HomeMy WebLinkAbout2008/10/21 Item 4
CITY COUNCIL
AGENDA STATE.MENT
~\'f::.. eln' OF
1?'~ CHULA VISTA
10/21/08, Item-1-
ITEM TITLE:
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VIST A AUTHORIZING THE EXECUTION Al'ID
DELIVERY OF A SECOND SUPPLEMENTAL BOND
INDENTURE IN CONNECTION WITH THE CITY OF CHULA
VISTA COMMUNITY FACILITIES DISTRICT NO. 07-1 (OTAY
RANCH VILLAGE 11) 2004 S@E.TAXBONDSAl'ID2006
SPECIAL TAX BONDS
DIRECTOR OF ENGINEERING
DIRECTOR OF FINANC~
INTERIM CITY MAl'JAGER
SUBMITTED BY:
REVIEWED BY:
4/5THS VOTE: YES 0 NO ~
SUMlVL<ill.Y
Community Facilities District No. 07-1 was formed to provide the financing for streets and
infrastructure for Otay Ranch Village 11 or "WindingWalk" (see Figure 1). The developer,
Brookfield Shea Otay, has requested that funds, previously budgeted for major roads on the
perimeter of the project (roads within the Transportation Development Impact Fee program), be
used for backbone roads within the project. The Second Supplemental Bond Indenture under
consideration tonight will provide for this action. Staff worked with Warren Diven of Best Best
and Krieger, LLP to prepare the resolutions and staffreport for this item.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed activity for compliance with
the California Environmental Quality Act (CEQA) and has determined that the proposed fiscal
activity is not a "Project" as defined under Section l5378(b)(4) of the State CEQA Guidelines
and would not result in a potentially significant physical effect on the environment. Therefore,
pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to
.CEQA. Thus, no environmental review is necessary.
RECOMMENDATION
Council adopt the resolution.
BOARDS/COMMISSION RECOMMENDATION
Not applicable.
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10/21/08, Item~
Page 2 of 3
DISCUSSION
On November 11,2003, the City Council formed Community Facilities District No. 07-1 (CFD
07-1) for the purpose of providing for the financing and acquisition of certain authorized public
facilities associated with Otay Ranch Village 11, Windingwalk. On April 20, 2004, per
Resolution No. 2004-113, the City Council approved the issuance of bonds and the
Acquisition/Financing Agreement (MA) for CFD 07-1 that established the procedure for
acquiring authorized public facilities from Brookfield Shea Otay LLC (BSO).
In 2004 the District and U.S. Bank National Association (the "Fiscal Agent") entered imo a
Bond Indenture (the "Original Indenture") that provided for the issuance of the 2004 Special Tax
Bonds (the "2004 Bonds"). In 2006 the Original Indenture was amended by a First Supplemental
Bond Indenture that provided for the issuance of the 2004 Special Tax Bonds (the "2006 Bonds"
and, together with the 2004 Bonds, the "Bonds") (the Original Indenture as amended shall be
referred to as, the "Indenture"). Pursuant to Section 3.05C of the Indenture, proceeds of the 2004
Bonds and 2006 Bonds were deposited into both the Transportation Facilities Account (to pay
for the acquisition of TDIF eligible facilities) and the Acquisition Account (to pay for the
acquisition ofnon-TDIF eligible facilities).
All of the proceeds of the Bonds originally deposited in the Acquisition Account have been used
to pay for the acquisition of non- TDIF facilities. Consequently, no funds are available to pay for
the acquisition of additional non- TDIF facilities that have been constructed and are eligible to be
acquired with the proceeds of the Bonds. Brookfield Shea Otay has approached the City and has
requested that $1,043,352 be transferred from the Transportation Facilities Account to the
Acquisition Account to enable such funds to be used to acquire such additional non-TDIF
facilities. Such a transfer would leave approximately $919,000 in the Transportation Facilities
Account.
The Indenture does not currently provide for the transfer of funds from the Transportation
Facilities Account to the Acquisition Account until all TDIF facilities to be funded from the
proceeds of the have been constructed. One such facility, the widening of Otay Lakes Road in
front of Southwestern College, has not been constructed to date and will be constructed by the
City as a Capital Improvement Project (CIP) using TDIF funds, in part provided by the developer
with the issuance of each building permit, and funds on deposit in the Transportation Facilities
Account. It is anticipated, however, that such construction will not be completed until January of
2011. The projected completion date of such project will result in a corresponding delay in the
transfer of any remaining funds on deposit in the Transportation Facilities Account to the
Acquisition Account and the availability of such funds to acquire additional non- TDIF facilities.
Approval of the Second Supplemental Bond Indenture will allow for the current transfer of
excess funds in the Transportation Facilities Account to the Acquisition Account to provide for
the acquisition of completed non-TDIF facilities sooner by not requiring the completion of Otay
Lakes Road before such funds can be transferred from the Transportation Facilities Account.
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10/21/08, Item~
Page 3 of 3
This action will have no effect on the funding or the delivery schedule for the Otay Lakes Road
Project.
Staff recommends approval of this action because there is a large backlog of eligible,
unreimbursed non-TO IF facilities that have been constructed by the developer. These facilities
would be acquired by the district from the excess funds transferred from the Transportation
Facilities Account to the Acquisition Account.
Requirements for Approval of a Supplemental Indenture
Section 5.01 of the Indenture authorizes the City Council to approve a Supplemental Indenture
without the consent of the bond owners to modify, alter, amend or supplement the Indenture in
any respect, which is not materially adverse to the interests of the bond owners. The excess
funds on deposit in the Transportation Facilities Account may be used for the direct benefit the
bond owners only after final payment for or reimbursement of all costs of acquisition of TOIF
facilitles and all non-TO IF facilities eligible to be paid from the proceeds of the Bonds. The
aggregate cost of the TOIF facilities and non- TO IF facilities eligible to be paid from such Bond
proceeds exceeds the amount on deposit in the Transportation Facilities Account. Therefore,
such funds will never become available to benefit the bond owners. For such reason, the
amendment of the Indenture to authorize the current transfer of designated funds from the
Transportation Facilities Account to the Acquisitions Account will not be materially adverse to
the interests of the bond owners.
DECISION MAKER CONFLICT
Staff has reviewed the property holdings onhe City Council and has found no property holdings
within 500 feet of the boundaries of the property, which is the subject of this action.
FISCAL IMPACT
There is no impact to the City's General Fund. Payment of the eligible non-TOIF facilities will
be paid out ofCFO 07-1 Bond Proceeds. All costs associated with the processing of the Second
Supplemental Bond Indenture were paid by the developer.
ATTACHMENTS
Figure 1: Village 11 location map
Attachment 1: Second Supplemental Bond Indenture
Prepared by: Tessa Quicho, Administrative Analyst II, Engineering Department
Chester Bautista, Associate Engineer, Engineering Department
M:\EngineerIAGENDAICAS2008Il0-2l-08ICFD 071 Bond Indenture Amendmentv3.doc
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CITY OF CHULA VISTA, COUNTY OF SAN DIEGO
STATE OF CALIFORNIA
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ASSESSOR'S PARCEL NUMBERS FOR
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NO. 07-1
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ATTACHMENT ~
SECOND SUPPLEMENTAL BOND INDENTURE
by and between
CITY OF CHULA VISTA
COMMUNITY FACILITIES DISTRICT NO. 07-1
(OT A Y RANCH VILLAGE ELEVEN)
and
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
Dated as of October 1, 2008
Re: $28,050,000
City of Chula Vista
Community Facilities District No. 07-1
(Otay Ranch Village Eleven)
2004 Special Tax Bonds
$16,950,000
City of Chula Vista
Community Facilities District No. 07-1
(Otay Ranch Village Eleven)
2006 Special Tax Bonds
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SECONTI SUPPLEMENTAL BOND INDENTURE
This Second Supplemental Bond Indenture, dated as of October I, 2008, is entered into
by and between Community Facilities District No. 07-1 (Otay Ranch Village Eleven) (the
"Dis,trict"), a community facilities district organized and existing under the laws of the State of
California, and U.S. Bank National Association, as Fiscal Agent (the "Fiscal Agent").
WITNESSETH
WHEREAS, the District and the Fiscal Agent are parties to that Bond Indenture, datedas
of May 1,2004, as amended by a First Supplemental Bond Indenture, dated as of May 1,2006,
(as supplemented, the "Indenture"), providing for the issuance and administration, of the
$28,050,000 City of Chula Vista Community Facilities District No. 07-[ (Otay Ranch Village
Eleven) 2004 Special Tax Bonds (the "2004 Bonds") and the $16,950,000 City ofChula Vista
Community Facilities District No. 07-1 (Otay Ranch Village Eleven) 2006 Special Tax' Bonds
(the "2006 Bonds" and collectively with the 2004 Bonds, the "Bonds"), which Bonds were issued
to finance the acquisition or construction of certain public facilities, including but not limited to
Traffic Facilities (as such term is defined in the Indenture), that were required to serve the
development within the District; and
WHEREAS, pursuant to the provisions of the Indenture, $9,531,884 of the proceeds of
the 2004 Bonds and $9,341,013 of the proceeds of the 2006 Bonds were deposited in the
Transportation Facilities Account of the Project Fund established pursuant to the provisions of
the Indenture for the purpose of paying Transportation Fa,cilities Costs (as such term is defined in
the Indenture); and
WHEREAS, the above identified proceeds of the Bonds were deposited in the
Transportation Facilities Account pursuant to the provisions of the AcquisitionlFinancing
Agreement, dated as of April 20, 2004 (the "Acquisition Agreement"), by and between the City
of Chula Vista (the "City"), the District, Brookfield Shea Otay, LLC (the "Developer"), Otay
R2/3 LLC, Otay MFI LLC, Otay R7/10 LLC and Shea Homes Limited Partnership (collectively,
the "Merchant Builders") to establish the terms and conditions pursuant to which acquisition or
construction of the Improvements (as defined in the Acquisition Agreement), including the
Traffic'Facilities, would be financed from the proceeds of the Bonds; and
WHEREAS, the Transportation Facilities were facilities that are otherwise eligible to be
financed through the City's Traffic Development Impact Fee Program ("TDIF") set forth in
Chapter 3.54 of the Chula Vista Municipal Code; and
WHEREAS, the Developer had requested and the Acquisition Agreement provides that
the Developer or the Merchant Builders receive a credit against the development impact fee
obligation for the development with the District to the extent that the bond proceeds deposited
into the Transportation Facilities Account are used to finance the acquisition or construction of
Traffic Facilities (defined in the Indenture as "Transportation Facilities Costs"); and
WHEREAS, the Indenture also provided for the deposit of other proceeds of the Bonds
in the Acquisition Account of the Project Fund for the purpose of paying all expenses of and
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incidental to the construction, acquisition or both of the public improvements described in the
Acquisition Agreement excluding therefrom the Traffic Facilities and certain other specifically
identified public improvements (defined in the Indenture as "Project Costs"); and
WHEREAS, all of the funds on deposit on the Acquisition Account have been disbursed
to pay Project Costs and the City has received requests for the payment of additional Project
Costs in the amount of $2,905,085 which the City has determined are eligible to be paid from
Acquisition Account if there are funds available for such purpose; and
WHEREAS, there remains on deposit in the Traffic Facilities Account the amount of
$1,963,089 that may, pursuant to the provisions of Section 3.05C of the Indenture, be used only
to pay Transportation Facilities Costs until either (a) all funds on deposit in the Transportation
Facilities Account have been used to pay such Transportation Facilities Costs or (b) the final
payment or reimbursement of all Transportation Facilities Costs to be funded from the proceeds
of the Bonds has been made, in which case any such funds remaining on deposit in the
Transportation Facilities Account may be transferred to the Acquisition Account and used to pay
Project Costs (as defined in the Indenture); and
WHEREAS, the Developer has requested that $1,043,352 of the funds on deposit in the
Traffic Facilities Account (the "Transfer Funds") be transferred from such account to the
Acquisition Account so that such funds may be used to pay Project Costs; and
WHEREAS, because the final payment or reimbursement of all Traffic Facilities Costs
to be funded from the proceeds of the Bonds has not been made and will not be made in the
foreseeable future, the provisions of Section 3.05C of t!:\e Indenture prohibit the current transfer
of the funds as requested without amending the provisions thereof to permit such a transfer; and
WHEREAS, Section 5.01 of the Indenture authorizes the City Council, by adoption ofa
resolution in its capacity as the legislative body of the District, to approve a Supplemental
Indenture to modify, alter, amend or supplement the Indenture in any respect which is not
materially adverse to the interests of the Bondowners; and
WHEREAS, the City Council has determined that the amendment of the Indenture to
authorize the transfer of the Transfer Funds from the Traffic Facilities Account to the
Acquisition Account will not be materially adverse to the interests of the Bondowners; and
WHEREAS, the District and the Fiscal Agent desire to amend' the Indenture as provided
herein.
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ARTICLE I
DEFINITION AND INTERPRETATION
Section 1.1 Defmitions.
Unless specifically defined herein, words and terms used herein with initial letters
capitalized have the meanings given to them in the Indenture. Except as provided below, the
definitions of words and terms set forth in the Indenture are applicable for all purposes of this
Second Supplemental Indenture. If a word or term used herein and in the Indenture with initial
letters capitalized is defined in both herein and in the Indenture, the definition contained herein
shall amend and supersede the definition contained in the Indenture.
Section 1.2 Conflict of Terms.
If there is any conflict between the terms of this Second Supplemental Indenture and the
terms of the Indenture, the terms of this Second Supplemental Indenture shall control. Except as
expressly amended by this Second Supplemental Indenture, however, the terms of the Indenture
shall remain in full force and effect.
ARTICLE II
AMENDMENTS
Section 2.1 Amendment of the Indenture.
Effective immediately upon the execution of this Second Supplemental Indenture, the
provisions of the Indenture shall be amended as provided for in this Article II.
Section 2.2 Amendment of Section 3.0SE.
The second paragraph of Section 3.05E is hereby amended to read as follows:
"In addition to transfers made pursuant to subsections A., B. and
C. above, the Fiscal Agent shall, from time to time and as directed
by the District by written instruction from an Authorized
Representative given pursuant to or consistent with the
Acquisition/Financing Agreement, transfer such funds as are
specified in such written instruction between the Traffic
Enhancement Improvement Account and the Acquisition Account,
between the Acquisition Account and the Traffic Enhancement
Improvement Account or between the Traffic Facilities Account
and the Acquisition Account established for each series of the
Bonds."
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ARTICLE III
MISCELLAt'lEOUS
Section 3.1 Counterparts.
This Second Supplemental Indenture may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
Section 3.2 Fiscal Agent's Consent.
By its execution hereof, the District is authorizing and directing the Fiscal Agent to
consent to the amendments to and modifications of the Indenture made by this Second
Supplemental Indenture and acknowledges that all requirements for the amendment and
supplement of the Indenture have been satisfied in accordance with the Indenture. By its
execution hereof, the Fiscal Agent consents to the amendments to and modifications of the
Indenture made by this Second Supplemental Indenture.
Section 3.3 Conditions to Effectiveness.
This Second Supplemental Indenture shall be effective up the fulfillment of the following
conditions:
(a) The Fiscal Agent shall have received from Best Best & Krieger LLP, as
Bond Counsel, an opinion to the effect that the Second Supplemental Indenture is authorized
under the Act and by proper action of the District and that execution and delivery of the Second
Supplemental Indenture will not adversely affect the exclusion of interest on any Bond from
gross income for Federal income tax purposes.
(b) The Fiscal Agent shall have received a form of certificate of the District
executed by an Authorized Representative certifying that the District has determined that the
execution and delivery of the Second Supplemental Indenture will not amend the Indenture in
any respect that is materially adverse to the interests of the Bondowners.
Section 3.4 Effective Date.
This Second Supplemental Indenture shall take effect immediately upon execution by the
District and the Fiscal Agent and the fulfillment of the conditions set forth in Section 3.03.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the Djstrict and the Fiscal Agent have executed Ibis Bond
Indenture effective the date first above written.
COMMUNITY FACILITIES DISTRICT NO. 7-1
(OTA Y RANCH VILLAGE ELEVEN)
By:
Name:
Title: Director of Finance
U.S. BANK NATIONAL ASSOCL<\ TION,
as Fiscal Agent
By:
Name:
Title: Authoriied Officer
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4-10
RESOLUTION NO. 2008-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA AUTHORIZING THE EXECUTION AND
DELIVERY OF A SECOND SUPPLEMENTAL BOND
INDENTURE IN CONNECTION WITH THE CITY OF CHULA
VISTA COMMUNITY FACILITIES DISTRICT NO. 07-I
(OTAY RANCH VILLAGE II) 2004 SPECIAL TAX BONDS
AND 2006 SPECIAL TAX BONDS
WHEREAS, the City ofChula Vista Community Facilities District No. 07-1 (Otay Ranch
Village Eleven) (the "District") has previously issued its $28,050,000 - 2004 Special Tax Bonds
and its $16,950,000 - 2006 Special Tax Bonds (collectively, the "Bonds") to provide for the
financing of the acquisition or construction of certain public improvements relating to a
residential project located in the City of Chula Vista known as Otay Ranch Village Eleven (the
"Project"); and
WHEREAS, in connection with such financings, the District and U.S. Bank National
Association (the "Fiscal Agen!") entered into that certain Bond Indenture dated as of May I,
2004, as amended by a First Supplemental Bond Indenture dated as of May I, 2006 (as
supplemented, the "Indenture"); and
WHEREAS, pursuant to the provisions of the Indenture, $9,531,884 of the proceeds of
the 2004 Bonds and $9,341,0/3 of the proceeds of the 2006 Bonds were deposited in the
Transportation Facilities Accounts of the Project Fund established pursuant to the provisions of
the Indenture for the purpose of paying Transportation Facilities Costs (as such term is defined in
the Indenture); and
WHEREAS, the above identified proceeds of the Bonds were deposited in the
Transportation Facilities Accounts pursuant to the provisions of the Acquisition/Financing
Agreement, dated as of April 20, 2004 (the "Acquisition Agreement"), by and between the City
of Chula Vista (the "City"), the District, Brookfield Shea Otay, LLC (the "Developer"), Otay
R2/3 LLC, Otay MFI LLC, Otay RillO LLC and Shea Homes Limited Partnership (collectively,
the "Merchant Builders") to establish the terms and conditions pursuant to which acquisition or
construction of the Improvements (as defined in the Acquisition Agreement), including the
Traffic Facilities, would be financed from the proceeds of the Bonds; and
WHEREAS, the Transportation Facilities were facilities that are otherwise eligible to be
financed through the City's Traffic Development Impact Fee Program CTDIF") set forth in
Chapter 3.54 of the Chula Vista Municipal Code; and.
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Resolution No. 2008-
Page 2
WHEREAS, the Developer had requested and the Acquisition Agreement provides that
the Developer or the Merchant Builders receive a credit against the development impact fee
obligation for the development within the District to the extent that the proceeds of the Bonds
deposited into the Transportation Facilities Account are used to finance the acquisition or
construction of Traffic Facilities (defined in the Indenture as "Transportation Facilities Costs");
and
WHEREAS, the Indenture also provided for the deposit of other proceeds of the Bonds in
the Acquisition Accounts of the Project Fund established pursuant to the provisions of the
Indenture for the purpose of paying all expenses of and incidental to the construction, acquisition
or both of the public improvements described in the Acquisition Agreement excluding there from
the Traffic Facilities and certain other specifically identified public improvements (defined in the
Indenture as "Project Costs"); and
WHEREAS, all of the funds on deposit on the Acquisition Accounts have been disbursed
to pay Project Costs and the City has received requests for the payment of additional Project
Costs in the amount of $2,905,085 which the City has determined are eligible to be paid from
Acquisition Account ifthere are funds available for such purpose; and
WHEREAS, there remains on deposit in the Traffic Facilities Accounts the amount of
$1,963,089 that may, pursuant to the provisions of Section 3.05C of the Indenture, be used only
to pay Transportation Facilities Costs until either (a) all funds on deposit in the Transportation
Facilities Accounts have been used to pay such Transportation Facilities Costs or (b) the final
payment or reimbursement of all Transportation Facilities Costs to be funded from the proceeds
of the Bonds has been made, in which case any such funds remaining on deposit in the
Transportation Facilities Account may be transferred to the Acquisition Accounts and used to
pay Project Costs (as defIned in the Indenture); and
WHEREAS, the Developer has requested that $1,043,352 of the funds on deposit in the
Traffic Facilities Account (the "Designated Funds") be transferred from such account to the
Acquisition Account so that such funds may be used to pay Project Costs; and
WHEREAS, because the final payment or reimbursement of all Traffic Facilities Costs to
be funded from the proceeds of the Bonds has not been made and will not be made in the
foreseeable future, the provisions of Section 3.05C of the Indenture prohibit the current transfer
of the funds as requested without amending the provisions thereof to permit such a transfer; and
WHEREAS, Section 5.01 of the Indenture authorizes the City Council, by adoption of a
resolution in its capacity as the legislative body of the District, to approve a Supplemental
Indenture to modify, alter, amend or supplement the Indenture in any respect which is not
materially adverse to the interests of the Bondowners (as defined in the Indenture); and
WHEREAS, the City Council has determined that the amendment of the Indenture to
authorize the transfer of the Designated Funds from the Traffic Facilities Accounts to the
Acquisition Accounts will not be materially adverse to the interests of the Bondowners; and
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Resolution No. 2008-
Page 3
WHEREAS, to proceed with the transfer of the Designated Funds from the Traffic
Facilities Account to the Acquisition Account, it is necessary to amend the Indenture by entered
into a Supplemental Bond Indenture in substantially the form presented at this meeting.
WHEREAS, staff worked with Warren Diven of Best Best and Krieger, LLP to prepare
this item. .
NOW THEREFORE BE, IT RESOL YED by the City Council of the City of Chula Vista
as follows:
1. The above recitals, and each of them, are true and correct.
2. The proposed form of Second Supplemental Bond Indenture presented at this meeting
is hereby approved. The City Manager or the Director of Finance are, and each of them is,
hereby authorized and directed, for and in the name of the District, to execute the Second
Supplemental Bond Indenture in substantially the form hereby approved, with such additions
thereto and changes therein as are approved by such officers, such approval to be conclusively
evidenced by the execution and delivery thereof
3. The officers of the City are hereby authorized and directed, jointly and severally, to
do any and all things to execute and delivery any and all documents and certificates which they
may deem necessary or advisable in order to facilitate the execution and delivery of the
Supplemental Indenture, and to otherwise to effectuate the purposes of this resolution; and such
actions previously taken by such officers are herby ratified,and confirmed.
4. This Resolution shall take effect immediately upon its adoption.
Presented by:
Approved as to form by:
Richard A. Hopkins
Director 0 f Engineering
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(' Bart NliesIe-rc1' .
'~),nterim City Attorney
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