize the preparation, sale and delivery of the Certificates of Participation, Series A of2000 (2000 Financing Project) in an aggregate principal amount not to exceed $27,000,000 (the "Certificates"), which Certificates evidence fractional interests in certain lease payments to be made pursuant to the Lease (as defined below). WHEREAS, in order to facilitate the issuance of the Certificates, the City and the Authority desire to enter into a Site Lease between the City and the Authority (the "Site Lease") and a Lease/Purchase Agreement between the City and the Authority (the "Lease"), the forms of which have been presented to this Board of Directors at the meeting at which this Resolution is being adopted and pursuant to which the City will under the Site Lease lease the Property to the Authority and under the Lease will lease the Property back trom the Authority and pay certain Lease Payments (as defined in the Lease), which have been pledged to the owners of the Certificates of Participation by the Authority pursuant to a Trust Agreement among U.S. Bank Trust National Association (the 'Trustee"), the City and the Authority (the "Trust Agreement"), the form of which has been presented to this Board of Directors at the meeting at which this Resolution is being adopted; and WHEREAS, the Authority desires to assign its right to receive such Lease Payments from the City to the Trustee pursuant to an Assignment Agreement between the Authority and the Trustee (the "Assignment Agreement"), the form of which has been presented to this Board of Directors at the meeting at which this Resolution is being adopted; NOW, THEREFORE, the Board of Directors of the Authority does hereby resolve as follows: SECTION 1. Certificates, This Board of Directors hereby authorizes the preparation, sale and delivery of the Certificates in an aggregate principal amount not to exceed $27,000,000 in accordance with the terms and provisions of the Trust Agreement. The purposes for which the DOC80C\7 55697v I \24036.0007 t, -13 "T proceeds of the sale of the Certificates shall be expended are to pay all or a portion of the costs the Project, to purchase a reserve fund surety bond or to fund a reserve fund, and to pay the costs of the sale and delivery of the Certificates, SECTION 2. Certificate Documents. The Site Lease, the Lease, the Trust Agreement, and the Assignment Agreement (the "Agreements") presented at this meeting are approved. Each of the Chairman, Vice Chairman, Executive Director, Chief Financial Officer and Secretary of the Authority, or the Chairman's designee, are authorized and directed to execute and deliver the Agreements. The Agreements shall be executed in substantially the forms hereby approved, with such additions thereto and changes therein as are recommended or approved by counsel to the Authority and approved by the officer or officers of the Authority executing the documents, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of the officers listed above. SECTION 3. Notice Inviting Bids. The Notice Inviting Bids is approved substantially in the form on file with the Secretary and the City's Financial Advisor is authorized to solicit bids for the sale of the Certificates by publishing once in a newspaper of general circulation in the State of California, not less than IS days prior to receipt of bids, a short form of the Notice Inviting Bids and to mail to perspective purchasers of the Certificates the Notice Inviting Bids. The City Manager of the City is authorized to accept the bid of the lowest responsible bidder for the Certificates providing that (a) the principal amount of the Certificates does not exceed $27,000,000 and (b) the true interest cost of the Certificates does not exceed 7.5% per annum. SECTION 4. Other Actions. The Chairman, Vice Chairman, Executive Director, Chief Financial Officer, Secretary and other officers of the Authority are authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to consummate the sale and delivery of the Certificates, and the execution of the Agreements and otherwise effectuate the purposes of this Resolution, and such actions previously taken by such officers are hereby ratified and confirmed. SECTION 5, Effect. This Resolution shall take effect from and after its date of adoption, Presented by Approved as to form by A/C; Kaheny Attorney Robert Powell Deputy City Attorney 2 DOCSOC\ 7 55697v I \240360007 c:, - I c.f ADOPTED AND APPROVED this _th day of August, 2000, by the following vote: AYES: NOES: ABSTENTIONS: ABSENT: Chairman Board of Directors Chula Vista Public Financing Authority I hereby certify that the foregoing resolution was duly introduced, passed and adopted at the time and place and by the vote as noted above. Secretary Chula Vista Public Financing Authority 3 DOCSOC\755697vl \24036.0007 ~ -IS- i DOCSOC\ 753950v2\24036.0007 CITY OF CHULA VISTA, STATE OF CALIFORNIA CITY COUNCIL Shirley Horton, Mayor Patty Davis John Moot Steve Padilla Mary Salas CITY OFFICIALS David D, Rowlands Jr., City Manager Sid Morris, Assistant City Manager George Krempl, Assistant City Manager Robert W. Powell, Deputy City Manager/Finance Director John M. Kaheny, City Attorney Robert Leiter, Director of Planning and Building John Lippitt, Director of Public Works Susan Bigelow, City Clerk CHULA VISTA PUBLIC FINANCING AUTHORITY GOVERNING BOARD Shirley Horton - Chair Patty Davis John Moot Steve Padilla Mary Salas David D. Rowlands Jr., Executive Director Susan Bigelow, Secretary SPECIAL COUNSEL Stradling Y occa Carlson & Rauth, a Professional Corporation Newport Beach, California TRUSTEE U.S, Bank Trust National Association Los Angeles, California A-I "T PRELIMINARY OFFICIAL ST A TEME:\"T DATED SEPTEMBER _.2000 NEW ISSUE - BOOK-ENTRY-O~LY In the opinion of Stradling rocca Carlson & Rauth. a Professional Corporation. NC\1port Beach, California ("Special Counsel'). under existing statures, regulations, rulings andjudicial decisions, and assuming certain representations and compliance with certain CmVlGlIIS alld requirements descrihed herein, interest (and original issue discOUf/t) with respect /0 the Certificates is excluded/rom gross incomeJor federal income rat purposes and is /101 all item of lax preference for purposes of calculating rhe federal af/emotive minimum ta.t imposed on indi\'iduals and corporations. in rhe further opinion of Special Counsel, the interest (and original issue discounf) wilh respect to the Certificates is exempt from State of California personal income lax, The differellce, if any, between the issue price with respect to a Certificate (the first price at which a substantial amount of the Certificates lrilh respccr to a mwuriry arc lO be sold to the public) and the stated redemption price at maturity with respect to such Certificate cOllstitutes original issue discoullf. "See Tax Mauers .. herein S . CITY OF CHULA VISTA Certificates of Participation Series A of 2000 (2000 financing Project) Evidencing Undivided Proportionate Interests in Lease Payments to be Made by the CITY OF CHULA VISTA, CALIFORNIA Pursuant to a Lease with the Chula Vista Public Financing Authority Dated: September 1, 2000 Due: October 1, as shown below The City ofChula Vista (the "City") Certificates of Participation, Series A of2000 (2000 Financing Project) (the "Certificates") are being executed and delivered to (i) provide funds to improve the City's 800 Megahertz emergency communications system and to improve the City's Corporation Yard (collectively, the "Project"), (ii) finance a reserve account for the Certificates and (iii) pay the costs of issuance incurred in connection with the execution and delivery of the Certificates. See "Description of the Project." The Certificates represent undivided proportionate interests of the Owners in the lease payments (the "Lease Payments") to be made by the City to the Chula Vista Public Financing Authority (the "Authority"), under the Lease, dated as of September 1,2000 by and between the City and the Authority (the "Lease") pursuant to which the City will lease several parcels of land and buildings within the City (collectively, the "Site"). See "THE SITE" herein. Interest represented by the Certificates is payable semiannually on April 1 and October I of each year, commencing on October 1, 2000. The Certificates will be executed and delivered in the principal amount of$5,000 and any integral multiple thereof. See "The Certificates _ General" herein. The Certificates will be executed and delivered in book-entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the Certificates. Individual purchases of the Certificates will be made in book-entry form only. Purchasers of the Certificates will not receive certificates representing their ownership interests in the Certificates purchased. Principal, premium, if any, and interest payments due with respect to the Certificates are payable directly to DTC by U.S. Bank Trust National Association, as Trustee. Upon receipt of payments of principal, premium, if any, and interest, DTC will in turn distribute such payments to the beneficial owners of the Certificates. See "Book-Entry System" herein. The Certificates are subject to extraordinary, optional and sinking fund prepayment prior to maturity, as described herein. See "'The Certificates - Prepayment" herein. THE CERTIFICATES DO NOT CONSTITIJTE AN OBLIGATION OF THE AUTHORITY OR THE CITY FOR WHICH THE AUTHORITY OR THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE AUTHORITY OR THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE OBLIGATION OF THE CITY TO MAKE LEASE PAYMENTS UNDER THE LEASE DOES NOT CONSTITIJTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. NEITHER THE CERTIFICATES NOR THE OBLIGATION OF THE CITY TO MAKE LEASE PAYMENTS CONSTITIJTES AN INDEBTEDNESS OF THE AUTHORITY, THE CITY. THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITIJTIONAL OR ST A TIJTORY DEBT LIMITATION OR RES1RlCTlON. The scheduled payment of principal of and interest in respect of the Certificates when due 'will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Certificates by (the "Insurer"). [LOGO] The purchase of the Certificates involves certain risks which should be considered by investors. See "Risk Factors" for a discussion ofcenain risk factors that should be considered in addition to the other matters set forth herein. This cover page contains information for quick reference only. It is not a summal!' of this issue. Potential purchasers must read the entire Official Statement to obtain information essential to making an informed investment decision. Maturity Schedule. Serial Certificates Maturity Principal (October 1 S Maturity (October 1 Principal Amount Interest Rate Yield Interest Amount Rate Yield S % Term Certificate due October I, - Yield_% (plus accrued interest) The Certificates will be offered when, as alld if executed and delivered. and received by the Underwriter, subjecr to the approml as to their legali()' by Stradling Yocca Carlson & Rauth. a Professional Corporation. Newport Beach. California, Special Counsel. and certain other conditions. Certain legal martel's will be passed upon for the City by the City Arrorney. It is anlicipared that the Cert~ficates will be available in book-entl)'formfor delivery (0 DTC ill New York, New York, on or about Seprcmber _,2000. Dated: September _' 2000 DOCSOC\ 753950v2\24036.0007 A -;L "T No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representations in connection with the offer or sale of the Certificates other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City, the Authority or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Certificates by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers or owners of the Certificates. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. This Official Statement and the information contained herein are subject to completion or amendment without notice. These securities may not be sold nor may an offer to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Official Statement constitute an offer to sell or the 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 prior to registration or qualification under the securities laws of any such jurisdiction. IN CONNECTION WITH THE OFFERING OF THE CERTIFICATES, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE CERTIFICATES TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. DOCSOC\ 7 53950v2\24036.0007 A-j "T TABLE OF CONTENTS PAGE INTRODUCTION.......................................................................................................................................................1 GENERAL......... .......................................................................................................................................................... 1 SECURlTY AND SOURCES OF PAYMENT FOR THE CERTIFICATES ......,............,..................................,.....................,...1 THE CERTIFICATES........ ...........,............,..................................................,.................................................... ............2 PREPAyMENT.................................................................................................................. ....... .............. .......2 CERTIFICATE INS URANCE .............................................................................................................................. ............2 TAX MATTERS .....................,........................."........................,...........,............,..........".......................,............,....... 2 CONTINUING DISCLOSURE.",.... ....... .............."..........,.....................................,...........,.... .....................,...................3 PROFESSIONALS INVOLVED IN THE OFFERING......................................................... ..............,................................... 3 CER TIFICA TE OWNERS' RISKS..........,...................................................."........................................ .......................,..3 MISCELLANEOUS..." ............,..........",............"............,..... ................................,............,.......................................... 3 DESCRIPTION OF THE PROJECT ........................................................................................................................4 DESCRIPTION OF THE SITE .................................................................................................................................4 ESTIMATED SOURCES AND USES OF FUNDS..................................................................................................5 THE CERTIFICA TES................................................................................................................................................5 GENERAL.................... ........................................................................................................... ....................................5 PREPAyMENT..."...... ..................."............"................... ..................... ........................... ............................ ................ 5 PREPAYMENT PROCEDURES.......,..... .....................,... .........,......... ....,......................................,..........................,....... 6 PARTIAL PREPAyMENT......... .......................... .......................................,............,.............,........................................ 7 BOOK-ENTRY SYSTEM .......................................................................................................................................... 7 GENERAL................ ............,...........,........................... .................... ........... ............ .............................. ......................7 DISCONTINUANCE OF BOOK - ENTRy-SySTEM......... .............................................,.......................................,............. 8 TRANSFER FEES ...,..........." ............,.............,.......................................,............................................................. ........9 SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES........................................................9 GENERAL.............., ........................... ............,......... ............................................,...................................................... 9 LEASE PAYMENTS ......"........ ............................................,.... .........,..........,.,..........."..........,. ............,..................... 10 RESERVE FUND...,............ ,............."............"...........,......... .................,................................................................... 10 ADDITIONAL PAyMENTS....."........................................................... ...................................,............... .................... 10 INSURANCE..........,... ..........".................................. ..................................,............................................................... 11 CERTIFICATE PAYMENT SCHEDULE .............................................................................................................11 CERTIFICA TE INSURANCE.................................................................................................................................11 CITY FINANCIAL INFORMATION .....................................................................................................................11 ACCOUNTING AND FINANCIAL REpORTING .......... .................................................,............,..... .......,................,...... 12 BUDGET PROCEDURE, CURRENT BUDGET AND HISTORlCAL BUDGET INFORMATION.............................................. 12 COMPARATIVE CHANGE IN FUND BALANCE OF THE CITY GENERAL FUND ........................................................,....13 COMPARATIVE BALANCE SHEETS OF THE CITY .......................................................................................................15 MAJOR REVENUES .................................................................. .......................................,......................................... 16 PROPERTY TAXES..........,..............,.........................."........................................... .........,............,............................ 16 PRlNCIP AL T AXP AYERS. ........................,..............,........................................................................................ .......... 18 INDEBTEDNESS.......,.............,.........................................,................................................... ...............,..............,......20 CITY INVESTMENT POLICy........................................................................................ ............................. .................22 LIMIT A TIONS ON TAX REVENUES ..................................................................................................................24 ARTICLE XIII A..................,.......................................,.........................,........................................ ..........................24 ARTICLE XIII B .........."............,...........,',..........",..........,.........................,..........."..........,............. ............,............24 DOCSOC\ 753950v2\24036.0007 A-'-/ "T TABLE OF CONTENTS PAGE UNITARY PROPERTy.....................".................... ........................................................ ............................................25 PROPOSITION 46 .................................................................... ..................................... ...........................................25 PROPOSITION 62 .................................................................................................................................... .................. 26 ARTICLE xmc AND ARTICLE XmD OF THE STATE CONSTITUTION .......................................................................26 RISK FACTORS .......................................................................................................................................................26 NOT A PLEDGE OF TAXES."...........",..........". ..........."...........,............,..... ...................,........................................... 26 ADDITIONAL OBLIGATIONS OF THE CITy............"................................................................................................... 27 DEFAULT.................... ,............................................................................................................................,... ............27 RELEASE OR SUBSTITUTION OF PROPERTy...................................................................... ........................................28 ABATEMENT..................."............"............,..........................,.............. .........."........................"...........,...... .....,.....28 EARTHQUAKES........""..........",..........,."...........,............"....... .................... .....................................,..........."......... 29 LIMITATIONS ON REMEDIES; BANKRUPTCy...................... ......................,.............,................. .................................29 THE AUTHORITY ...................................................................................................................................................29 TAX MA TTERS........................................................................................................................................................29 FINANCIAL STATEMENTS OF THE CITY .......................................................................................................30 CERTAIN LEGAL MATTERS ...............................................................................................................................30 LITIGATION ............................................................................................................................................................31 UNDERWRITING ....................................................................................................................................................31 CONTINUING DISCLOSURE................................................................................................................................31 MISCELLANEOUS ..................................................................................................................................................31 APPENDIX A APPENDIX B Economic and Demographic Information Regarding the City ofChula Vista............... A-I The City ofChula Vista Audited Financial Statements for the Fiscal Year Ended June 30, 1999 ..........,..,.........."...........,...........,..,............,.........."............".......... .B-1 Summary of Principal Legal Documents ."...........,..........,..,..........."............"..........".,..C.l Form of Legal Opinion.....,..."........"..,........................,............"............"............"........ D-I Specimen MlUlicipal Bond Insurance Policy ............................,.....................................E-I City Investment Policy".............,............,...........................,..............,............"...........,.. F.I Form of Continuing Disclosure Certificate .................................................................... G-I APPENDIX C APPENDIX D APPENDIX E APPENDIX F APPENDIX G 11 DOCSOC\ 753950v2\24036.0007 A-5 "T $ CITY OF CHULA VISTA Certificates of Participation Series A of 2000 (2000 Financing Project) Evidencing Proportionate Interests in Lease Payments to be Made by the CITY OF CHULA VISTA, CALIFORNIA Pursuant to a Lease with the CHULA VISTA PUBLIC FINANCING AUTHORITY INTRODUCTION This introduction contains only a brief summary of certain of the terms of the Certificates being offered, and a brief description of the Official Statement. All statements contained in this introduction are qualified in their entirety by reference to the entire Official Statement. References to, and summaries of provisions of the Constitution and laws of the State of California and any documents referred to herein do not purport to be complete and such references are qualified in their entirety by reference to the complete provisions. Capitalized terms used in this Official Statement and not defined elsewhere herein have the meanings given such terms in Appendix C - "Summary of Principal Legal Documents." This Official Statement speaks only as of its date, and the information contained herein is subject to change. General This Official Statement, including the cover and the Appendices attached hereto (the "Official Statement"), provides certain information concerning the execution and delivery of the City of Chula Vista Certificates of Participation, Series A of 2000 (2000 Financing Project) (the "Certificates") in an aggregate principal amount of $ . The Certificates will be executed and delivered pursuant to a Trust Agreement dated as of September I, 2000 (the "Trust Agreement") by and among the City of Chula Vista (the "City"), the Chula Vista Public Financing Authority (the "Authority") and U.S. Bank Trust National Association, as trustee (the "Trustee"). The Certificates represent proportionate undivided interests of the registered owners thereof (the "Owners") in a portion of the Lease Payments to be made by the City to the Authority under that certain Lease between the Authority, as lessor, and the City, as lessee, dated as of September I, 2000 (the "Lease"). See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES ~ Lease Payments." The Certificates are being delivered to (i) provide funds to improve the City's 800 Megahertz emergency communications system and to improve the City's Corporation Yard (collectively, the "Project"), (ii) finance a reserve account for the Certificates and (iii) pay the costs of issuance incurred in connection with the execution and delivery of the Certificates. See "DESCRIPTION OF THE PROJECT" and "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES." The City and the Project are located in the County of San Diego (the "County"). The Authority will lease the Site to the City pursuant to the Lease (the "Lease Payments"). See "DESCRIPTION OF THE SITE". Security and Sources of Payment for the Certificates The Certificates are being executed and delivered pursuant to the Trust Agreement. The City will lease the Site to the Authority pursuant to a Site Lease between the City as Lessor, and the Authority, as Lessee dated as of September I, 2000 (the "Site Lease"). Under the Lease, the Authority will lease the Site back to the Authority. The City is required under the Lease to pay Lease Payments for the use and possession of the Site, as further described under the caption "THE SITE" herein. The City is also required to pay any taxes and assessments and the cost of maintenance and repair of the Site. DOCSOC\ 7 53950v2\24036.0007 A-h "T Pursuant to an Assignment Agreement, dated as of September I, 2000 (the "Assignment Agreement"), by and between the Authority and the Trustee, the Authority will assign to the Trustee, for the benefit of the Owners. substantially all of its rights under the Lease, the Site Lease. including its rights to receive and collect Lease Payments and prepayments from the City under the Lease and rights as may be necessary to enforce payment of Lease Payments and prepayments. All rights assigned by the Authority pursuant to the Assignment Agreement will be administered by the Trustee in accordance with the provisions of the Trust Agreement for the equal and proportionate benefit of all Owners. The Certificates evidence fractional and undivided interests in the right to receive Lease Payments and prepayments thereof to be made by the City to the Authority under the Lease. The Lease Payments are designed to pay, when due. the principal and interest with respect to the Certificates. The City has covenanted in the Lease that it will take such action as may be necessary to include the Lease Payments and other payments due under the Lease in its annual budgets and to make the necessary annual appropriations therefor. The City's obligation to make Lease Payments is subject to abatement in the event of the taking of, damage to or loss of use and possession of the Site. See "RISK FACTORS - Abatement" herein. The obligation of the City to make Lease Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Certificates nor the obligation of the City to make Lease Payments constitutes a debt of the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. The Certificates Interest represented by the Certificates is payable semiannually on April I and October I of each year, commencing on April 1,2001 (each an "Interest Payment Date"). See "THE CERTIFICATES - General" herein. The Certificates will be executed and delivered in book-entry form only and, when delivered, will be registered in the name of Cede & Co" as nominee of The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the Certificates. Individual purchases of the Certificates will be made in book-entry form only, Purchasers of the Certificates will not receive certificates representing their ownership interests in the Certificates purchased. The Certificates will be executed and delivered in Authorized Denominations. Principal, premium, if any, and interest payments due with respect to the Certificates are payable directly to DTC by U.S, Bank Trust National Association, as Trustee. Upon receipt of payments of principal, premium, if any, and interest, DTC will in turn distribute such payments to the beneficial owners of the Certificates. See "THE CERTIFICATES -- General" and "Book-Entry System." Prepayment The Certificates are subject to extraordinary, optional and mandatory sinking fund prepayment prior to maturity, as described herein. See "THE CERTIFICATES - Prepayment" herein. Certificate Insurance Payment of the principal of and interest represented by the Certificates when due will be insured by a municipal bond insurance policy (the "Policy") to be issued by (the "Insurer") simultaneously with the delivery of the Certificates. See "CERTIFICATE INSURANCE." Tax Matters In the opinion of Stradling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach. California ("Special Counsel"), under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest (and original issue discount) with respect to the Certificates is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative 2 DOCSOC\ 7 53950v2\240J6.0007 A-7 .,. minimum tax imposed on individuals and corporations. In the further opinion of Special Counsel, the interest (and original issue discount) with respect to the Certificates is exempt from State of California personal income tax. See "TAX MATTERS" herein. Continuing Disclosure The City has covenanted for the benefit of the holders and beneficial owners of the Certificates to provide, or cause to be provided, to each nationally recognized municipal securities information repository and any public or private repository or entity designated by the State as a state repository for purposes of Rule 15c2-12(b)(5) (the "Rule") adopted by the Securities and Exchange Commission (each, a "Repository") certain annual financial information and operating data and, in a timely manner, notice of certain material events. These covenants have been made in order to assist the Underwriter in complying with the Rule. See "CONTINUING DISCLOSURE" herein for a description of the specific nature of the annual report and notices of material events and a summary description of the terms of the disclosure certificate pursuant to which such reports are to be made. Professionals Involved in the Offering U.S. Bank Trust National Association, Los Angeles, California, will act as Trustee with respect to the Certificates. The Certificates will be delivered subject to the approval as to their legality by Stradling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California, Special Counsel. Certain legal matters will be passed upon for the City and the Authority by the City Attorney. Excerpts from the City's financial report for the fiscal year ended June 30, 1999 included as Appendix B hereto has been audited by Calderon, Jaham & Osborn, an accountancy corporation, San Diego, California. Certificate Owners' Risks Certain events could affect the ability of the City to make the Lease Payments when due. See "RISK FACTORS" for a discussion of certain factors that should be considered, in addition to other matters set forth herein, in evaluating an investment in the Certificates, Miscellaneous It is anticipated that the Certificates in definitive form will be available for delivery to DTC on or about September _,2000 (the "Delivery Date"). The description herein of the Trust Agreement, the Lease, the Assignment Agreement and any other agreements relating to the Certificates are qualified in their entirety by reference to such documents, and the descriptions herein of the Certificates are qualified in their entirety by the form thereof and the information with respect thereto included in the aforementioned documents. See Appendix C - "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS." Copies of the documents are on file and available for inspection at the offices of the Trustee at 550 South Hope Street, Suite 500, Los Angeles, California 90071, Attention: Corporate Trust Services. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings given such terms in Appendix C - "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS." The information and expressions of opinion herein speak only as of their date and are subject to change without notice. Neither the delivery of this Official Statement nor any sale made hereunder nor any future use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. 3 DOCSOC\ 753950v2\24036.0007 A-% "T The presentation of information, including tables of receipt of revenues, is intended to show recent historical information and is not intended to indicate future or continuing trends in the financial position or other affairs of the City. No representation is made that past experience, as it might be shown by such financial and other information, will necessarily continue or be repeated in the future, DESCRIPTION OF THE PROJECT The Project consists of improvements to be made to the City's Corporation Yard (the "Corporation Yard Component") and improvements of the City's 800 Megahertz emergency communications system (the "800 Megahertz Component"), The cost of improvements to be made to the Corporation Yard component is projected to be $26,000,000. Construction of such improvements are expected to commence by the end of August, 2000 and to be completed by the end of August, 2001. The cost of the improvements to the 800 Megahertz Component is projected to be $3,600,000 of which approximately $2,000,000 will be financed from the proceeds of the Certificates; the remainder of the 800 Megahertz Component will be financed by funds on hand. Acquisition and improvement of the 800 Megahertz Component is expected to commence by the end of August, 2000 and to be completed by March 31, 200 I. DESCRIPTION OF THE SITE Pursuant to the terms of the Lease, the Authority intends to lease the Site to the City. The Site consists of five parcels of land owned by the City and the improvements located on such parcels. The total insured value of the facilities comprising the Site is $27,983,800. In addition, the value of the land underlying certain portions of the Site is established by the City an additional $6,752,671 of value bringing the total value of the Site as established by the City to $34,736,471. The name of each parcel and such parcels' insurance value and land value, if any, is set forth below. Estimated Parcel Insured Value Land Value Total Value Corporation Yard $ 8.500,000 $ 8,500,000 Main Library 7,714,000 $2,003,760 9,717,760 South Chula Vista Library 5.539,800 5,539,800 Public Services Building 4.000,000 [2,374.455] [6,374,455] City Hall 2,230,000 [2,374,456] [4,604,456] Total $27,983,800 $6,752.671 $34,736.471 Pursuant to the Lease, the City and the Authority have agreed and determined that the Lease Payments required to be made under the Lease represent the fair rental value of the Site. Under the terms of the Lease, the City may substitute other property for the Site, or any portion thereof, provided that certain conditions set forth in the Lease are met. The Lease provides that upon completion of the Corporation Land Component, the other four parcels comprising the Site will be released upon the submittal of a certificate of an authorized Official of the City, See Appendix A - "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - The Lease - Substitution or Release of the Site" herein. 4 DOCSOC\ 753950v2\24036.0007 A-q ESTIMATED SOURCES AND USES OF FUNDS The following table summarizes the estimated sources and uses of Certificate proceeds: Sources of Funds Par Amount of Certificates Accrued Interest Original Issue Discount Total Sources Uses of Funds Project Fund Reserve Fund Account Interest Costs of Issuance(l) Total Uses (1) Includes underwriting discount, Speclal Counsel fees, printing costs, Certificate insurance premium and other issuance costs. THE CERTIFICATES General The Certificates will be executed and delivered in the form of fully registered Certificates in principal amounts of $5,000 each or any integral multiple thereof. The Certificates will be dated their date of delivery and mature on October I in the years set forth on the cover page hereof. Each Certificate will be payable with respect to interest on April I and October 1 of each year, commencing on April 1, 200 I at the respective rates of interest set forth on the cover page hereof. The Certificates will be executed and delivered in book-entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the Certificates. Individual purchases of the Certificates will be made in book-entry form only. Purchasers of the Certificates will not receive certificates representing their ownership interests in the Certificates purchased. Principal, premium, if any, and interest payments due with respect to the Certificates are payable directly to DTC by U.S. Bank Trust National Association, as Trustee. Upon receipt of payments of principal, premium, if any, and interest, DTC will in turn distribute such payments to the beneficial owners of the Certificates. See "BOOK-ENTRY SYSTEM." Prepayment Extraordinary Prepayment The Certificates are subject to prepayment, without premium, prior to their respective maturity dates on any date, in whole or in part, from Net Proceeds which the Trustee transfers to the Prepayment Fund as provided in the Lease at least 45 days prior to an Interest Payment Date at a prepayment price equal to the principal amount thereof together with the accrued interest to the date fixed for prepayment. Optional Prepayment. The Certificates maturing on or after October I, _ are subject to prepayment prior to maturity in whole or in part on any date on or after October I, _ at the option of the City, in the event the City exercises its option under the Lease to prepay all or a portion of the principal component of the Lease Payments (in integral multiples of $5,000 but not in a principal amount of less than $20,000), at the prepayment price (expressed as a percentage of the principal component to be prepaid), plus accrued interest to the date fixed for prepayment as follows: 5 DOCSOC\ 7 53950v2\24036.0007 A-IO Mandatory Sinking Fund Prepayment. The Certificates payable on October I, _ are subject to mandatory sinking fund prepayment in part. by lot on October I. _, at a prepayment price equal to the principal amount thereof, together with accrued interest to the date fixed for prepayment, without premium. The principal amount represented by such Certificates to be so prepaid and the dates therefor and the principal amount represented by the Certificates to be paid on the final principal payment date is as indicated in the following table: Prepayment Date (October 1) Principal Amount The amount of each mandatory sinking account prepayment shall be reduced proportionately, in multiples of $5,000, in the event and to the extent of any and all prepayments of the Certificates. Prepayment Procedures Whenever provision is made for the optional prepayment of Certificates and less than all Outstanding Certificates are called for prepayment, the Trustee shall select Certificates for optional prepayment from among maturities selected by the City and by lot within any maturity. For extraordinary prepayment of Certificates, the Trustee shall select certificates for prepayment pro rata among maturities and by lot within any maturity. Notice of prepayment shall be mailed by first-class mail, postage prepaid, not less than 30 nor more than 60 days before the prepayment date to the respective Owners of any Certificates designated for prepayment at their addresses appearing on the Certificate registration books, and shall be sent by first class mail or delivery service, postage prepaid, to the Municipal Securities Depositories (as defined in the Trust Agreement) and to the Information Services (as defined in the Trust Agreement) which the City shall designate to the Trustee, Neither failure to receive such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the prepayment of such Certificates. Such notice shall specify: (a) the prepayment date, (b) the prepayment price, (c) if less than all of the Outstanding Certificates are to be prepaid, the Certificate numbers (and in the case of partial prepayment, the respective principal amounts), (d) the CUSIP numbers of the Certificates to be prepaid, (e) the place or places where the prepayment will be made, (f) the original date of execution and delivery of the Certificates, (g) any other descriptive information regarding the Certificates needed to identify accurately the Certificates being prepaid. Such notice shall further state that on the specified date there shall become due and payable upon each Certificate to be prepaid, the portion of the principal amount of such Certificate to be prepaid, together with interest accrued to said date and that from and after such date, provided that moneys therefor have been deposited with the Trustee, interest with respect thereto shall cease to accrue and be payable. So long as The Depository Trust Company ("DTC") is the registered Owner of the Certificates, all such notices will be provided to DTC as the Owner, without respect to the beneficial ownership of the Certificates. See "BOOK-ENTRY-ONL Y SYSTEM" herein. Notice having been given to the Owners of any Certificates being prepaid, and the moneys for the prepayment (including the interest to the applicable date of prepayment), having been set aside in the Prepayment Fund, the Certificates will become due and payable on the date of prepayment, and upon presentation and surrender thereof at the Principal Office of the Trustee such Certificates will be paid at the prepayment price with respect thereto, plus interest accrued and unpaid to the date of prepayment. If, on the date of prepayment moneys for the prepayment of all the Certificates to be prepaid, together with interest to the date of prepayment, held by the Trustee so as to be available therefor on such date of prepayment, and, if notice of prepayment thereof has been given as described above, then, from and after the date of prepayment, interest with respect to the Certificates to be prepaid will cease to accrue and become 6 DOCSOC\ 753950v2\24036.0007 A -II "T payable. All moneys held by or on behalf of the Trustee for the prepayment of Certificates will be held in trust for the account of the Owners of the Certificates so to be prepaid. without liability for interest thereon. Partial Prepayment Upon surrender by the Owner of a Certificate for partial prepayment at the Principal Office of the Trustee, payment of such partial prepayment of the principal amount of a Certificate will be paid to such Owner. Upon surrender of any Certificate prepaid in part only, the Trustee will execute and deliver to the registered Owner thereof, at the expense of the City, a new Certificate or Certificates which shall be of authorized denominations equal to the unprepaid portion of the Certificate surrendered and of the sarne tenor and maturity. Such partial prepayment will be valid upon payment of the amount thereby required to be paid to such Owner, and the City, the Authority and the Trustee will be released and discharged from all liability to the extent of such payment. BOOK-ENTRY SYSTEM The following description of the procedures and record-keeping with respect to beneficial ownership interests in the Certificates, payment of principal, interest and other payments with respect to the Certificates to Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in such Certificates and other related transactions by and between DTC, the 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 Participants nor the Beneficial Owners should rely on the following information with respect to such matters, but should instead confirm the same with DTC or the Participants, as the case may be. General Unless a successor securities depository is designated pursuant to the Trust Agreement, DTC will act as securities depository for the Certificates. The Certificates will be executed and delivered as fully-registered securities, registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Certificate will be issued for each maturity of the Certificates, each in the aggregate principal amount of each such maturity, and will be deposited with DTC. DTC 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 Conunercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of 1934, as amended DTC holds securities that its participants (the "Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants ("Direct Participants") include securities brokers and dealers, banks, tIust companies, clearing corporations, and certain other organizations. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of the Certificates under the DTC system must be made by or through Direct Participants. which will receive a credit for the Certificates on DTC's records. The ownership interest of each actual purchaser of each Certificate ("Beneficial Owner") is in turn to be recorded on the Direct Participants' and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchases, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Certificates are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. BENEFICIAL OWNERS WILL NOT RECEIVE CERTIFICATES REPRESENTING THEIR OWNERSHIP INTERESTS IN THE CERTIFICATES, EXCEPT IN THE EVENT THAT USE OF THE BOOK-ENTRY SYSTEM FOR THE CERTIFICATES IS DISCONTINUED. 7 DOCSOC\ 753950v2\24036.0007 A-I;! "T To facilitate subsequent transfers. all Certificates deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Certificates with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC's records reflect only the identities of the Direct Participants to whose accounts such securities are credited, which mayor may not be the Beneficial Owners, The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. NONE OF TIlE CITY. TIlE AUTHORITY OR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO SUCH DTC PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO TIlE CERTIFICATES. While Certificates are in the book-entry system, prepayment notices shall be sent to Cede & Co. If less than all of the Certificates are being prepaid, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in snch issue to be prepaid. Neither DTC nor Cede & Co. will consent or vote with respect to the Certificates, Under its usual procedures, DTC mails an Omnibus Proxy to an 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 the Certificates are credited on the record date (identified in a listing attached to the Onmibus Proxy). Principal and interest payments with respect to the Certificates will be made to DTC. DTC's practice is to credit Direct Participants' accounts on payment dates in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payments on the payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee. or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be responsibility of Direct Participants and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Certificates at any time by giving reasonable notice to the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Certificates are required to be printed and delivered as described in the Trust Agreement. The City may decide to discontinue use of the system of book-entry transfers of the Certificates through DTC (or a successor securities depository). In that event. Certificates will be printed and delivered as described in the Trust Agreement. The City carulOt and does not give any assurances that DTC will distribute to Participants, or that Participants or others will distribute to the Beneficial Owners payments of principal, interest and premium, if any, with respect to the Certificates paid or any prepayment or other notices or that they will do so on a timely basis or will serve and act in the manner described in this Official Statement. The City is not responsible or liable for the failure of DTC or any Participant to make any payments or give any notice to a Beneficial Owner with respect to the Certificates or any error or delay relating thereto. SO LONG AS CEDE & CO. IS REGISTERED OWNER OF TIlE CERTIFICATES, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE OWNERS OR REGISTERED OWNERS OF THE CERTIFICATES SHALL MEAN CEDE & CO., AS AFORESAID, AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE CERTIFICATES. Discontinuance of Book-Entry-System 8 DOCSOC\ 7 53950v2\24036.0007 fi - /3 "T DTC may discontinue providing its services with respect to the Certificates at any time by giving notice to the Trustee and discharging its responsibilities with respect thereto under applicable law or, the City may terminate its participation in the system of book-entry transfers through DTC or any other securities depository at any time. In the event that the book-entry system is discontinued, the Trustee will execute and make available for delivery, replacement Certificates in the fonn of registered Certificates. In addition, the following provisions would apply: the principal of and prepayment premium, if any, with respect to the Certificates will be payable at the principal corporate trust office of the Trustee, and interest with respect to the Certificates will be payable by check mailed on each Interest Payment Date to the registered Owners thereof as shown on the registration books of the Trustee as of the close of business on the Record Date immediately preceding the applicable Interest Payment Date; provided, however, that registered Owners of at least $1,000,000 aggregate principal amount of Certificates may. at any time on or prior to such Record Date, give the Trustee written instructions for payment of such interest on the succeeding Interest Payment Date by wire transfer to the bank account number on file with the Trustee as of the Record Date before the applicable Interest Payment Date. Certificates will be transferable and exchangeable on the tenus and conditions provided in the Trust Agreement. Transfer Fees For every transfer and exchange of Certificates, Owners requesting such transfer or exchange may be charged a sum sufficient to cover any tax, governmental charge or transfer fees that may be imposed in relation thereto, which charge may include transfer fees imposed by the Trustee, DTC or the DTC Participant in connection with such transfers or exchanges. SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES Neither the Certificates nor the obligation of the City to make Lease Payments constitutes an obligation of the City for which the City is obligated to levy or pledge, or for which the City has levied or pledged, any fonn of taxation. Neither the Certificates nor the obligation of the City to make Lease Payments constitutes a debt of the City, the State of California or any of its political subdivisions within the meaning of any constitutional limitation or violates any statutory debt limitation. General Each Certificate represents a fractional interest in the Lease Payments and prepayments to be made by the City to the Trustee under the Lease. The City is obligated to pay Lease Payments from any source of legally available funds, and has covenanted in the Lease to include all Lease Payments coming due in its annual budgets and to make the necessary annual appropriations therefor. The Authority, pursuant to the Assignment Agreement, has assigned all of its rights under the Lease (excepting certain rights as specified therein), including the right to receive Lease Payments and prepayments, to the Trustee for the benefit of the Owners, By the fifteenth day of each February and August (if such day is not a Business Day, the next succeeding Business Day), the City must pay to the Trustee a Lease Payment (to the extent required under the Lease) which is expected to equal the amount necessary to pay the principal and interest with respect to the Certificates on the next succeeding Certificate Payment Date. The City's obligation to make Lease Payments will be abated in the event of, and to the extent of, substantial interference with use and possession of the Site arising from damage, destruction, title defect or taking by eminent domain or condemnation of the Site. Abatement would not constitute a default under the Lease and the Trustee would not be entitled in such event to pursue remedies against the City. See "RISK FACTORS _ Abatement" herein. Under the Lease. the City agrees to pay certain taxes, assessments, utility charges, and insurance premiums charged with respect to the Site and the Certificates and fees and expenses of the Trustee. The City is responsible for repair and maintenance of the Site during the tenn of the Lease. The City may at its own expense in good faith contest such taxes, assessments and utility and other charges if certain requirements set forth in the Lease are satisfied, including obtaining an opinion of counsel that the Site will not be subjected to loss or forfeiture. 9 DOCSOC\ 753950v2\24036.0007 A -/'/ ~ Should the City default under the Lease, the Trustee, as assignee of the Authority. may terminate the Lease and fe-lease the Site or may retain the Lease and hold the City liable for all Lease Payments thereunder on an annual basis. Under no circumstances will the Trustee have the right to accelerate Lease Payments. See "RISK FACTORS - No Acceleration Upon Default" herein. Lease Payments Subject to the provisions of the Lease regarding abatement in the event ofloss of use and possession of any portion of the Site (see "RISK FACTORS - Abatement" herein) and prepayment of Lease Payments (see the provisions relating to prepayment under the caption "THE CERTIFICATES" above), the City agrees to pay to the Authority, its successors and assigns, as annual rental for the use and possession of the Site, the Lease Payments to be due and payable on March 15 and September 15 of each year (each, a "Lease Payment Date"). Any monies deposited in the Lease Payment Fund during the month preceding a Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole pursuant to the Lease and other amounts required for payment of past due principal or interest with respect to any Certificates not presented for payment) shall be credited to the payment of Lease Payments due and payable on such Lease Payment Date. The Trust Agreement requires that Lease Payments be deposited in the Lease Payment Fund maintained by the Trustee. Pursuant to the Trust Agreement, on March 1 and September 1 of each year, commencing September 1, 2000, the Trustee will apply such amounts in the Lease Payment Fund as are necessary to make interest and principal payments, respectively, with respect to the Certificates as the same shall become due and payable, in the amounts specified in the Lease. Reserve Fund A Reserve Fund is established by the Trust Agreement in an amount equal to the least of (i) maximum aggregate annual Lease Payments payable under the Lease in any Certificate Year, (ii) 125% of the average annual aggregate Lease Payments then payable under the Lease (calculated based on Certificate Years), or (iii) 10% of the face amount of the Certificates (less original issue discount if in excess of two percent of the stated payment amount at maturity (the "Reserve Requirement"). The full amount available in the Reserve Fund may be used by the Trustee in the event of abatement or failure by the City to make Lease Payments when due. Interest or income received by the Trustee on investment of monies in the Reserve Fund will be retained in the Reserve Fund so long as amounts on deposit in the Reserve Fund are less than the Reserve Requirement. In the event that amounts on deposit in the Reserve Fund exceed the Reserve Requirement, subject to the requirement of transfers to the Rebate Fund, such excess shall be transferred to the Project Fund to the filing of a Certificate of Completion and thereafter to the Lease Payment Fund on or before March 15 and September 15 of each year. Additional Payments Under the Lease. the City is to pay such amounts ("Additional Payments") as are required for the payment of all administrative costs of the Authority relating to the Site or the Certificates. including, without limitation, all expenses, compensation and indemnification of the Trustee payable by the City under the Trust Agreement, taxes of any sort whatsoever payable by the Authority as a result of its leasehold interest in the Site or undertaking of the transactions contemplated in the Lease or in the Trust Agreement, fees of auditors, accountants, attorneys or engineers, any and all amounts due to the Insurer and all other necessary administrative costs of the Authority or charges required to be paid by it in order to comply with the terms of the Certificates or of the Trust Agreement, including premiums on insurance required to be maintained by the Lease or to indemnify the Authority and its officers and directors. 10 DOCSOC\ 753950v2\24036.0007 A-/:::,- "T Insurance Pursuant to the Lease, the City will obtain an ALTA leasehold title insurance policy (with western regional exceptions) on the Site in an amount equal to the aggregate principal component of unpaid Lease Payments. The Lease also requires that the City maintain rental interruption insurance to insure against loss of Lease Payments caused by loss or damage to the Site not covered under the City's casualty insurance in an amount not less than the maximum remaining scheduled Lease Payments in any future two-year period. The City is obligated to obtain a standard comprehensive general public liability and property damage insurance policy or policies and workers' compensation insurance. See Appendix A - "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - The Lease" herein. The proceeds of any rental interruption insurance will be deposited to (i) the Reserve Fund to make up any deficiency therein and (ii) in the Lease Payment Fund to be credited towards the payment of the Lease Payments in the order in which such Lease Payments become due and payable. The Lease requires the City to apply the Net Proceeds of any insurance award either to replace or repair the Site or to prepay Certificates if certain certifications with respect to the adequacy of the Net Proceeds to make repairs, and the timing thereof, cannot be made. The amount of Lease Payments will be abated and Lease Payments due under the Lease may be reduced during any period in which by reason of damage, destruction, title defect or taking by eminent domain or condemnation there is substantial interference with the City's use and possession of all or part of the Site. See "RISK FACTORS - Abatement" herein. CERTIFICATE PAYMENT SCHEDULE Lease Payments are required to be made by the City under the Lease on or before March 15 and September 15 of each year for the use and possession of the Site for the period commencing as of September I, 2000 and terminating on September I, _, or extended as provided in the Lease. The Interest Payment Dates with respect to the Certificates are April I and October I, commencing April I, 2001. The aggregate annual amounts of Certificate payments, comprising interest and principal payable to the Owners, are set forth below. See Appendix A - "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - The Lease" herein. The following table sunnnarizes the annual Certificate payment requirements of the City. CERTIFICATE INSURANCE The following information has been furnished by the Insurer for use in this Official Statement. Neither the City, the Authority nor the Underwriter guarantees or makes any representation as to the accuracy or completeness thereof. Reference is made to Appendix E for a specimen of the Municipal Bond Insurance Policy which has been provided by the Insurer for use herein. [TO COME] CITY FINANCIAL INFORMATION The following is a description of the City's budget process. current budget, historical budget information, changes in fund balance. balance sheets, its major revenues and expenditures, indebtedness, investments and certain other financial information relating to the City. The City's Financial Statements along with accompanying notes and opinions from the Independent Auditor for the Fiscal Year ended June 30, 1999, are available upon request from the City. See Appendix D "AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE YEAR ENDED JUNE 30, 1999." For further information concerning the financial condition of the City, refer to annual audit reports on file with the City Clerk. II DOCSOC\ 753950v2\24036.0007 ,4-If,.:, Accounting and Financial Reporting The City maintains its accounting records in accordance with Generally Accepted Accounting Principles (GAAP) and the standards established by the Governmental Accounting Standards Board (GASB). On a quarterly basis, a report is prepared for the City Council which reviews fiscal performance to date against the budget and recommends any necessary changes. Combined financial statements are produced following the close of each Fiscal Year. The City Council employs an independent certified public accountant, who, at such time or times as specified by the City Council, at least annually, and at such other times as they determine, examines the financial statements of the City in accordance with generally accepted auditing standards, including tests of the accounting records and other auditing procedures as such accountant considers necessary. As soon as practicable, after the end of the Fiscal Year, a final audit and report is submitted by the independent accountant to the City Council. Budget Procedure, Current Budget and Historical Budget Information The Fiscal Year of the City begins on the first day of July of each year and ends on the 30th day of June of the following year. At such time as the City Manager detennines, each department head must furnish to the City Manager an estimate of revenues and expenditures for the department for the ensuing Fiscal Year, detailed in such manner as may be prescribed by the City Manager. In preparing the proposed budget, the City Manager reviews the estimates, holds conferences thereon with the respective department heads, and revises the estimates as he/she deems advisable. Prior to the beginning of each Fiscal Year, the City Manager submits to the City Council the proposed budget. The City Council detennines the time for the holding of a public hearing thereon and causes to be published a notice thereof, not less than ten days prior. available for inspection by the public in the office of the City Clerk and at the City Library. During the public hearing and after its conclusion, the City Council further considers the proposed budget and makes any revisions thereto that it deems advisable. On or before June 30, of each year, the City Council adopts the budget with revisions, if any, by the affirmative vote of at least a majority of the total members. From the effective date of the budget, the amounts stated as proposed expenditures become appropriated to the several departments, offices and agencies for the objects and purposes named, provided that the City Manager may transfer appropriations of a fund from one object or purpose to another within the same department in any amount up to $15,000. All other transfers or amendments require City Council approval. All appropriations lapse at the end of the Fiscal Year to the extent that they have not been expended or lawfully encumbered. At a public meeting after the adoption of the budget the City Council may amend or supplement the budget by motion adopted by four votes of the City Council. 12 DOCSOC\753950v2\24036.0007 1+- /7 ~ TABLE 1 CITY OF CHULA VISTA GENERAL FUND BUDGETS (in OOO's) Total Revenue Final Adopted Final Adopted Final Adopted 1998-99 1999-00 2000-01 Budee! Budeet Budeet $ 32,581 $ 35,365 $ 40,840 10.191 17,723 21,037 2.148 3,249 3,510 3.647 5,142 11.722 661 775 922 1,027 1,116 1,497 10,795 3,451 844 $ 61.052 $ 66,821 $ 80.246 $ 12,034 $ 3,670 $ 18.828 29,669 31,414 34.891 11,945 19.603 5,627 3.837 3,999 6,429 16.509 7,798 123 $ 63,274 $ 9.391 $ 83.711 $ (2,222) $ (2,570) $ (3,465) Revenue: Taxes Intergovernmental Licenses and Permits Charges for Services Fines and Forfeitures Interest and Rent Other Expenditures: General Government Public Safety Public Works Parks and Recreation Library Public Warks/Parks Library Recreation Capital Outlay Total Expenditures Excess (deficiency) of revenue over expenditures Other Financing Sources (Uses): Proceeds from long-term debt Operating transfers in Operating transfers out $ 5,047 (2,825) $ 7,015 (4,366) $ 2,649 $ 7,951 (4,486) Total Other Financing Sources (Uses) $ 2,222 $ 3,465 Excess of Revenue and other Sources over Expenditures and other Uses $ 79 Source: Adopted Budgets of the City for fiscal years 1998-99, 1999vOO and 2000-01. Comparative Change in Fund Balance of the City General Fund The Table 2 below presents the City's General Fund Statement of Revenues, Expenditures and Change in Fund Balance for the past five years, 13 DOCSOC\753950v2\24036.0007 A-If -r TABLE 2 CITY OF CHULA VISTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE FIVE YEAR COMPARISON (in OOO's) Fiscal Year Ending June 30, 1997 1998 1999 2000 (Unaudited) Revenue: Taxes $ 29.156 $ 31,328 $ 33.465 $ 38,341 Intergovernmental 17,671 Licenses and Permits 1.974 2,108 3.479 3.413 Charges for Services 4,295 5,071 7,172 9,910 Fines and Forfeitures 632 604 782 889 Interest and Rent 1,056 1,850 2,267 1,728 Other 1.607 2,228 3.543 1,373 Total Revenue $ 56.390 $ 60,677 $ 69,614 $ 73,212 Expenditures: General Government $ 10,481 $ 11,980 $ 15,627 $ 16,928 Public Safety 27,185 28,361 29,877 33,248 Public Warks 11,572 11,051 11,914 16.580 Parks and Recreation 5,181 5,190 5,255 2.938 Library 3,680 3,912 3,984 5.900 Capital Outlay 64 Total Expenditures $58,164 $ 60.493 $ 66,657 $ 75.594 Excess (deficiency) of revenue over expenditures $ (1,774) $ 184 $ 2.957 $ (2,382) Other Financing Sources (Uses): Proceeds from long-term debt $ 64 Operating transfers in 5.513 $ 5,379 $ 5.244 $ 8,865 Operating transfers out (1.877) (2,351) (2,544) (4,356) Total Other Financing Sources (Uses) $ 3,700 $ 3,028 $ 2,700 $ 4,509 Excess of Revenue and other Sources over Expenditures and other Uses $ 1,926 $ 3,211 $ 5,656 $ 2.127 Fund Balance, Beginning of Year $14.407 $16.334 $19,653 $25.309 Adjustment to Beginning Fund Balance 108 Fund Balance, End of Year $16.334 $19.545 $25,309 $27,436 Source: Audited Financial Statements for fiscal years 1996-97, 1997-98 and 1998-99 and unaudited financial report for fiscal year 1999-00. 14 DOCSOC\ 753950v2\24036.0007 A-/9 "T Comparative Balance Sheets of the City Table 3 below presents the City's General Fund Balance Sheets for the past five fiscal years. TABLE 3 CITY OF CHULA VISTA GENERAL FUND BALANCE SHEETS FIVE YEAR COMPARISON Fiscal Vear Ending June 30, 1996 1997 1998 1999 2000 ASSETS Pooled cash and investments $ 3,504,860 $ 3,050.636 $ 3,558.295 $ 9.002.899 Accounts receivable 2,052,671 1.548,415 3,276.408 1,513,337 Taxes receivable 2,347,295 2,495,554 2,767.923 2,971,033 Grant receivable 192,741 11,726 50.666 155.865 Interest and other receivables 5.584 397,919 747.387 402.670 Due from other funds 76.430 69,811 31.176 Loans receivable 250.000 250,000 250,000 243,750 Advances to component unit 2.130.992 2,398,452 2.633,718 2,892.922 Advances to other funds 7,444.974 9,405,175 11.310.201 13,342,468 Restricted Cash and Investments 64.187 110,061 239.810 265,329 Interfund Receivable Total assets $17,993,304 $20,666,741 $24,933,654 $31.580.534 LIABILITIES. EQUITY AND OTHER CREDITS Liabilities Accounts Payable $ 641.877 $ 463,675 $ 1.024,131 $ 828.022 Accrued Liabilities 1.294.763 1,547,688 1.431,469 1,968,142 Due to other funds 3,878 1,695 26,743 Deposits 2,415 4.350 Refundable Deposits 1,285 14,190 Deferred revenues 1,821,113 2.315.538 2,927.082 3,434,249 Total liabilities $ 3,759,038 $ 4.333.194 $ 5,388.727 $ 6.271.346 Equity and Other Credits Fund balances: Reserved: Encumbrances $ 662.277 $ 865,206 $ 829.853 $ 1,333,750 Long-Term Receivables 8.004.853 9.738,089 11,266.838 13,044,890 Assessment District Debt 572.749 572,749 572.749 572,749 Unreserved: Undesignated 853,446 1.587.255 3,748,112 6.803.214 Designated for contingencies 4.140,941 3.570,248 3.127,375 3,554,585 Total equity and other credits $14.234.266 $16.333,547 $19,544.927 $25.309.188 Total liabilities, equity and credits $17.993,304 $20.666,741 $24,933,654 $31.580,534 Source: Audited Financial Statements of the City for fiscal years 1996-96, 1996~97, 1997-98 and 1998-99 and unaudited financial statements for fiscal year 1999-00. 15 DOCSOC\ 7 53950v2\24036.0007 A-;2,O "T Major Revenues The City derives its revenues from a variety of sources including ad valorem property taxes, sales and use taxes, licenses, permits, aid from other governmental agencies, charges for services provided by the City and other miscellaneous revenues. The City's total revenues for selected major revenue source, are set forth below: Revenue Category 1997 Actual 1998 Actual 1999 Actual 2000 Unaudited 200 I Budget Sales & Use Taxes $13.262 $14.618 $15,360 $16.956 $17,702 Property Taxes 8.342 8.740 9,378 10.251 10,827 Motor Vehicle License Fees 6.049 6.539 7,245 8,300 8,798 Franchise Fees 2,134 2.443 2,507 4,387 5,052 Charges for Services- Development 530 950 1,790 2.977 4,288 Utility Users Taxes 2,921 3.102 3,452 3,563 3,705 Federal Grants 1,112 1.665 1,838 2.110 3,034 Building Permits 1,261 1.333 2,064 2,334 2.378 Total $35,611 $39,390 $43,634 $50.878 $55.784 Source: City of Chula Vista Property Taxes In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured". The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens, arising pursuant to State Law, on the secured property, regardless of the time of the creatiou of other liens. The valuation of property is determined as of March I each year, and installments of taxes levied upon secured property become delinquent on the following December 10th and April 10th. Taxes on unsecured property are due March I, and become delinquent August 31. Secured and unsecured property are entered separately on the assessment role maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classification of property. The exclusive means of forcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes of the State for the amount of taxes that are delinquent. The taxing authority has three methods of collecting unsecured personal property taxes: (I) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certaiu facts in order to obtain a judgment lien on certain property of the taxpayer; and (3) seizure and sale of personal property, improvement or possessory interest belonging or taxable to the assessee. Conunencing iu 1982, a 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, property on the secured roll on which taxes are delinquent is sold to the State on or about June 30 of the Fiscal Year. Such property may thereafter be redeemed by the payment of the delinquent taxes and a delinquent penalty, plus a redemption penalty of 1 1/2% per month to the time ofredemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State aud then is subject to sale by the county tax collector. A 10% penalty also applies to the delinquent taxes or property on the unsecured roll, and further, an additional penalty of I 1/2% per month accrued with respect to such taxes beginning on the varying dates related to the tax billing date. Supplemental Assessments Legislation enacted in 1983. SB813 (Statutes of 1983. Chapter 498), provides for the supplemental assignment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Previously, statutes enabled the assessment of such changes only as of the next March 1 tax lien date 16 DOCSOC\ 753950v2\240J6.0007 4-;2/ "T following the change and thus delayed the realization of increased property taxes from the new assessment for up to 14 months. As enacted, Chapter 498 provided increased revenue to redevelopment agencies to the extent that supplemental assessments of new construction or changes of ownerships occur within the boundaries of redevelopment projects subsequent to the March I lien date. Collection of taxes based on supplemental assessments occurs throughout the year. Taxes due are prorated according to the amount of time remaining in the tax years, with the exception of tax bills dated March 1 through May 31, which are calculated on the basis of the remainder of the current Fiscal Year and the full 12 months of the next Fiscal Year. Business Inventory Exception Pursuant to legislation adopted in 1984 (Senate Bill 794 and Assembly Bill 1849) business inventory subventions have been replaced with a financing plan for local governments. In Section I of Senate Bill 794 (Section 16110, et seq. of the California Government Code, which became operative along with counterpart legislation, Assembly Bill 1949, on July I, 1984), the purpose and intent of the legislation was stated as follows: The Legislature fmds and declares that some local agencies lack sufficient revenues to meet their obligations to the landowners and residents they serve. It is the intent of the Legislature in enacting this act to provide local agencies with relative, stable, and very predictable revenues to fmance these obligations. Table 4 below sets for the property tax rates for the City for the fiscal years 1995-96 through 1999-00, TABLE 4 CITY OF CHULA VISTA PROPERTY TAX RATES FISCAL YEARS 1995-96 TO 1999-00 1995-96 1996-97 1997-98 1998-99 1999-00 General Tax Rate(l) 1. 000000 1.000000 1.000000 1. 000000 1.000000 Chula Vista City School District 0,000000 0.000000 0.000000 0.000000 0.024790 San Diego County Water Authority 0.001200 0.001260 0.001170 0.001070 0.001 000 Metropolitan Water District 0,008900 0.008900 0.008900 0.008900 0.008900 Total Tax Rate 1.010100 1.010160 1.010070 1.009970 1.034690 (I) The passage of Proposition 13 on June 6, 1978 established a maximum countywide levy of 1 % of market value or $1.00 per $100 of assessed value. Prior to fiscal year 1981-82, assessed valuation was stated at 25% of market value or $4.00 per $100 of assessed value. Source: California Municipal Statistics, Inc. Table 5 below sets forth the secured and unsecured assessed valuations for property in the City for the fiscal years 1996-97 through 2000-0 I. 17 DOCSOC\753950v2\24036.0007 A-~ "T TABLE 5 CITY OF CHULA VISTA ASSESSED VALUATION FISCAL YEARS 1996-97 TO 2000-01 Year 1996-97 1997 -98 1998-99 1999-00 2000-01 Secured $6,447,133,021 6,449,700,069 6,615,013,861 7,225,834,828 8,466.318,000 Unsecured $236,496,503 413,899,982 240,220,931 475,579,779 502,444,000 Total $6.683,629,524 6.863,600,051 6,855,234,792 7,701,414,607 8,968,762,000 Source: City of Chula Vista Table 6 below sets forth property tax collections and delinquencies in the City for fiscal years 1995-96 through 1999-00. TABLE 6 CITY OF CHULA VISTA PROPERTY TAX LEVIES AND COLLECTIONS FISCAL YEARS 1996 TO 2000 Percent of Delinquent Delinquent Year Ended Current Current Tax Levy Tax Tax June 30 Tax Levy Collections Collected Collections Receivables 1996 $ 8,484,485 $8,202,654 96.68% $234.671 $463,396 1997 8,632,793 8,384,985 97.13% 212,969 432,747 1998 8,675,402 8,525,374 98.27% 233,881 338,404 1999 9,257,807 9,108,378 98.39% 243,354 280,041 2000 10,133,358 9,940,830 98.10% 144,306 253,037 Source: City ofChuJa Vista Principal Taxpayers The 20 largest taxpayers in the City as shown on the 1999-00 secured tax roll, the amounts of taxes paid by each and the percentage of the City's total property tax revenues attributable to each are shown on Table 7 below. 18 DOCSOC\ 753950v2\24036.0007 A- ;2-3 "T TABLE 7 CITY OF CHULA VISTA TWENTY PRINCIPAL TAXPAYERS Property Owner L ROHR. Inc. 2. HO Retail Properties I LP 3. R&B Executive Investments - Marbrisas 4. BRE Properties Inc. 5. Otay Project LLC 6. The Price Company 7. Eucalyptus Grove Holdings LLC 8. DMB & AEW Land Holdings Two LLC 9. Shea Homes Inc. 10. Universal Concerts I L Price Reit Inc. 12. Cypress Creek Co. LP 13. North Island Federal Credit Union 14. Eastlake Co. LLC 15. KMart Corporation 16. Michael S. Allen 17, Waterco LLC 18. Wayne R. Green Trust 19. Bonita Centre LLC 20. Sears Roebuck & Co. (I) Source: Primary Land Use Industrial Shopping Center Apartments Apartments Rural Undeveloped Shopping Center Apartments Vacant Residential Residential Development Amphitheater Commercial Shopping Center Commercial Residential, Commercial and Industrial Properties Shopping Center Apartments Recreational Apartments Shopping Center Shopping Center 1999-00 Local Secured Assessed Valuation: $7.602,861,969 California Municipal Statistics, Inc. DOCSOC\ 7 53950v2\24036.0007 "T 19 A-;2t./ 1999-00 Assessed Valuation $208.675.432 56,294.725 28,941.606 27,787,990 24.653,501 23.987,768 23,410,447 21.728,000 18.966.287 18.839,802 18,761,572 18.310,419 18.078,337 16.915,785 16.56 I ,676 16.398,849 15.504,753 14,390,571 14.350,000 14.203.247 $616,760,767 % of Total I') 2.74% 0.74 0.38 0.37 0.32 0.32 0.31 0.29 0.25 0.25 0.25 0.24 0.24 0.22 0.22 0.22 0.20 0.19 0.19 0.19 8.11% Indebtedness General Oblil!ation Debt. The City currently has no general obligation debt outstanding. Lon!! Term Debt The following is a schedule of all outstanding long term debt of the City as of June 30, 1999. Year Tax Pension Ending June Notes Capital Allocation Certificates of Obligation 30, Payable Leases Bonds Participation Bonds Total 2000 $ 285,544 $ 862,903 $ 2,549,841 $ 1,937,233 $1,651,263 $7,286,784 2001 271,482 862,903 2,552,778 1,936,340 1,736,166 7,359,669 2002 257,453 835,480 2,547,656 1,930,743 1,743,435 7,314,767 2003 243,456 776,936 2,544,878 1,925,245 1,838,435 7,328,950 2004 40,294 776,936 2,545,261 1,226,933 1,933,435 6,522,859 Thereafter 457,372 1,627,312 52,227,338 11,251,041 20,387,061 85,950,124 $1,555,601 $ 5,742,470 $64,967,752 $20,207,535 $29,289,795 $121,763,153 Source: City ofChula Vista Comprehensive Annual Financial Report for fiscal year 1998-99. Short-Term Debt: The City currently has no short-term debt outstanding. 20 DOCSOC\ 7 53950v2\24036.0007 A -;25 ..,. Estimated Direct and Overlappin!! Bonded Debt: The estimated direct and overlapping bonded debt of the City as of September I, 2000 is shown in Table 8 below. The City has not reviewed the following table for completion or accuracy and makes no representation in connection therewith. TABLE 8 CITY OF CHULA VISTA ESTIMATED DIRECT AND OVERLAPPING BONDED DEBT 1999-00 Assessed Valuation: Redevelopment Incremental Valuation: Adjusted Assessed Valuation: $8,088,272,068 506.230.684 $7,582,041,384 OVERLAPPING TAX AND ASSESSMENT DEBT: San Diego County Water Authority Metropolitan Water District Gtay Municipal Water District, LD. No. 27 Chula Vista City School District City of Chula Vista Community Facilities Districts Sweetwater Union High School District Community Facilities Districts Chula Vista City School District Community Facilities Districts CityofChula Vista 1915 Act Bonds TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT % Aoolicable 4.804% 0.832 99.999 81.522 100.000 79.554-100.000 79.554-100.000 100.000 DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT: San Diego County General Fund Obligations 4.630% San Diego County Pension Obligations 4.630 San Diego County Superintendent of Schools Obligations 4.630 Sweetwater Union High School District Certificates of Participation 57.805 Chula Vista City School District Certificates of Participation 81.522 City of Chula Vista Certificates of Participation 100.000 City of Chula Vista Pension Obligations 100.000 Gtay Municipal Water District Certificates of Participation 5\.530 TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT Less: Dtay Municipal Water District Certificates of Participation TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT (1) (2) Debt 9/1/00 $ 296,167 4,572,797 11,264,887 28,076,177 34,735,000 40,064,994 11,906,722 54.925.000 $185,841,744 $ 25,534,045 14,693,074 100,703 5,420,664 19,716,096 11,985,000 14,166,532 14.217.127 $105,833,241 14.217.127 $ 91,616,114 $291,674,985 $277,457,858 (I) (2) Excludes certificates of participation to be sold. Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Ratios to 1999-00 Assessed Valuation: Total Overlapping Tax and Assessment Debt. ......2.30% Ratios to Adiusted Assessed Valuation: Combined Direct Debt ($26,151,532). Gross Combined Total Debt Net Combined Total Deb!....... ............... ................ ...0.34% ...3.85% ......................... .......366% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30100: $0 Source: California Municipal Statistics, Inc. Assuming the total net direct and overlapping general fund obligation debt figure for the City as of September 1, 2000 is $91,616,114 as reported by California Municipal Statistics, Inc., and the reported population figure for 2000 of 174,300, the per capita net and direct overlapping debt for the City is $525.62. 21 DOCSOC\753950v2\24036.0007 A -;>4> -r The total net direct and overlapping bonded debt of the City as of September 1, 2000 is $277,457,858, or $1,591.84 per capita. City Investment Policy General. Pursuant to the City's Investment Policy (the "Investment Policy") the City's Finance Director is responsible for investing the cash balances in all City Funds in accordance with the California Government Code, Sections 53600 et seq. and 53635 et seq. The Investment Policy does not include long term debt reserve funds and deferred compensation funds, which are exceptions covered by other more specific Government Code sections and the legal documents unique to each debt transaction. The Investment Policy provides that investment practices shall conform to California's prudent man rule which states, in essence, that "in investing. . . property for the benefit of another, a trustee shall exercise the judgment and care, under the circumstances then prevailing, which men of prudence, discretion and intelligence exercise in the management of their own affairs. . . ." Under the Investment Policy the Finance Director and other individuals assigned to manage the investment portfolio, acting within the intent and scope of the investment policy and other written procedures, and exercising due diligence, shall be relieved of personal responsibility and liability for an individual investment's credit risk or market price changes, provided material deviations from expectations are reported in a timely manner and appropriate action is taken to control any adverse developments. The Investment Policy states that it is the City's full intent, at the time of purchase, to hold all investments until maturity in order to ensure the return of all invested principal. However, it is anticipated that market prices of securities purchased as investments will vary depending on economic conditions, interest rate fluctuations, or individual security credit factors. In a diversified investment portfolio, such temporary variations in market value will inevitably result in measurable losses at any specific point in time. From time to time, changes in economic or market conditions may dictate that it is in the City's best interest to sell a security prior to maturity. The three principal factors of safety, liquidity and yield are to be taken into consideration, in the specific order listed, when making investment decisions. Authorized Investment Instruments. The City may invest in the following instruments under the guidelines as provided in the Investment Policy: Certificates of Deposit. Time Certificates of Deposit will be made only in FDIC or FSLIC insured accounts. For deposits in excess of the insured maximum of $100,000, approved collateral shall be required in accordance with California Government Code section 53652 and/or 53651(m)(I). No more than 25% of the investment portfolio may be invested in this investment type. Securities of the U.S. Government or its Agencies. Includes obligations issued by Federal Horne Loan Banks, Government National Mortgage Association, the Farm Credit System, the Federal Home Loan Bank, the Federal Home Loan Mortgage Association, the Federal National Mortgage Association, the Student Loan Marketing Association, or obligations or other instruments of or issued by a federal agency or a United States Government sponsored enterprise. Treasury Bills and Notes. U.S. Treasury Bills, Notes, Bonds or Certificates of Indebtedness, or those for which the full faith and credit of the United States are pledged for the payment of principal and interest. Local Agency Investment Fund (LAIF). Investment of funds in the California LAIF which allows the State Treasurer to invest through the Pooled Money Investment Account. Maximum investment is subject to state regulation. 22 DOCSOC\ 753950v2\24036.0007 A-;r} .., County of San Diego Treasury PooL Investment of funds in the County of San Diego Treasury which allows the County Treasurer-Tax Collector to invest local funds through a pooled concept. Bankers Acceptance. Bills of Exchange or time Drafts drawn on and accepted by a commercial bank, otherwise known as Bankers Acceptances, both foreign and domestic, which are eligible for purchase by the Federal Reserve System.. Purchases of Bankers Acceptances may not exceed 270 days maturity or total more then 40% of the cost value of the City's investment portfolio. Commercial Paper. Paper of the highest rating as provided by Moody's Investors Service, Inc. (Pl), or Standard and Poor's Ratings Service (A 1 +). Eligible paper is further limited to issuing corporations that are organized and operating within the United States and having total assets in excess of $500,000,000. Purchases of eligible commercial paper may not exceed 180 days maturity, represent more than 10% of the outstanding paper of the issuer, or total more than 15% of the cost value of the City's investment portfolio. Negotiable Certificates of Deposit. Issued by a nationally or state-chartered bank of a state or federal savings and loan association of by a state-licensed branch of a foreign bank. Purchases of Negotiable Certificates of Deposit may not total more than 30% of the cost value of the City's investment portfolio. Repurchase Agreements. A purchase of securities by the City pursuant to a Master Repurchase Agreement by which the seller will repurchase such securities on or before a specified date, or on demand of either party, and for a specified amount. Investments in repurchase agreements will be used solely as short term investments not to exceed 90 days and be collateralized by securities having a market value of at least 102% of the value of the repurchase agreement at all times during the term of the investment. Medium Term Corporate Notes. Corporate obligations rated A or better by Moody's and or Standard and Poor's rating agencies. Purchases of corporate medium term notes shall not total more than 30% of the cost value of the City's investment portfolio, nor for anyone corporation, when combined with any Commercial Paper issued by the same corporation, total more than 15% of the cost value of the City's investment portfolio. Diversification. Investments shall be diversified among institutions, types of securities and maturities to maximize safety and yield with changing market conditions. Local financial institutions will be given preferential consideration for investment of City funds consistent with the City's objective of attaining market rates of return, and consistent with constraints imposed by its safety objectives, cash flow considerations and State laws. The par value, market value, adjusted cost basis and percent of total investments for each category of the City's investments, as of June 30, 2000, are set forth below. 23 DOCSOC\ 753950v2\24036.0007 A-;2% ~ Investment Type Adjusted Cost % of Total Par Value(l) Market Value Basis(2) Investments $ 99,650,000 $ 97,561,363 $ 99,493,117 40.57% 6,920,649 6,920,649 6,920,649 2.82% 46,500,000 45,692,602 46,881,001 19.1\% $153,070,649 $150,174,614 $153,294,767 63% Pooled Investment Federal Securities Local Agency Investment Fund Corporate Bonds Subtotal Cash/Investments with Fiscal Agent U.S. Government Investment Agreements Mutual Funds Cash with Fiscal Agents Subtotal $ 3,184,300 31,375,889 54,659,034 2,750,084 $ 91,969,307 $ 3,184,300 31,375,889 54,659,034 2,750,084 $ 91,969,307 $ 3,184,300 31,375,889 54,659,034 2,750,084 $ 91,969,307 1.30% 12.79% 22.29% 1.12% 37% Totals (I) Par value is the principal amount of the investment at maturity. (2) Adjusted Cost Basis is the par value ofthe security plus or minus any premium or discount and accrued interest that was included in the purchase price. Note: Par value is the principal amount of the investment on maturity. All market values contained herein are received from sources the City believes are reliable; however, the City does not guarantee their accuracy. Adjusted Cost Basis is the par value of the security plus or minus any premium or discount and accrued interest that was included in the purchase price. $245,039,956 $242,143,921 $245,264,075 100% Source: City of Chula Vista LIMITATIONS ON TAX REVENUES Article XIII A Article XIIIA of the State Constitution: (i) limits ad valorem property taxes on all real property to 1% of the "full cash value" of the property; (ii) exempts voter approved bonded indebtedness from the 1% limitation; (iii) defines "full cash value" as the assessor's appraised value of real property as of March 1, 1975, increased by changes in the Consumer Price Index-not to exceed 2% per year and decreased by reductions in market value; (iv) permits establishment of a new "full cash value" at market value when there is new construction or a change in ownership; (v) permits the reassessment, up to the March 1, 1975 value, of property which was not current on the 1975-76 assessment roll; (vi) requires counties to collect the 1% property tax and to "apportion according to law to the districts within the counties;" (vii) prohibits new ad valorem taxes on real property, except to pay bonded indebtedness for the acquisition or improvement of real property approved by two-thirds of the votes cast by the voters on a proposition pertaining to such bonded indebtedness; (viii) prohibits sales taxes or transaction taxes on the sale of real property; (ix) permits the imposition of special taxes by local agencies, other than those prohibited, by a two-thirds vote of the "qualified electors" of such agencies, and (x) requires a two-thirds vote of all members of both houses of the State Legislature for any changes in State taxes which would result in increased revenues. Article XIII B Under Article XIIIB of the State Constitution, state and local government agencies are subject to an annual "appropriations limit" and prohibited from spending "appropriations subject to limitation" above that limit. "Appropriations subject to limitation" consist of tax revenues, certain state subventions, and certain other funds. This Article does not affect the appropriation of money exclusive of "appropriations subject to limitation," such as debt service on indebtedness existing or authorized by January I, 1979, or subsequently authorized by the voters, and appropriations mandated by court. The provisions also exclude from limitation 24 DOCSOC\753950v2\24036.0007 k;1'1 .., the appropriation of proceeds from regulatory licenses, user charges, or other fees to the extent that such proceeds equal "the cost reasonably borne by such entity in providing the regulation, product, or service." In general terms, Article XIIIB provides that the appropriations limit will be based on certain 1978-79 expenditures and will be adjusted annually to reflect changes in cost of living, population, and transfer of the financial responsibility of providing services from one governmental unit to another. A recent amendment to Article XIlIB (Proposition III) revised the method of calculating the annual adjustment to the appropriations limit. These revisions resulted in an increase in the City's appropriations limit for fiscal year 1992-93. Article XIIIB further provides that if an agency's revenues in any fiscal year and in the fiscal year immediately following it exceed the amount which is appropriated by such agency in compliance with Article XIIIB during that fiscal year and the fiscal year immediately following it, the excess must be returned during the next two subsequent fiscal years by revising tax rates or fee schedules. There are many remaining uncertainties and ambiguities in Article XIIIB which will require clarification by the State Legislature or the courts. Accordingly, the City cannot now determine the effect that future legislation or court actions regarding Article XIlIB may have upon its operations and financial obligations. Unitary Property Some amount of property tax revenue of the City is derived from utility property which is considered part of a utility system with components located in many taxing jurisdictions ("unitary property"). Under the State Constitution, such property is assessed by the State Board of Equalization ("SBE") as part of a "going concern" rather than as individual pieces of real or personal property. State-assessed unitary and certain other property is allocated to the counties by SBE, taxed at special county-wide rates, and the tax revenues distributed to taxing jurisdictions (including the City) according to statutory formula generally based on the distribution of taxes in the prior year. Until fiscal year 2000-01, SBE assessment of investor-owned gas and electric companies, incumbent local exchange companies, AT&T Corp., and AT&T Communications of California, Inc., will be subject to a court-approved agreement dated May 1, 1992 (the "Settlement Agreement"), among those companies, the SBE and all California counties. The Settlement Agreement arose from litigation against the SBE in which the court held that the SBE's valuation approaches had overvalued AT&T's unitary property, and ordered AT&T's statewide assessed value to be reduced from approximately $1.75 billion to approximately $1.1 billion. The Settlement Agreement provides that its valuation method is not intended to be precedent for calculating fair market value of unitary property in years following its expiration. While the Settlement Agreement has been in effect, the California electric utility industry has been undergoing significant changes in its structure and in the way in which components of the industry are regulated. Sale of electric generation assets to largely unregulated, nonutility companies may affect how those assets are assessed following the expiration of the Settlement Agreement, and which local agencies are to receive the property taxes. The City is unable to predict the impact of these changes on its utility property tax revenues, or whether legislation may be proposed or adopted in response to industry restructuring, or whether any future litigation may affect the State's methods of assessing utility property and the allocation of assessed value to local taxing agencies, including the City. See "CITY FINANCIAL MATTERS" herein. Proposition 46 On June 3, 1986, California voters approved Proposition 46, which added an additional exemption to the 1 % tax limitation imposed by Article XIII A. Under this amendment to Article XIII A, local governments and school districts may increase the property tax rate above 1 % for the period necessary to retire new general obligation bonds, if two-thirds of those voting in a local election approve the issuance of such bonds and the money raised through the sale of the bonds is used exclusively to purchase or improve real property. 25 DOCSOC\ 753950v2\24036.0007 A-a6 ..,. Proposition 62 On November 4, 1986, California voters approved Proposition 62, an initiative statute limiting the imposition of new or higher taxes by local agencies. The statute (a) requires new or higher general taxes to be approved by two-thirds of the local agency's governing body and a majority of its voters, and requires new or higher special taxes to be approved by two-thirds of both such local agency's governing body and such local agency's voters; (b) requires the inclusion of specific information in all local ordinances or resolutions proposing new or higher general or special taxes; and (c) penalizes local agencies that fail to comply with the foregoing. Most of the provislOns of Proposition 62 were affirmed by the 1995 California Supreme Court decision in Santa Clara County Local Transportation Authority v. Guardino ("Guardino ") which invalidated a special sales tax for transportation purposes because fewer than two-thirds of the voters voting on the measure had approved the tax. Although by its terms, Proposition 62 applies to municipalities, because the City does not receive any material amount of tax revenues from any tax. levied in contradiction to Proposition 62, the City has not experienced nor does it expect to experience any substantive adverse financial impact as a result of the passage of this initiative or the Guardino decision. The requirements of Proposition 62 have generally been superseded by the enactment of Article XlIIC of the California Constitution (Proposition 218) in 1996. Article XUIC and Article XIUD of the State Constitution On November 5,1996, the voters of the State approved Proposition 218, the so called "Right to Vote on Taxes Act." Proposition 218 added Articles XlIIC and XlIIO to the State Constitution, which contain a number of provisions affecting the ability of local agencies, including municipalities, to levy and collect both existing and future taxes, assessments, fees and charges. Among other things, Article XlIIC establishes that every tax is either a "general tax" (imposed for general governmental purposes) or a "special tax" (imposed for specific purposes); prohibits special purpose government agencies such as school districts from levying general taxes and prohibits any local agency from imposing, extending or increasing any special tax beyond its maximum authorized rate without a two-thirds vote. Article XlIIC also provides that no tax may be assessed on property other than ad valorem property taxes imposed in accordance with Articles XlII and XlllA of the California Constitution and special taxes approved by a two-thirds vote under Article XlllA, Section 4. Article XlIIC also provides that the initiative power shall not be limited in matters of reducing or repealing local taxes, assessments, fees and charges. Article XlllO deals with assessments and property-related fees and charges. Article XlllO deals with assessments and property-related fees and charges. Article XlllO explicitly provides that nothing in Article XlllC or XlllO shall be construed to affect existing laws relating to the imposition of fees or charges as a condition of property development; however it is not clear whether the initiative power is therefore unavailable to repeal or reduce developer and mitigation fees imposed by the City. The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination. RISK FACTORS The following factors, along with all other information in this Official Statement, should be considered by potential investors in evaluating the Certificates. Not a Pledge of Taxes The obligation of the City to pay the Lease Payments and Additional Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the 26 DOCSOC\ 753950v2\24036.0007 A -3/ ..,. City has levied or pledged any form of taxation. The obligation of the City to pay Lease Payments and Additional Payments does not constitute a debt or indebtedness of the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. Although the Lease does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Lease to pay Lease Payments and Additional Payments from any source of legally available funds (subject to certain exceptions) and the City has covenanted in the Lease that, for as long as the Site is available for its use and possession, it will make the necessary annual appropriations within its budget for all Lease Payments and Additional Payments. The City is currently liable on other obligations payable from general revenues, including various certificates of participation issued by the City, the debt service on which is to be set aside annually by July 31 of each fiscal year. See "City Financial Information __ Indebtedness". Certain taxes, assessments, fees and charges presently imposed by the City could be subject to the voter approval requirements of Article Xll\C and Article Xll\D of the State Constitution. Based upon the outcome of an election by the voters, such fees, charges, assessments and taxes might no longer be permitted to be imposed, or may be reduced or eliminated and new taxes, assessments fees and charges may not be approved. The City has assessed the potential impact on its financial condition of the provisions of Article Xll\C and Article Xll\D of the State Constitution respecting the imposition and increase of taxes, fees, charges and assessments and does not believe that an election by the voters to reduce or eliminate the imposition of certain existing fees, charges, assessments and taxes would substantially affect its financial condition. However, the City believes that in the event that the initiative power was exercised so that all local taxes, assessments, fees and charges which may be subject to the provisions of Article Xll\C and Article Xll\D of the State Constitution are eliminated or substantially reduced, the financial condition of the City, including its General Fund, could be materially adversely affected. Although the City does not currently anticipate that the provisions of Article Xl1lC and Article Xll\D of the State Constitution would adversely affect its ability to pay the principal of and interest with respect to the Certificates as and when due and its other obligations payable from the General Fund, no assurance can be given regarding the ultimate interpretation or effect of Article Xl1lC and Article Xll\D of the State Constitution on the City's finances. Additional Obligations of the City The City is permitted to enter into other obligations which constitute additional charges against its revenues without the consent of Owners of the Certificates. To the extent that additional obligations are incurred by the City, the funds available to pay Lease Payments may be decreased. The Lease Payments and other payments due under the Lease (including payment of costs of repair and maintenance of the Site, taxes and other governmental charges levied against the Site) are payable from funds lawfully available to the City. In the event that the amounts which the City is obligated to pay in a fiscal year exceed the City's revenues for such year, the City may choose to make some payments rather than making other payments, including Lease Payments and Additional Payments, based on the perceived needs of the City. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues or is required to expend available revenues to preserve the public health, safety and welfare. Defanlt Whenever any event of default referred to in the Lease happens and continues, the Trustee, as the assignee of the Authority, is authorized under the terms of the Lease to exercise any and all remedies available pursuant to law or granted pursuant to the Lease; provided, however, that notwithstanding anything therein or in the Trust Agreement to the contrary, THERE SHALL BE NO RlGHT UNDER ANY CIRCUMSTANCES TO ACCELERATE THE LEASE PAYMENTS OR OTHERWISE DECLARE ANY LEASE PAYMENTS NOT THEN DUE OR PAST DUE TO BE IMMEDIATELY DUE AND PAYABLE. NEITHER THE 27 DOCSOC\ 753950v2\24036.0007 A-3.,.2 AUTHORITY NOR ITS ASSIGNEE SHALL HAVE ANY RIGHT TO REENTER OR RELET THE SITE EXCEPT FOLLOWING A DEFAULT UNDER THE LEASE. Following an event of default, at the direction of the Insurer, the Authority may elect either to terminate the Lease and seek to collect damages from the City or to maintain the Lease in effect and seek to collect the Lease Payments as they become due. The Lease further provides that so long as an event of default exists under the Lease, the Authority, or its assignee, may re-enter the Site for the purpose of taking possession of any portion of the Site and to re-Iet the Site and, in addition, at its option, with or without such entry to terminate the Lease as described therein. See Appendix C - "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - Lease - Remedies On Default." No assurance can be given that the Trustee will be able to re-Iet the Site so as to provide rental income sufficient to pay principal and interest evidenced by the Certificates in a timely manner or that such re-Ietting will not adversely affect the exclusion of interest with respect thereto from gross income for federal or State income tax purposes. Furthermore, it is not certain whether a court would permit the exercise of the remedies of repossession and re-Ietting with respect to the Site. In the event of a default, there is no remedy of acceleration of the total Lease Payments due over the term of the Lease and the Trustee is not empowered to sell the Site and use the proceeds of such sale to prepay the Certificates or pay debt service with respect thereto. The City will be liable only for Lease Payments on an annual basis and, in the event of a default, the Trustee would be required to seek a separate judgment each year for that year's defaulted Lease Payments. Any such suit for money damages would be subject to limitations on legal remedies against municipalities in California, including a limitation on enforcement of judgments against funds of a Fiscal Year other than the Fiscal Year in which the Lease Payments were due and against funds needed to serve the public welfare and interest. Release or Substitntion of Property Upon (i) completion of the Corporation Yard Component and (ii) delivery by the City of a certificate stating that the annual fair rental value of the Corporation Yard Component is at least equal to the annual Lease Payments and Additional Payments to be paid pursuant to the Lease, the City has the right and expects to release from the Lease and the Site Lease all property except the Corporation Yard. In addition, the City has the right from time to time to add other real property and improvements (subject only to Permitted Encumbrances) or to substitute other real property or improvements (subject only to Permitted Encumbrances) for all or a portion of the Site or to release a portion of the real property or improvements constituting the Site, subject to the conditions precedent to such addition, substitution or release as set forth in the Lease. See Appendix C - "Summary of Principal Legal Documents - Lease - Substitution and Release." In connection with a substitution or release, all interests of the Authority, and its assignee, in the portion of the Site released shall terminate and the Authority and its assignee shall execute and record with the County Recorder of the County all documents deemed necessary by the City to evidence such termination of interest. Upon satisfaction by the City of the conditions set forth in the Lease, the Trustee also will execute a Lease Supplement and will not impose on the City any further conditions or prerequisites to the requested addition, substitution or release. The City will cause the Lease Supplement, or another document substantially in the form of the Lease Supplement, to be recorded in the real property records of the County. All costs and expenses incurred in connection with such addition, substitution or release will be borne by the City. No addition, substitution or release under the Lease will be, by itself, the basis for any reduction in or abatement of the Lease Payments due from the City thereunder. See Appendix C -- "SUMMARY OF PRINCIPAL LEGAL DOCUMENTs -- Lease -- Substitution and Release." Abatement Under certain circumstances related damage, destruction, condemnation or title defects which cause a substantial interference with the use and occupancy of the Site, the City's obligation to make Lease Payments DOCSOC\753950v2\24036.0007 28 ,4-33 ... will be abated and could result in the Trustee having inadequate funds to pay the principal and interest with respect to the Certificates as and when due. See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES - Abatement" and Appendix C -- "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS-- Lease -- Abatement." Earthquakes The City is not obligated under the Lease to procure and maintain, or cause to be procured and maintained, earthquake insurance on the Site. In the event that any portion of the Site is destroyed by an earthquake, an abatement could result. Limitations on Remedies; Bankrnptcy The rights of the owners of the Certificates are subject to the limitations on legal remedies against municipalities in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. Additionally, enforceability of the rights and remedies of the owners of the Certificates, and enforcement of the City's obligations under the Lease, may become subject to the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditor's rights generally, now or hereafter in effect, 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 govermnental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against counties in the State. Bankruptcy proceedings under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), which governs the bankruptcy proceedings for public agencies such as the City, or the exercise of powers by the federal or State govermnent, if initiated, could subject the owners of the Certificates to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation, or modification of their rights. See "Risk Factors - Default." THE AUTHORITY The Chula Vista Public Financing Authority was established pursuant to a Joint Exercise of Powers Agreement dated as of April 4, 1995, by and between the City and the Redevelopment Agency of the City of Chula Vista. The City Council of the City is appointed as the Governing Board of the Authority. The Authority has acted as a conduit issuer for the City for a variety of financings. TAX MATTERS In the opinion of Stradling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California, Special Counsel, under existing statutes, regulations, rulings and judicial decisions, the portion of each Lease Payment constituting interest (and original issue discount with respect to the Certificates) is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Special Counsel, the portion of each Lease Payment constituting interest (and original issue discount with respect to the Certificates) is exempt from State of California personal income tax. Special Counsel notes that, with respect to corporations, the portion of each Lease Payment constituting interest (and original issue discount with respect to the Certificates) may be included as an adjustment in the calculation of alternative minimum taxable income which may affect the alternative minimum tax liability of such corporations. Special Counsel's opinion as to the exclusion from gross income of the portion of each Lease Payment constituting interest (and original issue discount with respect to the Certificates) is based upon certain representations of fact and certifications made by the City and others and is subject to the condition that the DOCSOC\753950v2\24036.0007 29 A -3'1 City complies with all requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the execution and delivery of the Certificates to assure that the portion of each Lease Payment constituting interest (and original issue discount with respect to the Certificates) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the portion of each Lease Payment constituting interest (and original issue discount with respect to the Certificates) to be included in gross income for federal income tax purposes retroactive to the date of execution and delivery of the Certificates. The City has covenanted to comply with all such requirements. The difference, if any, between the issue price with respect to a Certificate (the first price at which a substantial amount of the Certificates with respect to a maturity are to be sold to the public) and the stated redemption price at maturity with respect to such Certificate constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Certificate owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Certificate owner will increase the Certificate owner's basis in the applicable Certificate. Special Counsel's opinion may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Special Counsel has not undertaken to determine or to inform any person, whether any such actions or events are taken or do occur. The Trust Agreement and the Tax Certificate relating to the Certificates permit certain actions to be taken or to be omitted if a favorable opinion of Special Counsel is provided with respect thereto. Special Counsel expresses no opinion as to the exclusion from gross income of the portion of each Lease Payment constituting interest (and original issue discount with respect to the Certificates) for federal income tax purposes if any such action is taken or omitted based upon the advice of counsel other than Stradling Y occa Carlson & Rauth. Although Special Counsel has rendered an OpInIOn that the portion of each Lease Payment constituting interest (and original issue discount with respect to the Certificates) is excluded from gross income for federal income tax purposes provided that the City continues to comply with certain requirements of the Code, the ownership of the Certificates and the accrual or receipt of interest (and original issue discount with respect to the Certificates) with respect to the Certificates may otherwise affect the tax liability of certain persons. Special Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Certificates, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Certificates. FINANCIAL STATEMENTS OF THE CITY Included herein as Appendix B are the audited financial statements of the City as of and for the year ended June 30,1999, together with the report thereon dated October 1,1999 of Calderon, Jaham & Osborn, an accountancy corporation, independent certified public accountants(the "Auditor"). Such audited financial statements have been included herein in reliance upon the report of the Auditor. The Auditor has not undertaken to update the audited financial statements of the City or its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by the Auditor with respect to any event subsequent to its report dated October I, 1999. CERTAIN LEGAL MATTERS Certain legal matters incident to the authorization, sale, execution and delivery of the Certificates are subject to the approval of Stradling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California, Special Counsel. A complete copy of the proposed form of opinion of Special Counsel is contained in Appendix D hereto. Special Counsel has not undertaken any responsibility for the accuracy, completeness or fairness of this Official Statement or other offering materials relating to the Certificates and expresses no DOCSOC\ 753950v2\24036.0007 30 A -3S- opinion relating thereto. Certain legal matters will be passed upon for the City and the Authority by the City Attorney. Compensation of Special Counsel is contingent upon the execution and delivery of the Certificates. LITIGATION To the best knowledge of the City there is no action, suit or proceeding known to be pending or threatened restraining or enjoining the execution or delivery of the Certificates, the Trust Agreement, the Lease, or any other document relating to the Certificates, or in any way contesting or affecting the validity of the foregoing. There are a number of lawsuits and claims pending against the City. In the opinion of the City, such suits and claims as are presently pending will not have a material adverse affect on the ability of the City to make Lease Payments. UNDERWRITING The Certificates are being purchased by (the "Underwriter") at an aggregate discount of $ , plus accrued interest, from the initial offering price set forth on the inside cover of this Official Statement. The Underwriter are committed to purchase all of the Certificates if any are purchased. The Underwriter may offer and sell the Certificates to certain dealers (including dealers depositing Certificates into investment trusts) and others at prices lower than the offering prices stated on the cover of this Official Statement. After the initial public offering, the public offering prices of the Certificates may be changed from time to time by the Underwriter. CONTINUING DISCLOSURE Pursuant to a Disclosure Certificate (the "Disclosure Certificate"), the City has agreed to provide, or cause to be provided, with respect to each fiscal year commencing with fiscal year 1999-00, by no later than February I after the end of the fiscal year, to each nationally recognized municipal securities information repository and any public or private repository or entity designated by the State as a state repository for purposes of Rule 15c2-12(b)(5) (the "Rule") adopted by the Securities and Exchange Commission (each, a "Repository") certain annual financial information and operating data, including its audited financial statements and information of the type set forth in this Official Statement under the heading "City Financial Information." In addition, the City has agreed to provide, or cause to be provided, to each Repository in a timely manner notice of the following "Listed Events" if determined by the City to be material; (I) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled draws on the debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax-exempt status of the security; (7) modifications to rights of security holders; (8) bond calls; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the securities; and (II) rating changes. These covenants have been made in order to assist the Underwriter in complying with the Rule. [The City has never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events.] For a detailed description of the City's responsibilities under the Disclosure Certificate see Appendix G "Form of Continuing Disclosure Certificate." MISCELLANEOUS Included herein are brief summaries of certain documents and reports, which summaries do not purport to be complete or definitive, and reference is made to such documents and reports for full and complete statements of the contents thereof. Any statements in this Official Statement involving matters of opinion, 31 DOCSOC\ 753950v2\24036.0007 A-3G .,. whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or Owners of any of the Certificates. The execution and delivery of this Official Statement has been duly authorized by the City. CITY OF CHULA VISTA By: Mayor 32 DOCSOC\ 753950v2\24036.0007 A -3) ..,. APPENDIX A ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING THE CITY OF CHULA VISTA This appendix sets forth general information about the City of Chula Vista ("Chula Vista ") including information with respect to its finances. The following information concerning Chula Vista, the County of San Diego (the "County'') and the State of California (the "State'') is included only for general background purposes. It is not intended to suggest that the Bonds are payable from any source other than Special Tax and certain funds and accounts created by the Bond Indenture. General Description Chula Vista is located on San Diego Bay in Southern California, 8 miles south of San Diego and 7 miles north of the Mexico border, in the area generally known as "South Bay." Chula Vista's city limits cover approximately SO square miles. Chula Vista was incorporated March 17, 1911 and became a chartered city in 1949. Chula Vista operates under a Council-Manager form of govermnent and provides the following services: public safety, community services, engineering services, planning services, public works, general administrative services and capital improvements. With a January 2000 estimated population of 174,300, Chula Vista is the second largest city in County. Population The historic population of Chula Vista, the County and the State is shown below. City of Chula Vista, County of San Diego and State of California Population Estimates Year 1995 1996 1997 1998 1999 2000 City of Chula Vista 149,800 152,700 156,400 162,100 167,100 174,300 County of San Diego 2,658,600 2,682,100 2,729,100 2,795,800 2,855,900 2,911,500 State of California 31,910,000 32,223,000 32,670,000 33,226,000 33,766,000 34,336,000 Source: California State Department of Finance Building Activity Residential building activity for the past five calendar years for Chula Vista is shown in the following tables. City of Chula Vista New Housing Units Building Permits Single Family Units Multifamily Units Total Units 1996 871 77 948 1997 927 123 1,050 1998 1,180 166 1,346 1999 1,796 750 2,546 2000(1) 612 47 659 (1) Source: Number of Building Permits are as of May 1,2000. Construction Industry Research Board A-I DOCSOC\ 7 53950v2\24036.0007 A~3% ..,. City of Chula Vista Building Permit Valuations (Dollar Volume in $l,OOOs) 1996 1997 1999 2000(1) 1998 Residential New Single Family $145,991. 7 $155,849.7 $214,986.4 $307,653.4 $112,112.5 New Multifamily 7,093.5 11,075.4 11,452.0 53,470.8 4,259.2 Res. All. & Adds 5.744.8 6,439.3 5.391.2 5.085.0 2.318.7 Total Residential 158,829.9 173,364.3 231,829.7 366,209.2 118,690.4 Nonresidential New Commercial $ 747.8 $ 10,954.8 $ 17,432.3 $ 11,213.9 $ 4,412.2 New Industrial 142.2 0.0 5,581.6 7,909.6 0.0 New Other(2) 2,165.4 6,104.1 11,483.2 5,840.3 3,211.1 Alters. & Adds. 7.868.5 9.036.6 12.783.7 13.552.6 1.834.5 Total Non-Residential 10,923.9 26,095.4 47,280.9 38,516.4 9,457.8 Total All Building $1697539 $199459.7 $279 110.5 $404 725.7 $128 148.2 (I) (2) Note: Source: Valuations are as of May 1,2000. Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings and no-residential alterations and additions. "Total All Building" is the sum of Residential and Nonresidential Building Permit Valuations. Totals may not add to sums because of independent rounding. Construction Industry Research Board A-2 DOCSOC\ 753950v2\24036.0007 A-39 .., Employment San Diego Metropolitan Statistical Area ("MSA"), which includes Chula Vista, civilian labor force and wage and salary employment figures for calendar years 1995 through 1999 are shown in the following table. These figures are county-wide statistics and may not necessarily accurately reflect employment trends in Chula Vista. San Diego MSA Civilian Labor Force, Employment and Unemployment Annual Averages, March 1999 Benchmark 1995 1996 1997 1998 1999 Civilian Labor Force(l) 1,233,900 1,241,200 1,285,000 1,319,900 1,358,200 Employment 1,155,300 1,175,000 1,230,800 1,273,000 1,316,300 Unemployment 78,600 65,300 54,300 46,400 14,900 Unemployment Rate 6.4% 5.3% 4.2% 3.5% 3.1% Wage & Salary EmpIoyment(2) Total, All Industries 989,300 1,017,200 1,065,000 1,116,100 1,161,500 Agricultural, Forestry, and 10,700 11,000 10,800 10,600 11,300 Fisheries Non-Agricultural 978,600 1,006,200 1,054,200 I, I 05,500 I, I 50,200 Mining 300 400 400 300 300 Constructlon 43,600 45,500 53,000 61,800 66,400 Manufacturing 114,900 117,500 123,100 127,600 128,300 Transportation and public utilities 37,400 38,300 41,600 47,000 51,900 Wholesale trade 42,900 42,700 45,600 48,300 50,500 Retail trade 186,600 193,200 198,400 201,100 204,900 Finance, insurance and real estate 55,800 57,400 60,900 65,300 68,700 Services 310,900 321,200 339,300 359,600 380,000 Government 186,100 190,100 192,000 194,500 199,300 (I) Based on place of residence. (2) Based on place of work. Source: California Employment Development Department A-3 DOCSOC\753950v2\24036.0007 A-'10 ..,. The following listings set forth Chula Vista's Major Employers by Business Industrial Office, Government and Retail based industries: Chula Vista's Major Employers (Businesses with 150 or more Employees) Business IndustriaVOffice Name SF Goodrich Aerospace Aerostructures Group Sharp Chula Vista Medical Center Scripps Memorial Hospital White Water Canyon American Fashion Inc. Sunrise Medical Inc. Eca Building Systems American Manufacturing Concepts Coastal Embroidery Sharp Rees-Stealy Medical Group Fredericka Manor Care Center MOl Interviewing Services Inc. Management Pacific Waste Services Inc. Hyspan Precision Products Inc. Raytheon Systems Fredericka Manor Retirement Community Elderly South Bay Community Services Crower Cams & Equipment Inc. Navcare Community Health Group Name United States Border Patrol Southwestern Community College City of Chula Vista Department of Social Services Sweetwater Union High School District United States Postal Service Feaster Edison Charter School Chula Vista Elementary School District Name Sears Price Costco Mace's Big Kmart Fuller Honda Target Stores J C Penney Vons Fuller Ford Source: City of Chula Vista DOCSOC\ 753950v2\24036.0007 ~ Tvoe of Business Aerospace Manufacturer Hospital Hospital Amusement Park Clothing Manufacturer Medical Offices Modular Building Manufacturer Clothing Manufacturer Specialty Manufacturer Medical Offices Day Care Service Consulting Service Sanitary Waste Service Fabricated Metal Manufacturer Electrical Manufacturer Care Facility Social Service Agency Motor Vehicle Part Manufacturer Hospital Medical Offices Government Tvoe of Business Government Agency Conununity College Municipal Government Social Service Agency Secondary School District Government Agency Elementary School Elementary School District Retail Tvoe of Business Department Store General Merchandise Department Store General Merchandise Automotive Retailer General Merchandise Department Store Grocery Store Automotive Retailer A-4 A-YI No. of Emolovees 2,075 800 650 500 500 450 210 200 200 200 200 200 200 200 200 171 160 160 150 150 No. of Emolovees 2,700 1100 825 300 260 150 150 ISO No. of Emolovees 360 250 250 200 200 180 150 150 ISO Effective Buying Income "Effective Buying Income" is defined as personal income less personal tax and nontax payments, a number often referred to as "disposable" or "after-tax" income. Personal income is the aggregate of wages and salaries, other than labor-related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local, nontax payments, fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as "disposable personal income." Due to changes implemented in 1996 in the method of calculating Effective Buying Income, prior years are not directly comparable with statistics for I 996 and thereafter. The following table summarizes the total Effective Buying Income for Chula Vista, the County and the State for the period 1994 through 1998. Chula Vista, San Diego County and California Estimated Annual Median Household Effective Buying Income(!) Effective Buying Percent of Households Income(2) over $50.000 1994 Chula Vista $ 2,306,535 33.5% San Diego County 45,541,671 36.7 State of California 552,074,836 39.2 1995 Chula Vista $ 2,017,423 25.4 San Diego County 39,777,129 28.3 California 477,640,503 30.5 1996 Chula Vista $ 2,092,373 26.9 San Diego County 40,913,543 29.9 California 492,516,991 31.7 1997 Chula Vista $ 2,217,170 28.9 San Diego County 43,212,824 31.7 California 524,439,600 33.5 1998 Chula Vista $ 2,408,888 30.1 San Diego County 46,056,143 32.8 California 551,999,317 34.6 (I) Not comparable with prior years. Effective Buying Income is now based on money income (which does not take into account sale of property, taxes and social security paid, receipt of food stamps, etc.) versus personal income. Dollars in thousands. "Survey of Buying Power," Sales & Marketing Management Magazine, dated 1995, 1996, 1997, 1998 and 1999 (2) Source: A-5 DOCSOC\ 753950v2\24036.0007 A-'/;L .,. Labor Relations Chula Vista currently employs 895 full-time and 467 part-time employees. 725 of such employees are represented by four formal labor organizations as shown below. Chula Vista has 170 executive, managerial and confidential employees who are not represented by any formal bargaining unit. Chula Vista participates in joint powers agreements through the San Diego County Risk Management Authority and San Diego Cities Liability Management Authority to provide worker's compensation and general liability insurance to employees. City of Chula Vista Labor Relations Labor Organization Western Council of Engineers Police Officers Association International Assoc. of Fire Fighters Chula Vista Employees Association Number of Emplovees 29 191 73 432 Contract Expiration Date 6/30/01 6/30/03 6/30/03 6/30/0 I Source: City ofChula Vista Retirement Programs Chula Vista contracts with the Public Employees Retirement System (PERS) of the State of California. The retirement plan provides simultaneous coverage of eligible employees with PERS. The plan provides for basic retirement benefits for service which are based on the years of service, age and the average monthly qualifying wages during the last 12 month period of employment. The plan also provides for cost-of- living adjustments after retirement. The system is funded by a combination of employer and employee contributions. Chula Vista pays employer and employee costs for all full time employees. $3.8 million has been budgeted for Chula Vista's 2000-0 I contribution to the retirement plan. Sales Taxes The following table shows taxable transactions in Chula Vista by type of business during calendar years 1995 through the second quarter of 1999. As indicated below, total retail sales for Chula Vista in 1996 increased by approximately 6.3% over the 1995 level, in 1997 increased by approximately 5.6% over the 1996 level and in 1998 increased by approximately 7.5% over the 1997 level. A-6 DOCSOC\ 7 53950v2\24036.0007 A - <13 A summary of historic taxable transactions for Chula Vista is shown in the following table. City of Chula Vista Taxable Transactions (Dollars in thousands) Calendar Year 1995 1996 1997 1998 1999(1) Permits 1,553 1,594 1,643 1,644 1,733 Retail Stores Taxable Transactions $ 928,341 987,211 1,042,195 1,120,534 563,813 Permits 3,364 3,401 3,507 3,535 3,649 Total Outlets Taxable Transactions $1,063,911 1,133,092 1,213,423 1,320,195 672,065 (1) Source: Through the Second quarter of 1999 taxable transactions. State Board of Equalization Assessed Valuations The following table summarizes a five year history of assessed valuations for Chula Vista. City of Chula Vista Assessed Valuatious Fiscal Years 1996-97 through 2000-01 Year 1996-97 1997-98 1998-99 1999-00 2000-01 Secured $6,447,133,021 6,449,700,069 6,615,013,861 7,225,834,828 8,466,318,000 Unsecured $236,496,503 413,899,982 240,220,931 475,579,779 502,444,000 Total $6,683,629,524 6,863,600,05 I 6,855,234,792 7,701,414,607 8,968,762,000 Source: City of Chula Vista Counties levy and collect all ad valorem property taxes for property falling within the county's taxing boundaries, and apportion by statutory formula the tax revenue collected to all taxing entities therein as they are due. Education Public educational instruction from kindergarten through high school is provided by the Chula Vista Elementary School District and Sweetwater Union High School District. These districts administer twenty-six elementary schools, nine junior high schools and eight senior high schools. Southwestern College, a two year Community College, has an enrollment of more than 15,000. There are also four adult education schools and twelve private schools. There are seven universities or colleges within 30 minutes commuting distance from Chula Vista in the San Diego Metropolitan Area. Chula Vista has proposed a University of California campus in Chula Vista, to be located on a 400 acre site adjoining the Olympic Training Center. Community Facilities There are two acute-care hospitals, two psychiatric hospitals and three convalescent hospitals, and more than 400 medical doctors and allied professionals in Chula Vista. A-7 DOCSOC\ 753950v2\24036.0007 A-~LJ ..,. There are two daily, one weekly and one semi-weekly newspapers published and circulated in Chula Vista. Chula Vista has one main public library and two branch libraries. Recreational facilities within or near Chula Vista include twenty-four parks, four community centers, six "tot lots," two ballfields, twenty-eight tennis courts, three golf courses, four municipal swimming pools, two gymnasinms and boat launching facilities. Chula Vista's bayfront area contains a marina which houses 552 boats and miles of public beaches. Chula Vista also provides many trails for bicycling, hiking and joggmg. Chula Vista is also the home of the United States Olympic Training Center. This is the third such training center in the nation and the only year round training facility. The center is located on a ISO-acre site donated by Eastlake Development Company adjacent to the Otay Lake reservoir. Chula Vista has more than sixty churches and nearly 100 service, fraternal and civic organizations. 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 boarder. Commuter rail service is provided by the San Diego Trolley, a light rail system started in 1981 and eleven bus routes serve Chula Vista. Daily bus connections serve Chula Vista, and Southern Pacific Railway and San Diego's Lindbergh International Airport are fifteen minutes to the north of Chula Vista. Utilities Electric power and natural gas are provided by San Diego Gas and Electric Company. Pacific Bell Telephone Company provides telephone service to the area. Otay Water District and Sweetwater Water District provide water service and Chula Vista provides sewer service. A-8 DOCSOC\ 753950v2\24036.0007 A -L/6- ~ , APPENDIX B THE CITY OF CHULA VISTA AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 1999 B-1 DOCSOC\ 7 53950v2\24036.0007 A - Lje, - , DOCSOC\ 7 53950v2\24036.0007 APPENDIX C SUMMARY OF PRINCIPAL LEGAL DOCUMENTS C-I A-'17 ..,. APPENDIX D FORM OF LEGAL OPINION [Closing Date] City Council City of Chula Vista Chula Vista, California Ladies and Gentlemen: Re: $ City of Chula Vista Certificates of Participation, Series A of 2000 (2000 Financing Project) We have reviewed the Constitution and the laws of the State of California and certain proceedings taken by the City of Chula Vista (the "City") in connection with the authorization, execution and delivery by the City of that certain Lease/Pucchase Agreement, dated as of September I, 2000 (the "Lease"), by and between the Chula Vista Public Financing Authority (the "Authority") and the City. We have also ceviewed that certain Trust Agreement, dated as of September 1, 2000 (the "Trust Agreement"), by and among U.S. Bank Trust National Association, as trustee (the "Trustee"), the Authority and the City. All capitalized terms used herein shall have the meaning given them in the Trust Agreement unless otherwise defined. Pursuant to the Trust Agreement, the Trustee has agreed to execute and deliver the $ City of Chula Vista Certificates of Participation, Series A of 2000 (2000 Financing Project) (the "Certificates") evidencing proportionate interests of the Owners of the Certificates in lease payments (the "Lease Payments") to be made by the City pursuant to the Lease. Pursuant to that certain Assignment Agreement, dated as of September 1, 2000, the Authority has assigned to the Trustee the Authority's right to receive Lease Payments from the City undec the Lease. The Certificates are dated their date of delivery. The Certificates ace cegistered Certificates in the form set forth in the Trust Agreement and are subject to optional and extraordinary prepayment prior to maturity in the manner and upon the terms set forth in the Trust Agreement. Based upon our examination of the foregoing, and in reliance thereon and on all mattecs of fact as we deem relevant undec the circumstances, and upon consideration of applicable laws, we are of the opinion that: 1. The obligation of the City to pay Lease Payments in accordance with the terms of the Lease is a valid and binding obligation payable from the funds of the City lawfully available therefor, except as the same may be limited by bankruptcy, insolvency, reocganization, fraudulent conveyance, moratorium oc othec laws relating to or affecting genecally the enforcement of creditors' rights, by equitable principles, by the exercise of judicial disccetion in appropriate cases and by the limitations on legal cemedies against municipalities in the State of California. The obligation of the City to make Lease Payments under the Lease does not constitute a debt of the City, the State of California or any political subdivision thereof within the meaning of any statutory or constitutional debt limitation or restriction and does not constitute a pledge of the faith and credit or taxing power of the City, the State of California or any political subdivision thereof. 2. The Lease and the Trust Agreement have been duly authorized, executed and delivered by the City and constitute valid and legally binding agreements of the City enforceable against the City in accordance with theic terms, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulenl conveyance, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitations on legal D-I DOCSOC\ 7 53950v2\24036.0007 A - 'ir .., remedies against municipalilies in the State of California, except that we express no opmlOn as to any provisions in the Lease or the Trust Agreement with respect to indemnification. 3. Under existing statutes, regulations, rulings and judicial decisions, interest due with respect to the Certificates is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that, with respect to corporations, such interest will be included as an adjustment in the calculation of alternative minimum taxable income, which may affect the alternative minimum tax liability of such corporations. The foregoing opinion is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the execution and delivery of the Certificates to assure that the portion of the Certificates designated as and comprising interest will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements may cause the portion of the Certificates designated as and comprising interest to be included in gross income for federal income tax purposes retroactive to the date of execution and delivery of the Certificates. The City has covenanted to comply with all such requirements. 4. The portion of the Certificates designated as and comprising interest as described in paragraph (3) above is exempt from State of California personal income tax. Except as expressly set forth in paragraphs (3) and (4), we express no opinion regarding any tax consequences with respect to the Certificates. Certain agreements, requirements and procedures contained or referred to in the Trust Agreement, the Tax Certificate executed by the City and other documents related to the Certificates may be changed and certain actions may be taken or omitted, under the circumstances and subject to the terms and conditions set forth in such documents. We express no opinion as to the exclusion from gross income of the portion of each Certificate constituting interest for federal income tax purposes if any such change occurs or action is taken or omitted upon advice or approval of counsel other than Stradling Y occa Carlson & Rauth, a Professional Corporation. We have not made or undertaken to make an investigation of the state of title to any of the real property described in the Lease or of the accuracy or sufficiency of the description of such property contained therein, and we express no opinion with respect to such matters. We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Certificates, and purchasers of the Certificates should not assume that we have reviewed the Official Statement. The opinions expressed herein are based upon our analysis and interpretation of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. The opinions expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. In rendering this opinion, we have relied upon certain representations of fact and certifications made by the City, the Authority and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us. Respectfully submitted, D-2 DOCSOC\ 753950v2\24036.0007 A-'-I9 ..,. APPENDIX E SPECIMEN MUNICIPAL BOND INSURANCE POLICY E-I DOCSOC\ 753950v2\24036.0007 11-50 APPENDIX F CITY INVESTMENT POLICY DOCSOC\ 7 53950v2\24036.0007 F-I A-51 .., APPENDIX G FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the City of Chula Vista (the "City") in connection with the execution and delivery of $ City of Chula Vista Certificates of Participation Series A of 2000 (2000 Financing Project) (the "Certificates"). The Certificates are being executed pursuant to a Trust Agreement, dated as of September I, 2000, by and among the City, U.S. Bank Trust National Association, as trustee (the "Trustee") and the Chula Vista Public Financing Authority (the "Authority"). The City covenants as follows: SECTION I. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Holders and Beneficial Owners of the Certificates and in order to assist the Participating Underwriter in complying with the Rule. SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defmed in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Comprehensive Annual Financial Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Certificates for federal income tax purposes. "Disclosure Representative" shall mean the City Manager of the City, the Deputy City ManagerlFinance Director of the City or their designee, or such other officer or employee as the City shall designate in writing from time to time. "Dissemination Agent" shall mean U.S. Bank Trust National Association, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. 2000. "Official Statement" shall mean the Official Statement relating to the Certificates, dated September _, "Participating Underwriter" shall mean the original underwriter of the Certificates required to comply with the Rule in connection with offering of the Certificates. "Repository" shall mean each National Repository and each State Repository. "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 Califomia. "State Repository" shall mean any public or private repository or entity designated by the State as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Certificate, there is no State Repository. G-l DOCSOC\ 753950v2\24036.0007 ~-S;2 ..,. 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 each February I after the end of the City's fiscal year (presently such fiscal year ends June 30), commencing with the report for the fiscal year ending June 30, 2000, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Armual 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 Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the City's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5( c). (b) Not later than fifteen (IS) Business Days prior to said date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If the City is unable to provide to the Repositories an Annual Report by the date required in subsection (a), the City shall send a notice to each Repository in substantially the form attached as Exhibit A. ( c) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and the State Repository, if any; and (ii) (if the Dissemination Agent is other than the City), file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Content of Annual Reports. 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 ofCalifomia. 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 fmancial statements contained in the fmal 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 fmancial statements filed pursuant to the preceding subsection (a) by the date required by Section 3 hereof, updates of Tables I through 6 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 Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The City shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Certificates, if material: (i) Principal and interest payment delinquencies. (ii) Non-payment related defaults. G-2 DOCSOC\ 7 53950v2\24036.0007 A-53 -r (iii) Modifications to rights of Certificate holders. (iv) Optional, contingent or unscheduled certificate calls. (v) Defeasances. (vi) Rating changes. (vii) Adverse tax opinions or events affecting the tax-exempt status of the Certificates. (viii) Unscheduled draws on the debt service reserves reflecting financial difficulties. (ix) Unscheduled draws on the credit enhancements reflecting financial difficulties. (x) Substitution of the credit or liquidity providers or their failure to perform. (xi) Release, substitution or sale of property securing repayment of the Certificates. (b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall as soon as possible determine if such event would be material under applicable federal securities laws. (c) If the City determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the City shall promptly file a notice of such occurrence with the Repositories. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Certificates pursuant to the Trust Agreement. SECTION 6. Termination of Reporting Obligation. The City's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Certificates. If such termination occurs prior to the final maturity of the Certificates, the City shall give notice of such tennination in the same manner as for a Listed Event under Section 5( c). 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 Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Certificate. The Dissemination Agent may resign by providing thirty days written notice to the City and the Trustee. The Dissemination Agent shall not be responsible for the content of any report or notice prepared by the City and shall have no duty to review any information provided to it by the City. The Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent be responsible for filing any report not provided to it by the City in a timely manner and in a form suitable for filing. SECTION 8. Amendment Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by the Rule; provided, the Dissemination Agent shall have first consented to any amendment that modifies or increases its duties or obligations hereunder. In the event of any amendment or waiver of a provision of this Disclosure Certificate, 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 relates to the accounting principles 10 be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5( c), and (ii) the Annual Report for the year in which the change is made shall 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. G-3 DOCSOC\ 753950v2\24036.0007 A - s<l SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of conununication, 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 Certificate. 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 Certificate, the City shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 10. Default. In the event ofa failure of the City to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Certificates may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance. No Certificate holder or Beneficial Owner may institute such action, suit or proceeding to compel performance unless they shall have first delivered to the City satisfactory written evidence of their status as such, and a written notice of and request to cure such failure, and the City shall have refused to comply therewith within a reasonable time. SECTION II. Duties. Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees, to the extent permitted by law, to indenmify 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 attomey'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 tome and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. In performing its duties hereunder, the Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the City, the Certificate holders, or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Certificates. SECTION 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Certificate may be given as follows: To the City: City of Chula Vista 27 6 Fourth Avenue Chula Vista, Califomia 91910 To the Dissemination Agent: U.S. Bank Trust National Association 550 S. Hope Street, Suite 500 Los Angeles, Califomia 90071 SECTION 13. Beneficiaries. This Disclosure Certificate solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Certificates, and shall create no rights in any other person or entity. G-4 DOCSOC\ 753950v2\24036.0007 A -ss- .., SECTION 14. Signature. This Disclosure Certificate has been executed by the undersigned on the date hereof, and such signature binds the City to the undertaking herein provided. Dated: September _, 2000 CITY OF CHULA VISTA By: Its: City Manager 0-5 DOCSOC\ 753950v2\24036.0007 A-sG .., EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name oflssuer: City of Chula Vista Name of Certificate Issue: $ City of Chula Vista Certificates of Participation Series A of2000 (2000 Financing Project) September _, 2000 Date oflssuance: NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with respect to the above- named Certificates as required by the Continuing Disclosure Certificate executed by the City on the date of issuance of the Certificates. The City anticipates that the Annual Report will be filed by Dated: City of Chula Vista By: G-6 DOCSOC\ 753950v2\24036.0007 A-s? ..,