Resolution No. 2011-185 (4)Exhibit A
RESOLUTION NO. 2011-185
OHS West:261409670.2 A-1
RESOLUTION NO. 2011-185
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON AUTHORIZING AND APPROVING THE ISSUANCE OF
ELECTRIC SYSTEM REVENUE BONDS; APPROVING THE
SUPPLEMENTAL INDENTURE OF TRUST PURSUANT TO WHICH
SUCH BONDS ARE TO BE 'ISSUED; APPROVING A DISCLOSURE
DOCUMENT, A CONTRACT OF PURCHASE, A CONTINUING
DISCLOSURE AGREEMENT AND OTHER DOCUMENTS -IN
CONNECTION WITH SUCH BONDS; AND AUTHORIZING CERTAIN
OTHER MATTERS RELATING THERETO
WHEREAS, the City of Vernon (the "City") is a municipal
corporation and a chartered city of the State of California organized
and existing under its Charter and the Constitution of the State of
California; and
WHEREAS, the City is authorized pursuant to the provisions of
its Charter and the City of Vernon Municipal Facilities Revenue Bond
Law, constituting Article XI of the City Code of the City of Vernon, to
issue bonds, notes and other obligations payable from .the Net Revenues
of the Electric System (capitalized terms used herein and not otherwise
defined shall have the meanings given such terms in the Indenture
mentioned below) to finance the costs of any land, improvements,
facilities, equipment and other property of any nature whatsoever which
are used in the Electric System and to refund such bonds, notes and
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other obligations; and
WHEREAS, pursuant to an Indenture of Trust, dated as of
September 1, 2008 (the "2008 Master Indenture,%' and, as amended and
supplemented, the "Indenture"), entered into by the City and The Bank
of New York Mellon Trust Company, N,A., as trustee (the "Trustee"), the
City has provided the terms and conditions for the issuance and
securing of its Electric System Revenue Bonds to finance the costs of
Capital Improvements to the City's Electric System or to refund any
outstanding Parity Obligations; and
WHEREAS, the City desires to provide for the issuance of its
Electric System Revenue Bonds, 2011 Series A (the."2011 Series A
Bonds") to provide moneys to pay a portion of the Cost, including
capitalized interest to the extent authorized by the Bond Ordinance, of
certain Capital Improvements to the Electric System included in the
2011 Project (as defined in the Third Supplemental Indenture of Trust
referred to below) and pay costs of issuance of the 2011 Series A
Bonds; and
WHEREAS, the City desires to provide for the issuance of its
Electric System Revenue Bonds, 2011 Taxable Series B (the 12011 Series
B Bonds" and, together with the 2011 Series A Bonds, the 12011 Series
Bonds") to provide moneys to refund the City,s Electric System Revenue
Bonds, 2009 Series A maturing on August 1, 2012 (the "Refunded 2009
Series A Bonds"), to provide moneys to pay a portion of the Cost of the
2011 Project and pay costs of issuance of the 2011 Series B Bonds; and
WHEREAS, the 2011 Series Bonds are to be issued under and
pursuant to the 2008 Master Indenture as supplemented by the Third
Supplemental Indenture of Trust, expected to be dated as of December 1,
2011, and to be entered into by the City and the Trustee (such Third
Supplemental Indenture of Trust, in the form attached hereto as
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Exhibit A with such changes, insertions and deletions as are made
pursuant to this Resolution being referred to herein as the "Third
Supplemental Indenture"); and
WHEREAS, the 2011 Series Bonds are to be payable from and
secured by a pledge and assignment of the Trust Estate on a parity with
all other Bonds issued and Outstanding under.the Indenture; and
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WHEREAS, in connection with the refunding of the Refunded
2009 Series A Bonds there has been prepared an escrow agreement between
the City and the Trustee (such escrow agreement in the form attached
hereto as Exhibit D with such changes, insertions and deletions as are
made pursuant to this Resolution, being referred to herein as the
"Escrow Agreement"); and
WHEREAS, E.J. De La Rosa & Co., Inc., as underwriter (the
"Underwriter"), has submitted a proposal to purchase the 2011 Series
Bonds in the form of a Contract of Purchase (such Contract of Purchase,
in the form attached hereto as Exhibit B with such changes, insertions
and deletions as are made pursuant to this Resolution, being referred
to herein as the "Purchase Contract"); and
WHEREAS, in connection with the offering and sale of the 2011
Series Bonds there has been prepared a disclosure document in the form
of a Preliminary Official Statement (such Preliminary Official
Statement in the form attached hereto as Exhibit C with such changes,
insertions and deletions as are made pursuant to this Resolution, being
referred to herein as the "Preliminary Official Statement"); and
WHEREAS, Rule 15c2-12 requires that, in order to be able to
purchase or sell the 2011 Series Bonds, the Underwriter must have
reasonably determined that an obligated person has undertaken in a
written agreement or contract for the benefit of the owners of the 2011
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Series Bonds to provide disclosure of certain financial information and
certain material events on an ongoing basis; and
WHEREAS, in order to cause such requirement of Rule 15c2-12
to be satisfied, the City desires to enter into a Continuing Disclosure
Agreement with the Trustee (such Continuing Disclosure Agreement, in
the form attached to the form of the Preliminary Official Statement
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attached hereto as Exhibit C, with such changes, insertions and
deletions as are made pursuant to this Resolution, being referred to
herein as the "Continuing Disclosure Agreement"); and
WHEREAS, there have been submitted to this meeting drafts of
the following:
(1) the Third Supplemental Indenture;
(2) the Purchase Contract;
(3) the Preliminary Official Statement, including the
Continuing Disclosure Agreement; and
(4) the Escrow Agreement; and
WHEREAS, after having reviewed and considered the proposal of
the Underwriter to purchase the 2011 Series Bonds on the terms and
conditions contained in the Purchase Contract, this City Council now
desires to authorize the issuance and sale of the 2011 Series Bonds,
including the execution of such documents and the performance of such
acts as may be necessary or desirable to effect such issuance and sale
and the other actions contemplated by this Resolution.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON, AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the recitals contained hereinabove are true
and correct.
SECTION 2: The Third Supplemental indenture, in
substantially the same form as the copy which is attached hereto as
Exhibit A and made a part hereof as though set forth in full herein, be
and the same is hereby approved. Each of the Mayor, the Mayor Pro Tem,
the City Administrator, and the Treasurer (each an mAuthorized
Officer"), acting singly, is hereby authorized to execute and deliver
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the Third Supplemental Indenture, in the name of and on behalf of the
City, in substantially the form attached hereto with such changes,
insertions and deletions as may be approved by the Authorized Officer
executing the Third Supplemental Indenture, said execution being
conclusive evidence of such approval, and the City Clerk is hereby
authorized to attest thereto.
SECTION 3: Subject to the limitations specified in this
Resolution, the issuance of the 2011 Series Bonds on the terms and
conditions set forth in the Third Supplemental Indenture is hereby
authorized and approved. The aggregate principal amount of the 2011
Series Bonds shall not exceed eighty-five million dollars
($85,000,000). The 2011 Series Bonds will be dated as provided in,
will bear interest at the rates provided in, will mature on the date or
dates provided in, will be issued in the form provided in, will have
the Sinking Fund Installments specified in, will be subject to
redemption as provided in, and will have such other terms as shall be
provided in, the Third Supplemental Indenture as the same is completed
as provided in this Resolution, provided that no 2011 Series Bond shall
bear a stated rate of interest in excess of nine percent per annum.
SECTION 4: The Authorized Officer executing the Third
Supplemental Indenture is hereby authorized, subject to the limitations
set forth in Section 3 hereof, to determine the following: (i) the
maturity date or dates of the 2011 Series Bonds of each Series (but no
2011 Series Bond shall mature later than August 1, 2042); (ii) the
principal amount of the 2011 Series Bonds of each Series maturing on
each maturity date; (iii) the interest rate or rates for the 2011
Series Bonds of each Series maturing on each maturity date; (iv) the
maturity or maturities, if any, of the 2011 Series Bonds of each Series
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to be redeemed or paid at maturity from Sinking Fund Installments
("Term 2011 Series Bonds,,); (v) the Sinking Fund Installments for the
Term 2011 Series Bonds; and (vi) the redemption provisions for the 2011
Series Bonds of each Series.
SECTION 5: The net proceeds received on the sale of each
Series of the 2011 Series Bonds shall be applied to such purposes as
are set forth in the recitals to this Resolution in the manner provided
in the Third Supplemental Indenture.
SECTION 6: The Purchase Contract, in substantiallythe same
form as the copy which is attached hereto as Exhibit B and made a part
hereof as though set forth in full herein, be and the same is hereby
approved. Each of the Authorized Officers, acting singly, is hereby
authorized to execute and deliver the Purchase Contract, in the name of
and on behalf of the City, in substantially the form attached hereto
with such changes, insertions and deletions as may be approved by the
Authorized Officer executing said Purchase Contract and as are
consistent with the determinations of the terms of the 2011 Series
Bonds of each Series made pursuant to this Resolution, said execution
being conclusive evidence of such approval.
The Authorized Officer executing the Purchase Contract, is
hereby authorized to determine the purchase price to be paid for the
2011 Series Bonds of each Series under the Purchase Contract; provided,
however, that the aggregate Underwriter's discount (not including
original issue discount which, as to each Series of the 2011 Series
Bonds, shall not exceed five percent of the aggregate principal amount
such Series) for the 2011 Series Bonds of each Series shall be not more
than two percent of the aggregate principal amount of the 2011 Series
Bonds of such Series. The sale of the 2011 Series Bonds to the
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Underwriter on the terms and conditions contained,in the Purchase
Contract, as the same may be completed in accordance with the
provisions of this Resolution, with such changes, insertions and
deletions as are authorized hereby, is hereby approved and authorized.
SECTION 7: The Preliminary OfficialStatement, in
substantially the same form as the copy which is attached hereto as
Exhibit C and made a part hereof as though set forth in full herein, be
and the same is hereby approved. Each of the Authorized Officers,
acting singly, is hereby authorized to cause the Preliminary Official
Statement to be delivered to the Underwriter, in substantially the form
attached hereto as Exhibit C with such changes, insertions and
deletions as may be approved by the Authorized Officer delivering the
Preliminary Official Statement (including without limitation the
insertion of the proposed terms of the 2011 Series Bonds of each
Series), said delivery being conclusive evidence of such approval.
The use of the Preliminary Official Statement in connection with the
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offering and sale of the 2011 Series Bonds by the Underwriter,
including delivery of the Preliminary Official Statement in electronic
form, is hereby authorized and approved. Each of the Authorized
Officers, acting singly, is hereby authorized to determine that the
Preliminary Official Statement is deemed final for purposes of Rule
15c2-12.
The preparation and delivery to the Underwriter of a final
Official Statement (the "Official Statement") relating to the 2011
Series Bonds, and its use by the Underwriter in connection with the
offering and sale of the 2011 Series Bonds, including delivery of the
Official Statement in electronic form, be and the same is hereby
approved. The Official Statement shall be in substantially the form
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of the Preliminary Official Statement with such changes, insertions and
deletions as may be,approved by the Authorized Officer executing the
Official Statement (including without limitation the insertion of the
final terms of the 2011 Series Bonds of each Series), said execution
being conclusive evidence of such approval. Each of the Authorized
Officers, acting singly, is hereby authorized to execute the Official
Statement, in the name and on behalf of the City, and thereupon to
cause the Official Statement to be delivered to the Underwriter. Each
of the Authorized Officers, acting singly, is hereby authorized to
approve and execute any amendment or supplement to the Official
Statement contemplated by the Purchase Contract, in the name and on
behalf of the City, and thereupon to cause such amendment or
supplement, to be delivered to the Underwriter.
SECTION 8: The.Continuing Disclosure Agreement, in
substantially the form attached to the form of the Preliminary Official
Statement attached hereto as Exhibit C, be and the same is hereby
approved. Each of the Authorized Officers, acting singly, is hereby
authorized to execute and deliver the Continuing Disclosure Agreement,
in the name of and on behalf of the City, in substantially such form.
with such changes, insertions and deletions as may be approved by the
Authorized Officer executing the same, said execution being conclusive
evidence of such approval, and the City Clerk is hereby authorized to
attest thereto.
SECTION 9: The Escrow Agreement, in substantially the same
form as the copy which is attached hereto as Exhibit D and made a part
hereof as thought set forth in full herein, be and the same is hereby
approved. Each of the Authorized Officers, acting singly, is hereby
authorized to execute and deliver the Escrow Agreement, in the name of
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and on behalf of the City, in substantially the form attached hereto
with such changes, insertions and deletions as may be approved by the
Authorized Officer executing the same, said execution being conclusive
evidence of such approval, and the City Clerk is hereby authorized to
attest thereto.
SECTION 10: The refunding of the Refunded 2009 Series A
Bonds on the terms provided in the Escrow Agreement is hereby
authorized and approved.
SECTION 11: The Mayor, the Mayor Pro Tem, the City
Administrator, the Treasurer, the City Clerk, the City Attorney and the
Chief Deputy City Attorney of the City, the Director of the Light and
Power Department and any other proper official, officer or employee of
the City, acting singly, be and each of them hereby is authorized to
execute and deliver any and all documents and instruments and to do and
cause to be done any and all acts and things necessary or convenient in
carrying out the actions authorized by this Resolution and the
transactions contemplated by the documents and instruments approved or.
authorized by this Resolution, including, without limitation, making
any determinations or submission of any documents or reports which are
required by any rule or regulation of any governmental entity in
connection with the issuance and sale of the 2011 Series Bonds and the
authorization, execution, delivery and performance by the City of its
obligations under the documents and instruments approved or authorized
by this Resolution.
SECTION 12: All actions heretofore taken by any committee of
the City Council, or any official, officer, employee, representative or
agent of the City, in connection with the issuance and sale of the 2011
Series Bonds or the authorization, execution, delivery, or performance
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of the City's obligations under the documents and instruments approved
or authorized by this Resolution, and the other actions contemplated by
this Resolution, are hereby ratified, approved and confirmed.
SECTION 13, The City Clerk of the City of Vernon shall
certify to the passage, approval and adoption of this resolution, and
the City Clerk of the City of Vernon shall cause this resolution and
the City Clerk's certification to be entered in the File of Resolutions
of the Council of this City.
APPROVED AND ADOPTED this 15t" day of November, 2011.
Name: Hilario .Gonzales
Title: Mayor
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Willard G. Yamaguchi, City Clerk of the City of Vernon, do
hereby certify that the foregoing Resolution, being Resolution
No. 2011-185, was duly .passed, approved and adopted by the City Council
of the City of Vernon at a regular meeting of the City Council duly
held on Tuesday, November 15, 2011, and thereafter was duly signed by
the Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this f7 day of November, 2011, at Vernon, California.
(SEAL)
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Exhibit B
CITY CHARTER
ORS West261409670.2 B-I
of the
City of Vernon
Article I
Succession
Section 1. Name.
The municipal corporation now existing and known as the
City of Vernon shall remain and continue to exist as a municipal
corporation under its present name.
Section a. Boundaries.
The boundaries and territory of the City of Vernon
shall continue as now established until changed in a manner
sufficient to legally alter the boundaries and territory.
section 3. Rights and Liabilities of the City.
The City shall continue to own, possess, control, and
remain Vested with all rights and property of every kind and
nature owned, possessed, controlled, or vested at the time that
this Charter takes effect. All legally -enforceable debts,
obligations, liabilities, and contracts with respect to the City
and in force at the time this Charter takes effect shall be
unaffected by the adoption of this Charter.
Section i. ordinances.
Each ordinance, code, resolution and other regulation,
or portion thereof, in force on the date that this Charter takes
effect, and not inconsistent with this Charter, shall be in force
after this Charter takes effect and shall remain in force until
amended, repealed or superseded by proper authority. If any
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section, subsection or provision of such existing .ordinance,
code, resolution or other regulation is inconsistent with this
Charter and the remainder thereof is not inconsistent with this
Charter, such inconsistent portion shall be deemed to be severed
and repealed and the remainder of such ordinance, code, resolu-
tion or other regulation shall remain in force until amended,
repealed or superseded.
section 5. Officers and Employees.
The tenure, duties and responsibilities of the officers
and employees of the City shall not be affected by the adoption
of this Charter, except as specifically provided in this
Charter, but shall be subject to such ordinances or actions as
may be duly adopted or taken by the City Council of the City
subsequent to the adoption of this Charter. No provision of this
Charter shall be construed to grant a right to employment to City
employees.
Section 6. Pending Actions and Proceedings
Neither this Charter, nor its adoption, shall affect or
abate any civil action or proceeding or criminal action or
proceeding, brought by or against the City or any officer,
office, department or agency of the city, which is pending on the
date that this Charter takes effect.
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aw))) pt AGWASY (I)
Article rI
Powers of the City
Section i. General Powers.
The City shall have full power and authority to adopt,
make, exercise and enforce all legislation, laws, and regulations
and to take all actions in respect to municipal affairs, without
limitation, which may lawfully be adopted, made, exercised, taken
or enforced under the Constitution of the State of California
subject only to such limitations as may be provided by this
Charter. The City shall also have the power and authority to
adopt, make, exercise and enforce all legislation, laws and
regulations and to take all actions and to exercise any and all
rights, powers and privileges heretofore or hereafter
established, granted or proscribed by any law of the State of
California, or by this Charter, or by other lawful authority.
The specification in this Charter of any particular
power shall not be held to be exclusive of any other specific
power that may be exercised under the general parer, or of the
general powers, provided for in this section.
Section 1. Emergency Pavers.
Notwithstanding any general or special provisions of
this Charter, in order to ensure continuity of governmental
operations in periods of extreme emergency resulting from damage
or destruction from acts of war, subversion, terrorism, natural
disaster or other causes of whatever nature, the City Council, by
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majority vote of its members in office, shall have the power and
immediate duty to declare an emergency by resolution and:
(a) To provide for prompt and temporary succession to the
powers and duties of all city offices, whether filled by election
or appointment, when the incumbent may become unavailable for
carrying on the powers and duties of such office, and
(b) To adopt such other measures as may be necessary and
proper for ensuring the continuity of City operations, including,
but not limited to the financing thereof.
Section 3. intergovernmental Relations.
The City may exercise any of its powers, perform any of
its functions, or participate in the financing thereof, jointly
or in cooperation, by contract or otherwise, with any one or more
governmental entities or civil divisions or agencies thereof.
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Article III
City Council
section I. Composition.
There shall be a City Council composed of five members
elected at large by the qualified voters of the City.
Section 1. Powers.
Subject to the provisions of this Charter, and the
valid delegation by this Charter of any power to any person,
officer, board or committee, the City Council shall have the
power and authority, in the name of the City, to exercise all of
the governmental, legislative, adminiattative or other power,
authority or function of the City which, a city council could
exercise under the Constitution of the state of California and
which now or hereafter would be compatent for this Charter
specifically to enumerate.
Section 3. Eligibility.
No person shall be eligible to hold the office of
councilmember unless he or she is a voter and resident of the
City of Vernon at the time of filing nomination papers or
declaring candidacy and remains a voter and resident until the
election and throughout his or her term as councilmember.
Section 4. Election and Terms.
The regular election of councUmembers shall be held on
the second Tuesday of April in each even numbered year. The term
of each office shall be four years. Three four-year terms shall
be filled at the first general municipal election held after the
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adoption of this Chapter and two four-year terms at the next
general municipal election.
The City council shall be the final judge of election
results and the qualifications of its members. The City Council
shall canvass the returns'of an election on the first Tuesday
following a City Council election or such other date within
fifteen (15) days of the election as may be provided by
ordinance. The term of each elected councilmembor shall begin
at the hour of the completion of the canvass of the election
returns. In the absence of death, removal from office or
disqualification, each councilmember shall serve until expiration
of his or her term and until a successor qualifies.
Section S. Mayor.
At the council meeting at which any councilmember is
installed following a regular municipal election, and at any time
when there is a vacancy in the office of Mayor, the City Council
shall meet and shall elect one of its members as Mayor. The
Mayor shall be the presiding officer of the City Council. The
Mayor shall'be a membar of the City Council for all purposes and
shall have all the rights, powers and duties of a member of the
City Council in addition to those powers and duties conferred
upon the Mayor by virtue of his or her office.
The Mayor shall be the official head of the City for
all ceremonial purposes. The Mayor shall perform such other
duties consistent with the office of Mayor as may be prescribed
by this Charter or as may be provided by the city Council. The
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Mayor shall serve in his or her capacity at the pleasure of the
City Council and may be removed by a majority vote of the members
of the City council.
Section 6. Mayor Pro Tempore.
At the time that a Mayor is selected, the City council
shall also designate one of its members as Mayor Pro Tempore.
The Mayor Pro Tempore shall serve in such capacity at the
pleasure of the city council and may be removed by a majority
vote of the members of the Council. The Mayor Pro Tempore shall
perform the duties of the Mayor during the Mayor's absence or
disability.
Section 7. Vacancy.
Any vacancy occurring in the City Council for whatever
reason may be filled by appointment by the City Council. if the
City Council fails to fill the vacancy within thirty days, then
the City Council shall immediately call a special election to
fill the vacancy.
Any parson appointed or elected to fill a vacancy on
the city Council shall hold office for the remainder of the term
in the absence of death, removal from office or disqualification.
rf an election occurs at which one or more full terms
and one or sore unexpired terms are to be filled, no distinction
between the full terms and the unexpired terms shall be made in
nominating or voting. The person or persons elected by the
highest number of votes shall be elected for the full term or
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terms and the person or persons elected with the fewest votes
shall be elected for the unexpired term or terms.
Section S. Forfeiture.
The following shall be grounds for forfeiture of a
councilmember's office:
(a) Absence from three consecutive regular meetings of
the Council without permission of, or excuse by, the Council, for
absence from at least one of those meetings expressed in its
official minutes,
(b) Conviction of a crime involving moral turpitude,
(a) Failure at any time during the councilmember's
term of office to meet any qualification for office prescribed by
this Charter or by the Constitution of the State of California.
A vacancy caused by the forfeiture of a council-
member's office shall be filled as prescribed by section 7 of
Article III of this Charter.
Section 9. Forfeiture procedure.
The Council shall be the final judge of the grounds for
forfeiture of a councilmembers' office and for that purpose shall
have the power to subpoena witnesses, administer oaths and
require the production of evidence. A member charged with
forfeiture of office shall be entitled to a public hearing on
demand. Notice of such hearing shall be given in the manner
provided by ordinance.
An order of the City Council of forfeiture shall be
effective immediately. A petition for judicial review of such
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order may be filed in a court of competent jurisdiction within
two weeks after notice to the councilmember of such order.
Sending a copy of the order of forfeiture by united States mail,
certified and postage prepaid, addressed to the councilmember at
his or her address on file with the City clerk, shall constitute
notice for purposes of this section. During the pendency of any
such judicial action or proceeding, anyone appointed by the
Council or elected to fill the vacancy resulting from such
forfeiture shall have all the rights, duties, and powers of a
councilmember and shall continue in such office for the remainder
of the term (in the absence of death, removal from office or
disqualification) unless and until a final judgment is rendered
holding the declaration of forfeiture to be invalid or ordering
the Council to reinstate the councilmember.
section 10. Council Meetings and Rules of Order.
The City Council shall hold regular meetings at least
once each month. The frequency, time and place of seating*,
provisions for adjournment of meetings and calling of special
meetings and the rules of order for the conduct of Council
proceedings shall be established by ordinance adopted by the
Council.
Section 11. Compensation.
The Council may determine the base compensation of
councilmsmbers by resolution adopted by a majority vote of the
members of the Council. Any change in the base compensation of
councilmembers shall be effective on the first day of the
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following fiscal year or such other date as may be specified in
the resolution.
In addition to such base compensation, individual
counciimembers may be compensated for serving on City boards,
commissions, committees or other city governmental bodies. such
additional compensation shall be not by resolution adopted by a
majority vote of the members of the Council. Any change in
additional compensation of councilmembers shall be effective on
the first day of the following fiscal year or such other date as
may be specified in the resolution.
Councilmembers shall also receive compensation for
actual or anticipated expenses that may be incurred in the
performance of their duties of office.
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Article IV
Ordinances and Resolutions
Section 1. ordinances, when Required.
The following actions by the City Council shall be
taken by ordinance:
(1) Any action which this Charter requires to he taken
by ordinance;
(2) Provision of a fine or other penalty or
establishment of a rule or regulation for violation of which a
fine or other penalty may be imposed;
(3) Grant of a franchise;
(4) Creation of, alteration of, or abolishment of a
commission, board or agency)
(5) Restriction on the use of property;
(d) Adoption or amendment of a oode;
(7) Adoption of ordinances proposed under the
initiative power; and
(8) Amendment or repeal of any ordinance or code
previously adopted.
Actions other than those referred to above in this
section may be taken by ordinance, by resolution or order duly
entered in the minutes of a council meeting as may be
appropriate.
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Section 2. Procedure.
Every proposed ordinance shall be introduced in writing
and substantially in the form required for adoption. The
enacting clause shall be, substantially: "The City Council of
the City of Vernon hereby ordains:".
Except as provided by this Charter, no ordinance shall
be adopted by the City council on the day of its introduction,
nor within five days thereafter. Upon introduction and upon
second presentation, unless at least one Councilmember requests
that an ordinance be read in full, an ordinance may be read by
title only. Unless a higher vote is required by other provi-
sions of this charter, the affirmative votes of a majority of the
members of the City Council shall be required for the enactment
of any ordinance. Adopted ordinances shall be signed by the
Mayor and attested by the City Clerk.
in the event that any ordinance is substantially
altered after Its introduction, it shall not be adopted within
five days after the date of such alteration. The correction of
typographical or clerical errors or other minor changes shall not
constitute the making of an alteration within the meaning of this
paragraph.
The City Council may provide by ordinance for any
publication or posting of ordinances as it deems appropriate.
Section 3. Effective Date.
An ordinance shall be effective after the thirtieth day
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following its adoption with the exception of the following
ordinances which shall take effect upon adoptions
elections
(a) An ordinance calling or otherwise relating to any
(b) An ordinance relating to public improvements, the
cost of which is to be borne wholly or in part by special
assessments;
(a) An ordinance declaring the amount of money neces-
sary to be raised by taxation, or fixing the rate of property
taxation, or levying tax upon property;
(d) An ordinance fixing utility rates or charges;
(a) An emergency ordinance adopted as provided in
Section four of this Article of this Charter.
Ordinances referred to in (a) through (d) of this
section may be introduced and adopted at one and the same regular
or special meeting.
An ordinance may specify a data on which all or a
portion of its provisions shall be operative.
Section 4. Emergency ordinances.
Any ordinance declared by the City Council to be
necessary as an emergency measure for the immediate preservation
of the public peace, health, or safety, and containing a state-
ment of the reasons for its urgency, may be adopted in the
manner provided by this Charter except that such emergency
ordinance may be introduced and adopted at one and the same
regular or special meeting, and shall take effect immediately.
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Section 5. Adoption By Reference.
Detailed regulations pertaining to any subject, model
codes, and codifications of ordinances of other public agencies
may be adopted by reference, in their original fora or with
amendments thereto, with the ease effect as an ordinance, in the
manner not forth for adopting ordinances. Not less than three
copies of the regulations, codes or ordinances so adopted shall
be filed and kept on file for use and examination by the public
in the office of the City Clerk.
Section 6. Codification.
The City Council may by ordinance codify the ordinances
of the City. ordinances so codified shall be repealed as of the
effective date of the codification unless the City Council shall
otherwise provide. Amendments to a code shall be enacted by
ordinance.
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!l6111 pf A616.1e1 (3)
Article V
Elections
Section 1. General Municipal Elections.
General municipal elections shall be held in the City
on the second Tuesday of April in each even numbered year.
Section 2. Special Municipal Elections.
All other municipal elections shall be special
municipal elections.
Section 3. Procedure.
The City Council is authorised to adopt by ordinance
procedures governing municipal elections. until the City Council
adopts by ordinance provisions governing municipal elections, all
elections shall be held in accordance with the general laws of
the State of California. If an ordinance respecting municipal
elections is adopted by the City Council thereby superseding
certain provisions of the general laws governing municipal
elections, the general laws not so superseded as they may exist
from time to time shall be applicable unless and until the City
Council shall take action otherwise.
Section 4. Initiative, Referendum and Recall.
The power of the initiative and referendum and of the
recall of municipal elective officers is reserved to the voters
of the City. The procedures for initiative, referendum and
recall shall be governed by ordinance or ordinances of the City.
Until the City Council adopts by ordinance provisions governing
=111 Of AMAN (3)
initiative, referendum, and recall, these procedures shall be in
accordance with the general laws of the state of California. If
an ordinance respecting initiative, referendum or recall of
municipal elective officers is adopted by the City Council,
thereby superseding certain provisions of the general laws
governing initiative, referendum and recall, the general laws not
so superseded as they may exist from time to time shall be
applicable unless and until the city council shall take action
otherwise.
No initiative ordinance providing for the expenditure
of public money or for a change in salaries of any city officer
or employee shall take effect until the beginning of the fiscal
year next following the date of its adoption.
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amtn pt Mms.Lew (3)
Article VI
City Administrator
Section 1. Appointment.
The City Council shall appoint, by majority vote, a
City Administrator who shall be the chief administrative officer
of the City of Vernon. The City Administrator shall serve at the
pleasure of the Council except as may otherwise be provided by
written contracts provided, however, that the City Administrator
shall not be removed from office except as provided by this
Charter.
The City Administrator shall engage in no other
business or occupation except as may be permitted by the Council.
Section 2. Removal.
(a) Rxcept as otherwise provided by this section, the
City Administrator may be removed from office by a majority vote
of the members of the City Council.
(b) At least thirty (30) days before the effective
date of removal, the City Administrator shall be furnished with a
written notice stating the Councilts intention to remove and, if
requested by the City Administrator, the reasons therefor.
Sending a copy of such notice by United States mail, certified
and postage prepaid, addressed to the City Administrator at his
or her last known address, shall constitute notice for purposes
of this section. Within seven days after receipt of such notice,
the city Administrator may, by written notification to the City
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OIO1H pf A616AMI 0)
Council, request a public hearing before the City Council. Upon
such request, the Council shall fix a time and place for public
hearing which shall be held before the date of the City
Administrator's removal. The City Administrator may appear and
be heard at such hearing. The purpose of the hearing is to allow
the City Council and the City Administrator to present publicly
all pertinent facts prior to final action of removal. In
removing the City Administrator, the City Council shall use its
uncontrolled discretion and its action shall not depend upon any
showing or degree of proof at the hearing. The City Council
action shall be final.
(a) After furnishing the City Administrator with
written notice of intended removal, the City Council may suspend
the City Administrator from duty with regular compensation to
continue until removal as provided by this Section 2.
(d) The City Administrator shall not be removed within
ninety (90) days after the election of a councilmsmber unless
(i) The City Administrator has been convicted of
commission of a felony; or
(ii) The City Administrator has been convicted of
a crime prescribed by statute applicable to municipal
officials.
In either case the City Administrator may be removed by
majority vote of the members of the City Council.
Section 3. Compensation.
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U0111 p1 AO16.L3W (3)
Compensation for the city Administrator shall be set by
the City Council. However, compensation for the City Admin-
istrator shall not be reduced within ninety (90) days after the
election of a councilmember.
Section 4. Duties.
The City Administrator shall be responsible to the City
Council for the proper and efficient management of all the
affairs of the City and those specific duties assigned to the
City Administrator by this Charter or by the City Council. The
specific duties of the city Administrator may be specified by
ordinance, resolution or order of the City Council.
section S. Noninterference.
The power to direct the City Administrator rests with
the Council as a governing body, not with its individual members.
No individual member of the Council, without authorization of the
Council, shall in any manner direct or request the city
Administrator to appoint any person to and/or remove any person
from any office or position of employment with the City.
No individual member of the City Council, without
authorization of the Council, shall give orders or instructions
publicly or privately to any person under the jurisdiction of the
City Administrator or otherwise interfere with the administrative
staff of the City.
No individual member of the city Council, without
authorization of the Council, shall undertake to coerce or direct
the City Administrator with respect to any of the City
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MOM Pt ACU.UW (3)
Administrator's duties, and/or any municipal contract, and/or in
connection with the purchase of any municipal supplies.
Section 6. Eligibility.
No person shall be eligible to be appointed City
Administrator while serving as a member of the City Council or
within two years following the termination of membership on the
City Council.
Section 7. other Positions.
The City Council may appoint the City Administrator to
any other office in the City and direct the City Administrator to
carry out the duties of that office or any other position of
employment with the City in addition to his or her duties as City
Administrator.
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Article VII
Other Officers, Hoards, Commissions, and Employees
section 1. City Clerk.
There shall be a City Clerk who shall be the custodian of
the City seal and shall maintain a book or books of the ordinances
and resolutions adopted by the City Council and the minutes of all
meetings and actions of the Council. The City Council shall
provide by ordinance for the method of selection of the City Clerk,
by appointment or election, and the duties and tenure of the City
Clerk. The City Clerk's compensation shall be fixed by the City
Council.
section 2. City Treasurer.
There shall be a City Treasurer who shall receive and
safely keep the funds of the City and shall disburse the same for
public purposes pursuant to appropriations and directions by the
City council. The City Council shall provide by ordinance for the
method of selection of the City Treasurer, by appointment or
election, and the duties and tenure of the City Treasurer. The
City Treasurer's compensation shall be fixed by the City Council.
The City Treasurer shall be bonded in an amount determined by the
City Council.
Section 3. City Attorney.
There shall be a City Attorney who sha11 be the legal
officer of the City. The City Attorney shall serve at the pleasure
of the City Council unless otheryise provided by written contract,
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SMIS pf 0016.1e1 (3)
and shall perform such duties and provide such professional
services as may be assigned by the City Council unless otherwise
provided by written contract. The compensation of the City
Attorney shall be determined by the City Council subject to any
provisions of a written contract of employment.
Section 4. Other Officers.
The city Council shall provide for such other officers as
it deems appropriate, and shall fix the duties, tenure and
compensation of such officers by ordinance.
Section S. Boards and Commissions.
The City Council may, by ordinance, establish such boards
and commissions as the Council deems to be necessary, and shall
provide for the method of selection, tenure, duties and any
compensation of the boards and commissions so established.
Section 6. 8mployees.
All City employees shall serve at the will and pleasure
of the City Council. No City employee shall have any right to
employment with the City unless that employee and the City have
entered into a written contract which gives the employee a.property
right to employment with the City.
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Article VIII
Fiscal Administration
section 1. Fiscal Year.
The fiscal year of the City shall begin on the first
day of July and and on the last day of June of the following
year. The Council may, by ordinance, change the fiscal year.
Section 2. Submission of Budget.
On or before the thirtieth (30th) day preceding the
last day of the fiscal year, the City Administrator shall submit
to the City council a proposed budget for the ensuing fiscal
year.
Section 3. Budget Contents.
The proposed budget shall contain the following.
(a) An estimate of the revenues and expenditures for
each City Department for the ensuing fiscal year;
(b) A statement of comparison of expenditures for the
current fiscal year with proposed expenditures for the ensuing
fiscal year, and reasons for the proposed increase or decrease;
(c) An estimate of money needed for contingent or
emergency purposes;
(d) An estimate of all anticipated revenues;
(a) An estimate of the tax rate necessary to most the
expenditures proposed;
(f) A recommendation for the amount of funds to be
allocated to capital outlays;
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(g) A recommendation for amounts to be appropriated,
with reasons therefor, in such detail as the Council may directs
(h) Such other or further information as the City
Administrator may deem, advisable to submit, subject to approval
by the City Council.
Section 4. Adoption of the Budget and Appropriations.
After receiving the budget, the City Council shall hold
a public hearing regarding the adoption of the budget. Notice of
the hearing shall be given in such manner as the City Council may
provide by ordinance. Copies of the proposed budget shall be
made available in the City Clerk's office in City Hall for public
inspection.
At or after the public hearing, the Council shall make
any changes to the budget that it deems advisable and shall adopt
the final budget by resolution passed by the affirmative vote of
a majority of the members of the Council on or before the last
day of the fiscal year preceding the fiscal year for which the
budget is adopted (the "budget year").
The resolution adopting the budget shall also operate
as an appropriation of funds in the amounts and for the purposes
set forth in the budget so adopted.
If the Council fails to adopt the budget by the last
day of such preceding fiscal year, the amounts appropriated for
the preceding fiscal year shall be deemed adopted for the budget
year on a month -to -month basis, with all items prorated
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accordingly, until such time as the City Council adopts a budget
for the budget year.
Section S. Amendment of the Budget.
At any meeting of the City Council after the adoption
of the budget, the City Council may amend or supplement the
budget by the affirmative vote of a majority of the members of
the Council.
Section 6. Lapse of Appropriations.
Every appropriation, except an appropriation for a
capital expenditure, shall lapse at the and of the last day of
the fiscal year if that appropriation has not been expanded or
lawfully encumbered. An appropriation for a capital expenditure
shall continue in force until the purpose for which it was made
has been accomplished or abandoned. The purpose of any such
appropriation shall be deemed abandoned if three years pass
without any disbursement from or encumbrance of the appropriation
for such purpose.
Section 7. Taxation.
The City Council may adopt all or part of a system of
taxation for the assessment, levy and collection of city taxes.
The City Council say, by ordinance, authorize the transfer to,
assumption of, and discharge by officers of the County of Low
Angeles, of any function of the City relating to assessment of
property for taxation, the equalization of such assessment, and
collection of taxes.
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Section a. Handed Debt Limit.
The total bonded general obligation debt of the City
shall not exceed fifteen percent (15*) of the assessed valuation
of all property taxable for municipal purposes.
Section 9. Franchises.
Franchises may be granted to persons, firms, corpor-
ations, or other entities for such consideration and upon such
terms, conditions, restrictions, or liaitations as may be
prescribed by the City Council by ordinance.
Section 10. Contracts.
The City Council shall have the power, by majority
vote, to enter into any contract on behalf of the City. All
contracts must be in writing, signed by the mayor or other
officer authorised by resolution, and attested by the City Clark.
There shall be no bidding requirements for any contract unless
the City Council otherwise provides by ordinance.
Section 11. Audit.
The City Council shall appoint a California certified
public accountant or firm of certified public accountants to
provide an independent, annual audit of all City accounts,
including the accounts of all departments, officers, and
employees who receive, handle or disburse public funds. The City
Council say require more frequent audits as it deems advisable.
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r'
Within one hundred tventy (120) days after the end of
the fiscal year, unless the City Council extends such time, a
final audit and report shall be submitted to each member of the
City Council and to other officers designated by the Council.
Also, copies of the final audit and report shall be provided to
such other persons or agencies as the City Council may direct,
and copies shall be made available in City Hall for public
inspection.
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Article IX
Miscellaneous Provisions
Section 1. Construction.
The general grant of power to the City under Article II
of this Charter shall be construed broadly in favor of the City.
The specific provisions enumerated in this Charter are intended
to be and shall be interpreted as limitations upon the general
grant of power and shall be construed narrowly.
Section 2. violations.
The City Council may establish fines and penalties for
violations of ordinances.
Section 3. Definitions.
unless the provision or the context otherwise
requires, as used in this Charter:
Vernon;
(a) "Shall" is mandatory, and "may" is permiseivel
(b) *City" is the City of Vernon;
(a) "Council" or "City Council" is the City Council of
(d) "City Administrator" or *Administrator* is the
City Administrator of Vernon;
(e) "Majority* of the City Council means a majority
of a quorum of the City Council.
(f) "Majority of the members" of the Council means a
majority of the entire membership of the City Council.
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e)D)t) pf AOtb.Ler (3)
(g) The masculine includes the feminine and the
feminine includes the masculine.
(h) The singular includes the plural and the plural
includes the singular.
Section 4. Official Bonds.
The city Council shall, by ordinance, determine which
officers or other persons in the service of the city, in addition
to the City Treasurer, shall give bonds for the faithful
performance of their duties. The Council shall fix by ordinance
or resolution the amounts and terms of the official bonds of all
officials or employees who are required to give such bonds. All
bonds shall be executed by a responsible corporate surety, and
shall be approved as to form by the City Attorney, and shall be
filed with the City. Premiums on official bonds shall be paid by
the City.
Section 5. Residence.
The City Council may, to the maximum extent permitted
by the Constitution of the State of California, provide by
ordinance for protection against fraud in municipal elections in
the city involving claims of residence in areas of the City in
which personal residence is not permitted by law.
Section 6. Severability.
If any provision of this Charter is held invalid, the
other provisions of the Charter shall not be affected thereby.
if the application of this Charter or any of its provisions to
any person or circumstance is held invalid, the application of
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the Charter and its provisions to other persons or circumstances
$hail not be affected thereby.
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Exhibit C
CITY OF VERNON MUNICIPAL FACILITIES REVENUE BOND LAW
OHS We t:261409670.2 C-I
CERTIFICATE
STATE OF CALIFORNIA )'
) as
COUNTY OF LOS ANGELES)
I, Manuela Giron, Deputy City Clerk of the City of Vernon,
County of Los Angeles, State of California, hereby certify that
the attached is a full and complete copy of:
ORDINANCE NO. 1004 - AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF VERNON AMENDING THE CODE OF THE CITY OF
VERNON BY ADDING ARTICLE XI ENTITLED "CITY OF VERNON
MUNICIPAL FACILITIES REVENUE BOND LAW" TO CHAPTER 2,
ADMINISTRATION, RELATING TO POWERS AND PROCEDURES TO
ISSUE REVENUE BONDS FOR THB PURPOSE OF FINANCING
MUNICIPAL FACILITIES OF THE CITY, AND INCLUDING
DEFINITIONS, GENERAL PROVISIONS, POWERS, ISSUANCE
PROCEDURES AND CERTAIN SUPPLEMENTAL PROVISIONS
IN WITNESS MIHREOF, I have hereunto set my hand and affixed
the official Seal of the City of Vernon, County of Los Angeles,
State of California, on this 15u' day of December, 2004.
SEAL: /
Manuals Giron f
Deputy City Clerk
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ggalnNes No. 10.04
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF VERNON AMENDING THE CODE OF THE
CITY OF VERNON BY ADDING ARTICLE XI
ENTITLED "CITY OF VERNON MUNICIPAL
FACILITIES REVENUE BOND LAWN TO CHAPTER 2,
ADMINISTRATION, RELATING TO POWERS AND
PROCEDURES TO ISSUE REVENUE BONDS FOR TIE
PURBOSD OF FINANCING MUNICIPAL FACILITIES
OF THE CITY, AND INCLUDING DEFINITIONS,
GENERAL PROVISIONS, POWERS, ISSUANCE
PROCEDURES AND CERTAIN SUPPLBNENTAL
WHEREAS, the City of Vernon (the "City") is a municipal
corporation and charter city duly organized and existing under a
freeholders' charter pursuant to which the. City has the right
and power to make and enforce all laws and regulations in
respect of municipal affairs and certain other matters in
accordance with and as more particularly provided in Sections 3,
5 and 7 of Article Xi of the Constitution of the State of
California and Section 2.1 of Article II of the Charter of the
City (the "Charter"); and
WREREA8, the City Council of the City, acting under and
pursuant to the powers reserved to the City under Sections 31 5
and 7 of Article XI of the constitution of the State of
California and Section 2.1 of Article II of the Chartar, finds
that the public interest and necessity require the adoption of
this brdinance to authorize, and establish the procedures for,
the sale and issuance of revenue bonds by the City for the
purpose of providing financing for the municipal facilities of
the City.
FOLLONS t
THE CITY COUNCIL OF THE CITY OF VERNON DOES ORDAIN AS
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SECTION lz The City Council of the City of Vernon
hereby finds and determines that the rscitale contained
herainabove are true and correct.
38CTION 2: Article XX entitled "City of Vernon
Municipal Facilities Revenue Bond Law" is hereby added to
Chapter 2, Administration, of the Vernon Municipal Code to read
as sat forth in Exhibit A which is attached hereto and made a
part hereof by reference.
SECTION 3: If any section, subsectioa, sentence,
clause, or phrase or word of this ordinance is for any reason
held to be void or unconstitutional, such decision shall not
affect the validity of the remaining portions of this ordinance;
it being the intention of the City Council of the City of Vernon
to adopt and pass this ordinance and each section, subsection,
sentence, clause or phrase thereof irrespective of the fact that
one or nor* of the sections, subsections, clauses, sentences or
phrases thereof may be declared void or unconstitutional.
aRMION a; There being no newspaper printed, published
or circulated in the City of Vernon, the City Clerk is hereby
directed to certify to the passage of this ordinance and shall
post the some, or cause the same to be posted, within fifteen
(15) days after its passage in accordance with Section 36933 of
the Government code, in three (3) of the most public places in
the City of Vernon, to wit: the northwest corner of 38th Street
and Santa re Avenue, the northeast Corner of Leonia Boulevard
and Pacific Boulevard, and on the bulletin board in the lobby of
the City Hall of said City, located at 4305 Santa Fe Avenue, all
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in the City of Vernon, Country of Loa Angeleno State of
California.
sLgKXgH 5: This ordinance shall be in full force and
effect thirty (30) days from and after its passage of the same.
APPROVED AND ADOPTED this 13th day of November, 1991.
S C. OAfi, 1 a or
ATT�:
BRUCE V. K&MMMORSTr city Clark
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STATE OF CALIFORNIA )
) aS
COUNTY OF LOS ANGELES )
1, BRUCE V. KALKENHORST, City Clerk of the City of
Vernon, do hereby oertify that the foregoing Ordinance, being
Ordinance No. 1004, was duly and regularly introduced at a
regular meeting of the City Council of the City of Vernon, held
on Tuesday, November 5, 1991, and thereafter wag finally adopted
at an adjourned regular meeting of said City Council held
on Wednesday, November 13, 1991, and thereafter was duly signed
by the Mayor of the City of Vernon, by the following vote:
(SEAL)
AYES: 5 Councilman: Halburg, Ybarra, Gonzales
McCormick, Davie
Norat 0 councilment
ABSENT: 0 Councilmen:
BRUCE V. NA7Ti�ORST, City CCl.ar-E
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EXKM1T A
CHAPTER 2
ADMINISTRATION
ARTICLE X1
CITY OF VERNON MUNICIPAL FACILITIES REVENUE BOND LAW
Sec.2.70. Title.
This Article may be cited as the City of Vernon Municipal Facilities Revenue Bond Law.
See. 2.71. Purpose.
The Council hereby finds and declares that it is necessary, essential, a public es pu and a
mtmicipai affair' for the City to provide Ong for municipal facilities serving rota and
>fosi roses of the Chy in tha iuteeests of rite public beaith, safety and welfare.
See. 2.72. Definitions.
Unless the context otherwise requires, the following definitions shall govern the
coostrocdoa of this Artier
AcgniAdon and Conswacrion mean. with respect to any Facility or pardon thereof. the
acquisition, cooswction, imprort went, furnishing, equipping, remodeling, repair, reconstruction
or rehabilitation thereof.
Arffrle menus this Article XI of Chapter 2 of rho Vernon City Code. as amended from time
to tune in accordance herewith.
Bonds mesa any bonds, nuts, imullment tale agreements, leetts or other obligations
issued or entered into by rice City pursuant to this Article for the purpose of financing the Casts of
a ]Facility,
which am A r payable exclusively from Revenues mating to such Facility and other fuluds
per
Charts moans tdw charter of the City, as ammuded from time to time.
City means the City of Vernori, Celifotnia, s charter city in the State existing under and
exercising powers psnusat to the Charter and the Constitution of the State.
City Commit mamas the City Council of the City.
Costs meso, with reference to a Facility or say portion thereof, any or all of the following
costs incurred forthe Acquisition and Construction thereof:
(a) Obligations of the City incurred for labor and materials in connection
with the Acquisition and Construction of sudt Facility or portion thereof;
(b) The cost of Acquisition and Construction of an p , whether
real of personal and improved or unimproved, including =M%LS`e ghu and other
A-1
intangible props, and any interests therein, required far the Acquisition and
Constrwdon of such titd* or portion tbeseot;
(c) The cost of demolishing, renwving or relocating eery building or
structure, and the cast of mating relocation assistance pmaneots required by law;
(d) The cost of contract bonds and of insurance of ail kinds that may be
required or necessary daring the course of the Acquisition and Construction of such
Icy of portion thereof
(e) All costs of engineering. legal and consultant services, Wd the
costa of the CYty for aorveya, eseimatess and spedflcationa curd pfolimiam
investigation diereftr, and for supervising construction, as well as for the
performsace of all other duties required by or cousegnent upon the proper
Acquisition and Construction of such F=Iky or portion tbaeof1,
(t) All costs incurred is connection with proceedings by the City
necessary to comply with the California Snvironmenul Quality Act of 1970, as
(g) All amounts t+equired to fund any reserve Rinds for Buuds and any
interest on Bonds becoming due and payable durin��g$ a period not exceeding the
e moo dAcquisitio and Construction of such Faclt&y or portion thereof and for
(h) All costs of issuance of die Honors;
(1) All costs which the City shall be required to pay, under the %= of
any contract or contracts, for the Acquisition and Construction of such Facility or
portion. t WMA
of any existing indebtedness relating to such Pacility
or 1
(lc) Any sums required to reimburse the City for advances made for any of
the above itents. or for my other costs incvnad and foc wort dote which are
property chwamble to such racifrty or portion d=WL
Foetltry means my land, improvements, futlitles, equipment and otherpropany of any
nacre whatsoever, which are used in any municipal operation of the City. SnCh municipal
optratiou may include, but shall not be limited to, any, ow or mote of the following: the
system of the CYty for the genesatim. production, tranemnsslor and distribution of tyty, gss
and other forms of energy for lighting, beating, and power for pub is or pnue uses; (b) tie
system of the City for the acquisition, storage, treatment and distribution o wsma for domestic
use, irrigation, sanitation, industrial use. fire protection, recreation or any other public or private
use; (c) the ssyystem of the City for the collection, treatment and disposal of sewage, waste er storm
water, including drainage; (d) public parking lots, gauges or other automotive or vehiadar padttang
facilities, including any and all public off-street vohicular puking facilities; (a) haspiials red
facilities apptutmant thereto; (f) public golf courses and facilities and improvements is connecdan
therewith; and (g) an)r other facialry for which the C ity is sadmized to provide financing through
the issuance of revenue bonds. Thu precise dosenpdon of any FwfUty for which financing is
provided under this Article shall be set forth in the proceedings of the City Council authorizing
such financing.
A-2
Revenues mean, with respect to a Facility, all gross income and revenue teoeived by the
City from the ownership and operation of such Facility, including all ices and charges trceived by
the City for the services of such Facility and all odrer income and revenue howsoever derived by
the laity from the ownership and operntion of such Facility or arising from sack Facility. and
including all teceiprs derived from the mvesttrxat of such income or reveuuea, including uroneya
deposited in a za redemption orttresve fund tx order food to secure the Bonds ar to vide
for the payment of principal of or intezeat on the Bonds and such other moneys as tl� City
Coaurit may in itt discYtxlon make available therefac. With nspect to any grant asuidpazfwn notes
issued undo this Article, the oerm Revenues shall also include the rovmuea datived from the
of any federal or State grant with inspect to such Facility. The precise deseripda► of the
sues with respect to any Facility for which Iksmiq Is provided herder this Ard& shall be set
forth in the proccediags of the City Council authorizing such financing,
Shure means the state of California.
See. 2.73. General powers.
In Edon with the Acquisition and Catsuuction of aFacility by the City, the City is
authorized and empowered:
(a) To issue Bonds for the pmpose of financing at otherwise assiuting the
psymeat of cite Cast+ of such Facility and for the purpose -of landing or refuadmg any
issue of Bonds.
such FacilityTom the tams and condraons for the financing of any component of
pursuant to this Ardcle.
(c) To employ or contract for asap. legal, coasultaru, underwriting, economic
feasibiliqor other services in connection with the financing of such Facility, or to contract .
for Bondinsurance or other forma of collateral security, as may be necessary in the
judgment of the City Council for the P=csdid fmanclog of such Facility and the issuance
and sale of Bonds therefor. ,
(d) In addition to all other powers specifi 1p granted In this Article, to do aB
things necessary or convenient, in the judgrmatt of the City Council, to carry out the
purposes of this Article.
Set:. 2.74. Authorization of bonds.
The City may issue its Bonds for the p use of financing or otherwise as ' Uta
i a Benda shag batiun of au a any poatou of a Faa]ity as aufhttrized by this ArdcTGveay
pt cial obligadoa of the City, payable solely from all or any part of the
Reve ntes with respect to such Facility. It shall trot W necessary that the issunce of any Bonds be
subje t to audtorizatlon by the votes Of the City.
Sec. WS. Issuance of bonds.
Bonds may be Weed as serial Bonds or as to m Bonds. as current interest Bonds or capital
aapppreciation Aonds, or in such other or dditioiw faros as the City Council may deem advisable.
the Bonds shall be authorized by resolution of the City Council and shell bear such date or dates,
mature at such time or times, bear intom st such fixed or variable rate or rates, be payable at such
dme or times, be in such denominations, be in such form, carry such regisaation prdvile es, be
axe uted in such roamer, be payable in lawful money of ttm United States of America at such place
or places, and be subiect to such tcmrs of redemption as the City Council may provide. The Bonds
A•3
may be sold at either a public or private sale and for such prices ea the City Council shall
determine.
See. 2.76. Terms of bonds.
of the City authorizing Bonds for a Facility may contain provisions
respeczg aany�owing tuna and candidoa% which shall be a part of the contract with die
owners of the Bonds:
(a) The pledge of all or any part of the robued Revenues. subject to such
agreements with Bond owners as may then exist.
(b) The creadon of auy mortgage, lien or other security iatetest on any part of a
Facility, or on any other fends, rights or assets of the City of any nature whatsoever
misting to such Facility.
(c) The inteaast and principal lobe received and other charges to be charged and
the amounts to be ralsed each year y, aal the use and dispositioa of such Revenues.
(d) The t Was aside of reserves ur sinking funds and the regulation and
disposition tJtMd.
Sale of any issue of
Bonds, then e) Umitations on the purposes �plwhich the proceeds Of a n or thereafter issued, may be aplr�J, and pledging such proceeds to secure the
payment of the Bonds or any iesus of Bonds.
{ Limitations as the issuance of additional Bonds, the berms upon which
addida Bonds may be issued end seatred, and the refunding of outstanding Bonds,
W The peaoedare, if any, by which the worms of any contract with Bond owners
may be amendod or abrogated; the amount of Bonds the owners of which mustconsent
Ow ero, and the manner in which such consent may be given.
(h) Specification of the ac7s a omisshooa to act which W a1i constitute a default in
the duties of the aty to the owasra of the Bon* and providing the rights and remedies of
such owners in the event of dsfwkt
deemed(I) Sue b t ter termCity Council.dcondifions
Pertaining
to the issuance of the Bonds as am
See. 2.17. Yssuann und:r aodandure or trust agreement.
It the discretion of the City Council, any Bonds issued wader the provisions of ttls Article
may be secured by a oust agreement or iedemate by sod bahvoes the City and a corporate Irostee
or trustees, which ny be any trust company or bank staving the powers of a trust company within
or without the State Such trust agreement or the indenture may pledge or assign the Revenues to
be received or pttueeds of any contract or contracts pleded, and may convey or mortgage any
property.
Such trust agreement or iodemure may cat such provisions for protecting and
enforcing rights and remedies of the Bond owns as may be reasonable and proper and not in
violation of law, including such provisions as is permitted to be Included in any resolution or
resolutions of the City Councl authorizing due istu suce of Bonds hereunder. Any bank or trust
company doing business under the laws of the State which may act as depository of thel pracot ds
of Bonds or of Revenues or other moneys may braish such indemnity bonds or p edgy such
secuddes as may be required by the City. Any such trust agreement or indenture may set frth the
A-4
rights and remedies of the Bond owners and of the trustee or trustees, and may restrict the
Individual right of action by Bond owners, in addition to the foregoing, any such trust agreement
or indenture may contain such other provisions as the City Council may deem reasonable and
proper for the aecutity of the Bond owners.
Sea 2.78. Personal iiablUty.
Neither the members of the City Council nor ally person vmudng the Bonds shall be liable
ppeEatSctud[y on the Boada or be subject to any personal liability at accountability by reason of the
Issuance thereof.
See. 2.79. Refunding bonds.
The City Council may pro+ide for the issuance of Bomb any portion of which is to be used
for the purpose of refisnding outstanding Bonds6 including the payment of due principal thereof and
interest and redemption Premiums, if any, @resort. The pmoeeds of Bonds i"Med to refund any
outstanding Bonds may, m On discretion of the City Grsunoil, be 11"ppH]ied to the retirement of such
outstanding Bonds at maturity. or the redemption (at any redemption date) or purcbete of such
outstanding Bonds prior to maturity, spun such teams and subject to suds conditions as the City
Council shall dean advisable.
See. L80. Repayment of bonds.
Revenues, or any portion thereof, as designated in the resolution, oust agreement or
indentate authorizing the issuance of the Bonds, shall be the tole source of finds pl �cd by the
eu City for repayment of Bonds issued hereunder. Bonds issued beaader thell not beeddeerned to
conatitute adebt or liabluty of the City or a pled of the faith and credit of the City but shall be
palrable solely from Revenues. All Goads shall contain on the face thereof a statement to the
?011owing effect
Nelther the jtrilh and credit nor the terxing power of tine Cory of Vernon is
pledged to the payment of the prlrxVal ofor lnterea on thtsBond
The•issuancs of Bonds shell not directly, indirectly or contingently obligate the City
Council to levy or pledge any foam of tomdot or to make any app opriatdoo for their payment.
See. Z81. Trust funds.
All moneys received pursuant to the provisoes of this Article, whether proceeds from the
sale of Bonds or Revenues or other moneys or assets authorized by this Article to be pledged to
secure payment of Bonds, thrill, to the extent set forth in the resolution or trust agreement
authorizing the issuance of the Bonds, be deemed to ba trust funds to be held and tpplied solely for
the purposes of this Article. Any bast or trust company in Well such moneys are deposited shall
ea as uustce of such moneys and shall hold and apply the same for tl►c puaptuea specified in this
Article, subjec tm the terms of the resolution, agreement or indentum audicsizing the Bonds.
Sea 232. Purchase of bonds by city,
The City shall have the power out of any foods available then0or to purchase its Bonds.
Tie City may hold, pledge, cancel or resell such Bonds, subject to and in accordance with its
agreement with Bond owners.
Sec. 2.83. Bond anticipation notes.
A-5
In anticipation of the sale of Bonds authorized by this Article, the City is hereby authorized
to issue bond anticipation notes, and to ronow the same from t;¢te to time. in such saries and
amounts as are detorminod by the City Council to be necessary Orap to for the Costs of :
Fa Ulty approved by the Chy Council, Such notes shall be payab�m Raveaues or other
moneys or assets authorized by this Article to be pledged to secure payment of Bonds, and which
are not otherwise pledged, or from the proceeds or sale of the particular Bawds in snttdpatlon of
which tiny are issued. Socb notes shall be issued in the same manner as other Bonds which am
authorized to be issued hereumdan
Sec. 2.84. Grant anticipation noses.
fn anticipation of the receipt of funds derived tram any fadent or Stele grants with reapers
to it Fa4iry or any portion themo€, the City is herd p authorised to Iwo grant an notes,
and to renew the same from time nd to time, in such series asmoutns as are determinedeby tithe (.Sty
Council to be necessary orappropriate for the Costs ofaFatuity approved by the City and
reimbursable from such grants. Such notes shall be pa ble sum the revenues from the
proceeds of such gets or other moneys or assets authorized by this Article to be pledged to secure
payment of Bonds. and which are not otherwise pledged. or from the proceeds or sale of the
particular Bonds in anticipation of which they arc issued. Such notes shall be issned in the same
manner as other Bonds which area authorized to be issued hereunder.
See. 2.96. Liberal construction.
17tis Article, being necessary for the health, welfare and safety of the City, its residents and
businesses, dull he liberally construed to triter its proposes. 1+urdtt>traeaa, the CSt�y Council
hereby declares that this Article is an exercise of the power exaled to the City by the Cti y Chartor
and the Constitution of the State and is an exercise by the (My of its powers as to amnicipal affairs
and its police powers, and this Article shall be liberally construed to uphold its va Udity under the
laws of the State.
Sec. IA. Provisions of this article are complete, additional and
alternative.
Ibis Article shall be deemed to provide a complete, adt
doing the things Authorized hereby, and shall be regarded as t
powers conferred by other laws. The issuance of Bonds tinder
not comply with the requirements of any other law appllcab
Facility. The purposes authorized hereby may be effectuate
issued for any such purposes under this Article notwithstanding
such purposes or for the issuance of bonds for like puq
neq h1mrits, Mutictims, limitations or other plovisicros cWtu
Sec. 2.37. judicial validation promillugs.
lition l mutt alternative method for
uppkmental and additional to the
the proMons of this Article need
le to the issuance of bonds for a
t and Bonds arm authorized to be
that any other law may provide for
oses ad without regard to the
led in sny otherlow.
Art action may be brought pursuant to (7tapter 9 (commencing with Section 860 ofTitle itle 10
of PA n 2 of the Code of Civil procedure) to de(eadhe the validity of Bonds and the legality and
validity of all proceedings previously taken and proposed to be taken for the authorization,
issuamn. sale, and delivery of the Bonds and for the payment, of the principal thereof and interest
therew.
See. 2.88. Amendment of article.
This Article shall not be amended so as to have a material, adverse affetx upon the rights of
the owners of any outstanding Bonds theretofore issued hereunder, without the written consent of
A-6
such Bond Ownem provided, lwwevar, that this Ankle may In ameodel at any dw (a) to make
such odmons for the purpose of owing any ambiguity, or of aping, o0a'rdc ft or inpplwwadng
any deSCc ve peovision besein contained. as the City away dam rucessary or dea'a:able, or (a) if
such amendment does not materially im or adversely affect the inwasts of any such Bond
owner in the opinion of the City CounciLo (c) if such amendments apply soldy to Bonds not
theretofore issued.
Sec. 2.89. Article controlling.
To the extent that the provisions of this Ardcle are insonsistew with the provisions of any
general statute or special act or parts thereof, fhe provisions of this Article stKU be deemed
controlling.
A.7
Exhibit D
CITY OF VERNON ADMINISTRATIVE CODE SECTIONS
OHS West261409670.2 D-I
j 2.49 ADMMIMRAT1ON § 2.50.2
Article VIL Electrical Distribution. Syatem.
Editor's not& --Trio rate schedules for the electrical distribution
system of the city are not set out in this volume. Ordinances
establishing such rate schedules are on file in the office of the dty
dent.
Article VIIL Separate Ftmds,
See. 2A9. Capital Pre ject—Bandini Overpass.
The city council of the City of Vernon hereby ratifies the
establishment and creation of a new fund entitled "Capital
Project—Bendini Overpass." (Ord. No. 960, ¢ 1.)
Sea 2.b0. Capital Pro jest —Soto Street Bridge Widening.
The city council of the City of Vernon hereby ratifies the
establisbment and creation of a new fund entitled "Capital
Project --Soto Street Bridge Widening." (Ord. No. 950, § 2.)
Sea 2.60.1. Parcel Tax Fund.
The cky council of the City of Vernon hereby ratifies the
establishment and creation of a new Amd entitled "Parcel Tax
Fund' that will include all pared tax receipts and expenditam.
(Ord. No.1096, Exh. A.)
Sea 2.tio.2. Fiber Optics FuiKL
The city council of the City of Vernon hereby ratifies the
establishment and oreatioa of a new Mind entitled "Fiber Optics
Fund" that will commence operating in fiscal year 2000004.
(Ord. No.1095, Exh. A.)
26
8upp. 161, 1-04
80.1 V MN ELsorata" SYMN 5 au
CHAPTER 80.
VERNON ELECTRICAL sunwd`
AvdcbL=ookiedMwffvY ae.
! lO.L Tlda.
! OeA Qaaane aataa.
! sOL BMW wahv tnaa
! s0A Rama ood ed♦tlatmmL
! WA MaLUeoenn orate sohaddm
! ass. hearted.
Ax"IL RWNfwZhw9dc 7e T6m
! A7 etdatapasaa of eater.
! aoa Adoption of rrba
Bea ML Tole.
The electrical energy gemratim, trawisefssfon, and
dfettfttim getem ofthe CW of Vemon shell be referred to as
the Vernon Matt is Sys6e®. (Ord. No. 1000.18.)
Seo.M& Qeneralramm
Any ehangs in the rates to be charged and coRecW for
eaargy sapplfed by the Vernm MwWc System fi»m and after
July29,189R shall be set by rm d = of the city oowmg. (Ord.
NO.1080, 10
s0.a pnekadr amww as chaptw 8A. Flaariw
Rama Dbb2POUM
Exhibit E
CITY OF VERNON INVESTMENT POLICY
OHS WesC261409670.2 E-I
CERTIFICATE
STATE OF CALIFORNIA )
) as
COUNTY OF LOS ANGELES)
I, Manuela Giron, Deputy City Clerk of the City of Vernon,
County of Los Angeles, State of California, hereby certify that
the attached is a full and complete copy of:
RESOLUTION 8384 - A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF VERNON ADOPTING AN ANNUAL STATEMENT OF
INVESTMENT POLICY FOR 2004 AND DELEGATING INVESTMENT
AUTHORITY TO THE CITY TREASURER
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the official Seal of the City of Vernon, County of Los Angeles,
State of California, on this 15t' day of December, 2004.
SEAL:
nuela Giron
Deputy City Clerk
t RESOLUTION NO. 8384
2
3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON ADOPTING AN ANNUAL STATEMENT Of INVESTMENT
4 POLICY FOR 2004 AND DELEGATING INVESTMENT AUTHORITY
TO THE CITY TREASURER
WHEREAS, pursuant to California Government Code Section
53646(a)(2), the City Treasurer shall annually render to the City
g Council an Annual Statement of Investment Policy which the City
g Council shall consider at a public meeting; and
10 WHEREAS, pursuant to Resolution No. 8162, the City Council
11 approved the 2003 Annual Statement of Investment Policy which
12 delegated investment authority to the City Treasurer, and granted the
13 City Treasurer express authority, as limited by Section 5.1 of the
14 Policy, to make investments of City funds in securities with a term,
15 or term remaining to maturity at the time of investment, in excess of
16 five years, as part of an investment program; and
17 WHEREAS, the City Council desires to .approve a new 2004
lg Annual Statement of Investment Policy as required by California law so
19 that the Investment Policy conforms with recent changes in the
40 California Government Code concerning the types of investments in
21 which the City may invest its funds for deposit, the form of the
22 statements which report the investment of City funds, and the filing
23 of the Investment Policy and investment reports with the appropriate
44 state agency.
25 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
26 CITY OF VERN014 AS FOLLOWS:
27 SECTION 1: The City Council of the City of Vernon hereby
28 finds and determines that the recitals contained hereinabove are true
I
and correct.
2 SECTION 2: The City Council of the City of Vernon hereby
3 adopts the Annual Statement of Investment Policy (the "Investment
4 Policy"), for the calendar year 2004, a copy of which is attached
5 hereto as Exhibit "A" and made a part hereof.
6 SECTION 3: The City Council of the City of Vernon hereby
7 delegates to the City Treasurer, his deputy or to his authorized
8 designee, the authority to implement the Investment Policy and select
9 the instruments for the City's investment portfolio in accordance with
10 the Investment Policy.
11 SECTION 4: The City Council of the City of Vernon hereby
12 grants, as part of the City's investment program, to the City
13 Treasurer, his deputy and to his authorized designee, express
14 authority, as limited by Section 5.1 of the Policy, to invest in
15 securities with a term, or term remaining to maturity, at the time of
16 investment, in excess of five years, and this authority shall become
17 effective no less than three months from the effective date of this
18 Resolution.
19 SECTION 5: The City Council of the City of Vernon hereby
20 directs the City Clerk, his deputy or his authorized designee, to
21 transmit a copy of this Resolution, the Investment Policy, and a copy
22 of the Report of Cash and Investments for the Quarters ended June 30,
23 2004 and December 31, 2004, when such become due and are prepared by
24 the Treasurer's Office, pursuant to the California Government Code, to
2S the following state agency:
26
27
28
- 2 -
California Debt and Investment Advisory Commission
1 Attention: Local Agency Investment Reports
at
2
915 Capitol Mall, Room 400
3 Sacramento, CA 95814
or
4 P.O. Box 942809
Sacramento, CA 94209-0001
5 SECTION 6: If any section or part of this Resolution is found
6 to be unenforceable by operation of law, the remaining sections or
7 parts of this Resolution shall be in full force and effect.
9 SECTION 7: This Resolution shall become effective
9 immediately.
10 SECTION 8: The City Clerk of the City of Ve;non shell certify
it to the passage of this Resolution, and thereupon and thereafter the
12 same shall be in full force and effect.
13 APPROVED AND ADOPTED this 70° day of April, 2004.
14
is
16 ATTEST:
.K/ BRUCE V. MALMHORgI'
17 B UCE V . ty er
is
19
21
22
23
24
25
27
2s
- 3 -
S LEDNIS C. MAIBVRG
LORIS U. , Mayor
I STATE OF CALIFORNIA )
as
2 COUNTY OF LOS ANGELES )
3
4 1, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do
5 hereby certify that the,foregoing Resolution, being Resolution No.
6 8384, was duly adopted by the City Council of the City of Vernon at a
7 regular meeting of the City Council duly held on Wednesday, April 7,
8 2004, and thereafter was duly signed by the Mayor of the City of
0 Vernon.
10 S/BRU= MAME.NHORSr
NMI V. HALITHRORST, My Clark
11
12 (SEAL)
13
14
1
21
22
23
24
26
27
28
- 4 -
EXE11BIT A
CITY OF VERNON
ANNUAL
STATEMENT OF
INVESTMENT POLICY
Brice V. Malbnhorst
Treasurer
MARCH 2O04
Approved by the City Cnncil
Apti19, 2M
lie
0.0 PREFACE
This Annual Statement of rnvestmmt Policy (tie "Invaxlmmt Policy") sets forth the course of
action necessary to gmide the decision -making of the City Treasurer and all petsoas authorized
to make investment decisions on behalf of the City is the administration of the City's
Investment portfolio.
Thin investment Polley has been researched, prepared ad written by an outside consultant
under the direction of the City Treasurer and the Treasurer's Deparmxta.
While some portions of this Investment Policy are a restatemrnt of the laws of the State of
California, it is viewed that these restatements are integral to the purpose and Dow of this
Investment Policy. In most instances the use of thtore tease throughout this Investment Policy
is intended to mean a continued practice or a practice which shall be continued with the aid of
auromadom r
The following satemerss are intended to umaure the adrievanent of the purpose. the goals and
objectives in an orderiy and accurate matmer. However, tiers is no guarantee that problems,
errors or losses will not arise in the cause of administering the investment of We or surplus
toads.
Among the obstacles and deterrents in achieving the goals and objectives of the portfolio are.
unforeseen national or international events or crises, devntion of actual cash flow $om
forecasted rash Sow, unforeseen demands on cash Dow, policies made with regard to
investment in local depositories, e,iors in data or advice used to,alce decisions, as well as
say other inconceivable aberration or event that may have an effect on local, national or
International Snancid markets, economics or politics which in tan has a decided effect upon
the portfolio.
This Iave iment Policy is designed to achieve, keeping in mind the obstacles and deterrents in
pursuing portfolio goals and objective, a reasonable rare of rarer over an economic cycle,
consistent with limited risk and prod t investment practices.
1.0 SCOPE
This investment Policy governs tie deposit, safeteeping and investment of the I& or surplus
funds of the Treasury, as well as all related transactions and investment activities. The
Investment of bond proceeds will be governed by the provisions of the relevant bond
documents.
2.0 PURPOSE
The purpose of the Investment Policy Is to facilitate accomplishment of the goals and
objectives of the Treasurer with regard to the hrvestmeat of Idle or surplus fiords, to provide a
ftrmuework within which to carry out do business of administering and investing the We or
-2-
surplus funds of the Treasury, and to improve communications at all levels between those
involved and those interested in the prooess of investing and administering the idle or surplus
fogs of the Treasury.
3.0 OBJECTIVE
3.1 Lees rAx tance
All investments shall be made in accordance with this investment Policy, California
Government Code Section 53600 at seq., and any forthcoming amendments or additions to the
California Government Code Ia relation to the investment of local agency idle or surplus
funds.
3.2 j
The administration of idle or surplus finds of the City Treasurer, as a fiduciary trustee, shall
be performed in accordance with the prudent investor standard pursued to California
Government Code Section 53600.3.
The City Treasurer, all governing bodies of the City, ine Cling the Finance Committee, and
all persons authorized to make investment dedslons on behalf of the (Sty arc -trustees" and
therefom fiduciaries subject to the pamdeet imtestot standard. When investing, reinvesting,
purchasing, acquiring, unchanging, selling, or »ranging public fiords. a Minn of the City
&ball act with care, null, prudence, and diligence under the circamstum then prevailing,
including, but not limited to, the general economic conditions and the andeipated needs of the
City. that a prudent person acting in a hike capacity and fiuntitarity with those matters would
use In the conduct of fiords of a like character and with fib aims, to safeguard fire principal
and maintain the IigaIdity needs of the City. within the limitations of this Invegmumt policy
and Section 53600.3 of the California Government Code and considering individual
imeatme to ae pmrt to an overall strategy, die City Trainer is authorized to acquire
finealumrots as authorised by law.
As prudence shall be applied in the context of portblio managenuct, Investment officers and
their advisors, acting in accordance with written procedures and ondaing due diligence. shall
be relieved of personal responsibility for an hmdivkbud security's credit riat or tontet price
changes. providod that deviations from egwctition are reporW to the Treasures In a timely
fashion and AWWriate action is taken to control adverse devdopmema.
3.3
The Treasurer's primary goals for the lavesnueot of idle or surplus funds (n the City's
Treasury or monies in a sinking find) are. In order of priority pursuant to Cafttornis
Obve nunent Code Section 53600.5:
-3-
3.3.1 ,At& -- Safety of capital shall mean the safeguarding of capital through the
selection of inveshaeots and investing procedures to best protect against loss
arising frorn default, hand, or error.
3.3.2 ; iquig — The City's portfolio shall be invested so as to always have the
ability to convert sufficient securities in the portfolio to cash, with little or no
loss in value, to cover cash flow needs of tba City to meet contingency weds.
3.3.3 Yield — Yield refers to earning a reasonable rate of return and shalt talm into
consideration current Martel conditions, the present phase of the Market cycle,
both present and flume cash flow weeds, and the other primary goals of Safety
and Liquidity.
3A
The investment portfolio will be managed in accordance with the parameters specified within.
Oils Investmeat Policy. The methdds of Meastuiwg Investment performance and perfoemsaoe
barks shall be mtkahWW in the imernal policies of the City Treasurer's Department.
IS MWntmasimotPublIcUnd
As the Tmasaar has bean a stusted with the sahbaping of public monies received from
public sources, the Treasurer, in managing the investment portfolio, shall exercise a high
degree of professionalism to ensure and sustain public confidence, reanembering that both the
lwvestau at instruments and the Methods of transacting invesnneat business am subject to
public review and scru day.
4.0 DWAGAUON OF AUMORM
The mmanagernew restwasibWey fur the City's imtestMent program is hereby delegated to fie
City lteasua in accordance with California t: marament Code Section 53W7. Pursuant to
California Government Code Sections 53601 and 53d35, the City Treasurer shall be
responsible for the investment.of the City's flhnda (including the purchase, sale, or enehahhge of
aecwdtiea), tie monitoring and reviewing of all investments for consistency under dds
Investment Policy, and the establiahmant ofa system of controls to regulate the activities of
stlwrdivate officials.
The Treasurer shall have the responsibility to execute invesmteot transactions an a day to day
basis. Wbea circexmstnces warrant, the responsibility to execute investment transactions may
be delegated to the Deputy City Treasurer or to the City Treasurer's authorized designee.
However. each and every transaction must be approved by the City Treasurer.
Any pemns authoraed to male inveswent decisions on behalf of the City, shall be subject to
daily oversight and nmonitm* by die City Treasmeer or the Treasurer's Office in order to
insure Nil anti complete compliance with dais Investment Policy and the Government Code of
4-
the State of California, relating to the deposit and investment of fiords and local agency
finances.
NO PW=N MAY ENGAGE IN AN DIVESThIERF TRANSACTION EXCEPT AS
PROVIDED UNDER THE LR M OF THUS POLICY.
5.0 RVVESIAf PROGRAM
5.1 Imv * mmt la
The investment program of the city shall require the City Treasurer, the Deputy City .
Tteasurer and the authorized designees of the City Treasurer, to actively manage the City's
portfolio of investments in order w take advantage of changing economic conditions and to
loom that the liquidity needs of the City are satisfied. As part of the City's investment
program, the City Treasurer has the express authority to make investments in securities that
have a team, or a term remaining to maturity, at rime time of investment, in excess of five
yaw, se long as such investments, taken in the aggregate in relation to the City's entire
investment portfolio, do not adversely impact the [Wdky needs of the City and its floods and
enterprises.
Notwithstanding anything contained in rids investment Policy to the contrary, I is die policy
of the Cky to limit the investment of money in the Light and Power Department Paw.
including operating, reserve and surplus finds, In an amount up to one hundred million dollars
($100,000,000), to iavicetments otherwise permitted for such Rust under this investment
Policy which mature no later than five years from. the time of such investment.
33 Actke Portfolio Mauaee t nt
The City Treasurer has the exptessirutbority to sell, as he deems prudent, any securities in the
City's portfolio of iavesmmads prior to the mamttky date of the particular seamrity. The City
Treasurer has the express authority to unrest In. as he demos prudent, soy wcurity authorized
by this Investment Policy with the objective of selling that same security prior to IN msftr ty
daft. The City Treasurer's autlority to bay and sell securities for investment on behalf of the
City includes the authorization to buy and sell the same secur[ty on the same trading day.
6.0 INSTRUMENTS AUTHORIZED FOR VOICSTM]ENT
The City, having money in a sinking lhnd of, or surplus money In. Its treasury not required
for the immediate needs of the (Sty may invest any portion of the money that it donna wise or
expedient in those investments set forth below. If the City purchases or obtains tarry securities
prescribed in this Section 6.0. in a negotiable, bearer, registered, or nonregistered format. the
City shall require delivery of the sa urines to the City, including those purchased for the City
by financial advisors, consultants, or managers using the City's fhnds, by book entry, physical
delivery, or by third party, custodial agreement. The transfer of securities to the Counterpany
back's customer book carry account may be used for book entry delivery. For purposes of
-5-
this Section 6.0, "Counmrparty" means the other party to the transaction. A Counterparty
bank's trust department or separate safekeeping deparment may be used for the physical
delivery of the security if the security is held in the name of the City.
Investments may be made in any security authorized by d ds Section 6.0, and by Saxton 53601
of the California Goverment Code, that has at the time of investmmt, a term, or a tam
remaining to maturity, in excess of five years, as long as such investment comports with the
policies and objectives of this hrvestmam policy and the provisions of the California
Government Code.
'rive following section titles am for ref ence only. Refer to the cotaplete section teat for the
permitted inveatmaat description:
6.1 Bonds kmW by Clts
Bonds issued by the City, including bonds payable solely out of the revenues from a
revenu Producing property owned. aosttolled, or operated by the Chy or by a department,
board, agency, or authority of the City.
6.2 «dues T haaff Bonds
United States Treasury notes, bonds, bills, or catdHcates of indeb0atttas, or those for which
the faith and credit of the United States are pledged for the payment of principal and imerest.
6.3 Bonds of the State of California
Registered state warrants or treasury notes or bonds of this state, including bonds payable
solely out of the revenues from a revenue -producing property owned, controlled, or operated
by the stale or by a department, board, agency, or modmity of tie state.
6.4
Bonds. noses, warrants, or other evidences of indebtedness of soy toed agency within this
state. including bonds payable solely out of else revenues hm a revemmixoduciog properly
owned, canlmlled. or operated by the local agency. or by a departmen, board, agency, or
authority of the local agency.
6.5 Qbbodom issued by Fedsarad AgM or Ueit4¢�Mgm Government - Smhnsored
Federal agency or United States government-sponsomd euoerpcise obligations, parteipatim,
or other insa meats, issued by, or fitly guatameod as to principal and interest by fedetad
agencies or United States gDvernment-sponsored entaprisea.
C'_
Bankers acceptaneas otherwise kaowa as bills of exchange or time drafts that are drawn on and
accepted by a commercial bank. Purchases of bankers acceptances may not exceed too days
maturity or 40 percent of the City's surplus money that may be Invested pursuant to this
Section 6.6. However, no more than 30 percent of fie City's money may be fa msted In the
bankers acceptances of any one commercial bank pursuant to this Investment Policy.
6.7 Commerelal Pao
Commercial paper of "prime" quality of the iigieat ranking or of the highest letter and
numerical rating as provided for by Moody's lavestors Service, Inc. ("Moody's"), or the
Standard & Poor's Corporation, ("S&P") or Fitch Financial Services, lac. ("itch'). The
corporation that issues the eomnamial paper shall be organized and operating within the
Urdtod States, aball have total assets In excess of five hundred million dollars (5500,000,000)
and shall issue debt. other than commercial paper, if any, that Is rated "A" or bigka by
Moody's, S&P or Ftcb. Eligible eomumercial papa shall have a maximum maarclty of 270
days orleas. The City may invest mo more drop 25% of its money in eligiblc commercial
paper. The City may pumbase no more than 10 percent of the outstanding commercial paper
of any single corporate issue.
6.8
Negodable certtticaes of deposit issued by a natiosialiy or state•chaticrcd bank, savings
association or a federal association (as defined by Section 5102 of the California Financial
Code), a state or federal credit union, or by a etate-fioemsed branch of a foreign bank.
Purebases of negotiable certificates of deposit may not exceed 30 percent of the City's money
which any be invested pucsnant to this Iavestment. Policy. For purposes of tins Secdon 6.9.
negotiable catificates of deposit do not corns within Article 2 of the California Government
Cade (commencing with Section 53630). except that the amount so investod shsti be subject to
the limitations of California Government Code Saxton 53639 concerning mtaxinttmt deposits.
The City Council of the City and the City Treasurer or other ofB W of the City having legal
cum* of the money are prohibited hem investing City !bade, or finds in the custody of the
City, In negotiable eettificates of deposit issued by a state or federal credit union if a member
of the City Council of the City,, or any person with investta t decision making suthority in
the City Administrator's Office, l3u4at.Audit s Office, TressaWs Office or Flmanee
Department of the City, also serves on the board of directors, or any committee appointed by
the board of directors, or the credit committee or tie supervisory committee of the state or
federal eredit union lasting the acgottabie certificates of deposit.
69
6.9.1 Investments in repurchase agreements or reverse repurchase sgreemsenta or
securities lending agreements of any smwWm authorized by this Section 6.9, as
long as tie agreements are Subject to this SWdon 6.9, including, the delivery
requirements specified in this Saxion 6.9.
-7-
6.9.2 • Investments ie reepurchase agreements may be made, on any investment
authorized in Section 6.0, wham the term of the agreement does not exceed out
year. The market value of securities that underlay a repurchase agreement tdtaU
be valued at 102 parent or greater of die funds borrowed against those
securities and the value shall be adjusted no leas than quarterly. Siace de
mar>at value of the underlying securities is subject to deity market 8ttcotettons,
rite Wrosbme is in reparchase agreements shall be itt compliance if the value of
the underlying securities is brought back up to 102 percent no later thm the
nwit business day.
6.93 Reverse repurchase agreements or secarities lending agreements may be utilized
only when all of the following 000didona are met;
6.9.3.1 The security to be sold on reverse wpurebase agreement or
securities lending apoemeat has been owned and My paid for
by the City for a minimum of 30 days prior 0 sale.
6.9.3.2 The total of all reverse re archase agreebMraata and securities
lending agreements on hwestmrtus owned by the City does not
mead 20 percent of the base value of the port[olio.
6.9.3.3 The agteo onot does not exceed a tam of 92 days, m de n the
agreement includes a written codicil guaranteeing a mi man
earning or spread for the onike period between the sale of a
security using a reverse repurchase agreement or securitie
leading agreement and the fuml"menmity dato of tine same
security.
6.9.3.4 Fuhxis obtained or Rinds within the pool of an "dval®t amotmt
to that obtained from selling a security to a cou ntmparty by way
of a teverae repurchase egramunu or semddes Itstding
agreement, shall not be used to purcl ass another sewdty wilh a
matrity longer than 92 days from the initial walement date of
the reverse repurchase agreement of Securities lending
sgaeemmt, unless the reverse repurchase agreement or aecinitin
leaft agreement includes a written codicil gustanteeiag a
minimum taming or spread for the entire pettod between the sale
of a security meting a reverse repurchase agreement or se trifles
landing agreement and fire final maturity elate of fbe same
securky.
6.9.4 Investments in reverse reQnrclase agreements, securities lending agreements or
similar invasmtents in which the City sells securities prior to purchase with a
eimultaneam agreement to repurchase the security, may only be made upon
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prior approval of the City Coancil of de City anti shall only be made with
primary dealers of the Federal Reserve Bank of New York or with a nationally
or state-charbsed hank that has or bas had a sigoifrant banking relationship
with the City.
6.9.4.1 For putposee of this Section 6.9, "aignificam banking
relationship* mesas any of die following aedvides of a bat8a
69.4.1.1 Involvement in the creation. sake, purchase, or retirement
of the City's bonds, warratts, notes, or other evidence of
indebtedness.
6.9.4.1.2 Financing of the City's activities.
6.9.4.1.3 Adana of the City's securities or finds as deposits.
6.9.6 Deffnitlons
619.6.1 Rgmrchase Agr+eemnt
Repurchase Agreement means a purchase of securities by the City
puraoant to an agreement by w" the ctontuparty seller will
rexmehm the securities on or before a specified date ad for a
specified amont and the coumuparty will deliver the undulylag
WMrkk* to the City by book eauy,1h4'alc+l delivery, at by
thhd party cueaodiai aget�ent. Tha ttaasiirr of ttmdeciyittg
securities b the eounta party baak's customer book -eery axaunt
may be used for book -noisy delivery.
6.9.6.2 Soisrides
Sex irides means securities of the earn issuer, description, issue
dare, and maturity.
6.9.6.3 Revex�eRepturhaseAgrement
Reverse Rgmrchase Agreement mama a age of securities by tilt
City pursuant to an agreement by whM the 00 will Mudase
dte annuities on or bed'ore a specified date and indudsa other
comparable apeaments.
6.9.6.4 Snaffles Lending Agreement
Securities Leaading Agreem nt moms an agreement under which
the City agrees to transfer securities to a borrower who, in turn,
agrees to provide cQ uard to tie City. Daring the term of die
agreement, both the securities and the collateral an hdd by a
tbird party. At the conclusion of the agreement, the securides
are ttmsfarred back to the City In rerun for the collateral.
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619.6.5 Base valve
Base Value of the City's pool portfolio shell be. that dollar
amount obtained by totaling all cash balances placed in the pool
by all pad per, wing any amounts obtained through
selling securities by way of reverse repurchase agreements or
other similar bortowiog methods.
6.9.6.6 Spmwd
Spread means the dif fdeoce between the cost of finds obtained
using the reverse repurchase agreemcut and the earrings obtained
on the rdmestmcem of the Anuds.
6.10 Medlin -Tim Notes
Medium -term uses, defined as all corporate and depository institution debt securities with a
maximum remsiaiog maturity of five years or loss, issued by corporations organized and
operating within dun United States or by dgmhory institutions licensed by the United States or
any date and operating within the United Stan. Notes eligible for investment under this
Section 6.10 scull be rated 'A' or better by a nationally recognized rating service. Purchases
ofmcdium term notes shall not include other instruments authorized by Section 6.0 ad may
we acted 30 percent of the City's stuplas money which may be invested pursuant to thin
section.
6.11.1 Shares of beneficial interest issued by divexslfled management companies tbat
invest in the securities and obligations ae authorized by Sections 6.1 to
6.10, inclosive, or Secdow 6.13 or 6. H aid that comply with the
investment restrictions of Article 1(eommencing with Sexriom 53600 of
the Califormia Government Code) and Article 2 (commencing with
Section 53630 of the Colfforaia Government Code). However,
notwithstanding these testtiGons, a countetpaq to a reverse repurchase
agreement Is not required to be a primary dealer of the Federal Reserve
Bank of New York If the company's board of directors finds that the
cormterparty presents a minimal risk of dolimit, and the value of the
securities undedying a repurchase agreement may be 100 percent of the
safes price if the securities ate t ulmd to market daily.
6.11.2 Stares of beneficial interest issued by diversified management companies that
are money market fha It reVacred with the Securities and Exchange
Commission under the Investment Company Act of 1940 (15 U.S.C.
Sao.110a-1, et seq.).
-10-
6.11.31f investment is in shame issued pursuant to paragraph (1), the company shall
have met either of the following criteria:
6.11.3.1 Attained the highest ranldog or the highest letter and
numerical rating provided by not less than two nationally
recognized statistical rating organizations.
6.11.3.2 Retained an investment adviser tegistered or exempt from
registration with the &=him and Exchange Commission
with not less than five Yeats' mrperiem investing in the
securities and obligations authorized by Sections 6.1 to
6.10, inclusive, or Sections 6.13 or 6.14 and with assets
under roams In excess of five hundred million
dollars ($500,000,000).
6.11.4 if investment Is in shares !wood pursuant to Section 6.11.2. the company shall
have met ei(iner of tie following ezit cia:
6.11.4.1 Attained the highest ranking or the highest letter and
wnmedcal rating provided by not less than two nationally
recogtnized Witistical rating organizations.
6.11.4.2 Retained an fmvestmet adviser registered or exempt from
registration with the Securities and Exchange Commission
with not less than five yeti=' experieaoe managing money
marloet mutual flmda with assets wider management in
excess of five imodred million dollars ($500,000,00p).
6.11.5 11he purchase price of share of beneficial interest parehased pursuant to this
Section 6.11 chid not include any emission that die companies may
chap and shall not exceed 20 percent of the City's surplus money flat
may be invested pursuant to this Saxon 6.11. However. no more than
10 percem of the City's surplus funds, may be invested in share of
beneficial interest of any one muwal fend pursuant to Seaion 6.11.1.
Jt7 A6 _%. 7, 77 K , I ;t: ',1 t v ,v1 r V ,7, -. i a1S
Moueya held by a uuaee or Saul agent and pledged to that payment or security of bonds or
other indebtedness, or obligations under a ieaae, .imallmoM sale, or other agreement of a local
agency, or certificates of participation In those bonds, Indebtedness, or lease installment sale.
or omen agteements, may be invested in accordance with the statutory provisions governing
the issuance of those lands, Indebtedness, or lease insallaxm salt, or other agreement, or to
the extant not inconsistent thatewith or if there are no specific statutory provisions, in
accordance with the or+dinamce, resolution, indenture, or agmement of the local agency
Providing for the I991111aCE.
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6.13 Bonds Secured by Government Code Section S365
Notes, bonds, or other obligations that ate at all tithes secured by a valid that priority security
interest in securities of the types listed by Section 53651 of the Californis Government Code as
eligible securities for the purpose of secuft local agency deposits laving a market value at
least equal to that required by Section 53652 of the California Govaument Code for the
purpose of securing local agency deposits. The modem serving as collateral shall be placed
by delivery or book entry into the costody of a trust company or the trust department of a bank
which is root affiliated with the issuer of the secured obligation, and the security interest shag
be perfected in accordance with the re ulrernenct of the Unihmm Commercial Code or federal
regulations applicable to the types of sec rWes in which the security interest is granted.
C14 Morton Pass-7lunudr Settaity
Any Idottgage bass -through security, collateralized mortgage obligation, mortgage -backed or
odor pry -through bond„ equipment tease -backed anti&ate, consumer recoivable pass4hrough
etadficate, or consumer reedvable-backed bond of a mmdmum of five yam maturity.
Securities eligible for investrmnt under this subsection shall be issued by an haw having an
"A" or higher rating for the issuer's debt as provided by a nationally recognized rating service
and rated in a rating category of "AA" or its equivalent or better by a nationally recognized
rating service. Purchase of securities authorized by duns Section 6.14 may not exceed 20
percent of the City's surplus mom that may be invested pursuant to Section 6.0.
7.0 DESIGNATED ENT1 W FROM WHOM THE C17 T MAY PURCHASE
AUTHORIZED D(VES1hUMM
The purchase by the City of any investment authorized pursuant to California Government
Code Sections 53601 or 53601.1, not purchased directly from the issuer, shall be pmnband
eider from an institution licensed by the state as a broker -dealer. as defined in Section 25M
of the Ca MwWa Corporations Code, or from a member of a federally regulated securities
emcbamge, from a national or state -chattered battle, from a savings association or federal
association (as defined by Season 5102 of the California Mancini Code) or from a brokerage
firm designated as a primary government dealer by the Federal Reserve Bank.
S.0 FROlIIMM OWNSTMUM
8.1 The City shall not invest any fmhda pnraant to d1b Section 8.0 or putxuaat to
California Government Code, Article 2, Deposit of Funds (comnmearang wide Section 53630)
in love= floats, top notes, or mortgage-dedved, interest -only strips. The laity shall not
invest any tlmds pursuant to this Section 8.0 or pursuant to the California Government Code,
Article 2 (commencing with Section 53630) in any security that could result in zero interest
accrual if held to maturity. However, the City may hold prohibited instruments rani( &air
maturity dates. The limitations in this Section 8.0 shall not apply to City investmeum 3a shares
of beneficial interest issued by diversified management companies registered under the
-M
Investment Company Act of 1940 (Z U.S.C. Sec. 80s-1 at sett.) that are authorized for
investment pursuant to the California Government Code, subdivision (k) of Section 53601.
8.2 The City shall not invest any Amds pursuant to this Section 8.0 or pursuant to
California Government Code, Article 2, Deposit of Funds (commenting with Section 53630)
In any security that could result in zero interest aecad if held to maturity. Howe=, the City
may hold prohibited instruments neat their maturity dates. The limitation in this Section 8.0
shall not only to City Investments in shares of beaeGcial interest issued by diversified
management companies registered under the Investment Company Act of 1940 (15 U.S.C.
Sec. 80a-1, and [following) that are authorized for investment pursuant to Section 6.11.
9.1 Annual Shtpmeat of investment Policv
The City Treasurer shall annually reader to the City Council and the Finance Committee of the
City a statement of investment policy, which the City shall consider at a public meeting. Any
changes in the investment policy shalt also W considered by the City Council of the City at a
public meeting.
9.2
The City Treasurer shall render a quarterly report to the Finance Committee of the City and
City Council. The quarterly report shall be so submitted within 30 days following the cod of
the quitter covered by the report. This to" shall include die type of investment, issuer,
date of maturity par and dolbur amount invested on all securities, inveemown and moneys held
by the City and shall additionally include a description of any of the City's funds, investments,
or pcogtaws, that sae under the management of contracted parties, including leading programs.
With respect to all securities held by the City and under management of any cooft patsy tat
Is not also a local agency or the State of California Local Agency inxatnmt Fond, the report
aball also include a c reeut tnarbat value ae of the date of the report, and shall inchide the
source of this same valuation.
For Wall agency investments that have been placed in The Local Agency Investment Fund, In
National Credit Union Share hrumace Puud lusured accounts in a credit union, in accounts
Insured or guaranteed pursuant to Section 14858 of the California Financial Code, or W
Federal Deposit Insurance Corporation -insured umuits in a bank or savings and loan
associalloN In a California County Investment pool, or airy combination of these, the city
Treasurer and the Treasurer's Department may supply to the City Council and Finance
Committee the mast recent sauemew received by the City fhom these institutions.
The quarterly report shall state compliance of the portfolio to the statement of investment
policy, or manner in which the portfolio Is not in compliance. The quarody report shalt
include a statement demoting the ability of the City m mat its budgeted expenditure
-13-
requtrasems for the next six months, or provide an explanation as to why sufficient money
shall, or may, not be available. In the quarterly report, a subsidiary ledger of investments
may be used in accordance with secepad accounting praedces.
The City shall submit copies of its second and fourth quarter reports to the California Debt and
Investment Advisory Commission within 60 days ails the close of dw second and fomtlt
quarters of each calendar year.
The City shall not be required to submit a quarterly report to the Commission ill during the
entire rgwrting period. dw City has maintained 100% of its investment pordblio in (1) the
ttes W of Los Angeles Counly, (2) the loot Agency bweaomal Fond of the State of
Caiiforuia, (3) National Credit Union Share Isammoe Fundinsuredaccounts in a credit anion,
in mounts insured or guaranteed pursuant to Section 16429.1 of the Financial Code, or in
Federal Deposit Insuranos Corporation-inmmed aecosas in a bank or savings and loan
association. or (3) to any combination of these.
N the City is not required to submit a report to the C9ommhsion, Ilia► tie City sball file with
de Commission a attificadon withbt 60 days of tie end of the second and fourdt quarters of
the calendar year stating the distribution and another of its imrstmeot portfolio and that it is
dmefore not subject to the repotting tequdrement.
9.3
The autbority of the City Cotmcil to invest or to reinvest 6306 of the City, or to sell or
exchange securities so purchased bas bean delegated for a one-year pn W by tbs City Council
to die City Treasurer, who dtall dwealier assume full responsibility for those transactions and
am maim a timely monddy report of tiwae transactions to the City Council.
10.0 CONFLICT OF II 7111ME T
No City employee shall, outside of regular working hours, engage in any probasioss, trade,
business or occupation which is incompatible or involves a conflict of in0erust witit Walker
duties as a City Officem or employee, or which may reflect unfavorably on the Cky or on
fellow employes.
11.0 PUBLIC INQUIRY
The City Tressurees portfolio and related ttansections at a scatter of public record. Any
member of the public may rwdve a copy of the portfolio or Investment Policy by requesting a
copy at the Treasurer's Office. The Treastuar may charge a foe for the copy, as allowed by
law.
12.0 ANALYSIS OF PROSPECTIVE DrAM MPNTS
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Due ro the complexity of the various Investment instruments available and uncertainty of
market conditions the Treasurer may seek professional advice in making Investment decisions
in order to optimize investment selections.
[My'"4NIN IaDi I7 Cr
As required by California Govetnment Code Section $3601 and 5action 53635 all investment
kstrumeuts in a negotiable, bearer, registered, of nonregistered format. shalt be delivered to
the City's custodial bank by using book entry or physical delivery. Ile "delivery vs.
payment' purchase procedure >rhell be used.
Notwithstanding me above ttiudrement for Ere delivery and safekeeping of investment
instruments to the C ity's custodial bank, the City shall maintain an invesuamt daattmrnts
custodial account wild any one or mama inatiludons licensed by the state as a broker -dealer, as
defined in Section 7.0 hereof and use the wire transfer of finds purchase procedure Bar
securities bought from that firm or firms.
14.0 BROHEWDRALSR AND DSPOSrrORY ]NST1TMON RELATIONtilIM
14.1
The City Treasurer shalt approve and maintain a list of broker/dealers and depository
insdardous authorized to provide investment and other service; to -the City. All invests
must be made with institutions that have been approved by due City Treasure prior to
im'esliag.
14.2 Broker/add Cnmmtabdons ad Fees QXMbble to the City
All broluuldeslers who transact with the City and buy and sell securities on the CWn behalf
shall ear a commission or charge a &e not to exceed an amount deemed prudent ad
reasonable by the National Association of Socuitias Dealers (the 'NASD) and what is
c ustotuary in the industry for due types of secuuides being purchased by the City.
All depository imstitations that do business wigt the City shall be in compliance with the
requirements of Article 2, commencing with Soodon 53630, of due Government Code of due
Stare of Callfornia, concerning the deposit of funds, including the overall txeditwardtdness and
credit ratings relukements of the sections of that Article.
-15-
$37,640,000
CITY OF VERNON
$35,100,000
CITY OF VERNON
ELECTRIC SYSTEM REVENUE BONDS ELECTRIC SYSTEM REVENUE BONDS
2012 SERIES A 2012 TAXABLE SERIES B
SIGNATURE AND INCUMBENCY CERTIFICATE OF THE CITY
I, Mark C. Whitworth, City Administrator of the City of Vernon (the "City"), HEREBY
CERTIFY as follows:
follows:
that the members of the City Council of the City were on November 15, 2011 as
Hilario Gonzales
William J. Davis
W. Michael McCormick
Richard J. Maisano
Daniel D. Newmire
2. that the persons holding the following offices and positions were duly appointed
thereto and acting therein on November 15, 2011, and continue to hold such offices and positions
as of the date hereof, as follows:
Name
William J. Davis
Mark C. Whitworth
Rory Burnett
Willard G. Yamaguchi
Office
Mayor Pro Tempore
City Administrator
City Treasurer
City Clerk and Chief
Deputy City Attorney
3. that the signatures set forth opposite the respective names of the following
designated officers of the City are manual specimens of their signature:
Name
William J. Davis
Mark C. Whitworth
Rory Burnett
Willard G. Yamaguchi
01 IS wcse26I409670.2
Office? Signature
Mayor Pro Tempore b
City Administrator
`1
City Treasurer�a
City Clerk and Chief
Deputy City Attorney
4. that William J. Davis, as Mayor Pro Tempore and Willard G. Yamaguchi, as City
Clerk have caused their manual or facsimile signatures to be printed on the City's Electric
System Revenue Bonds, 2012 Series A and Electric System Revenue Bonds, 2012 Taxable
Series B (collectively, the "2012 Series Bonds"), and said signatures on the 2012 Series Bonds
constitute their true and lawful signatures. The said officers also caused a facsimile of the
official seal of the City, an impression of which is applied to this certificate, to be printed or
reproduced on the 2012 Series Bonds.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of January, 2012.
Mark C. Whitworth
City Administrator
[SEAL]
The undersigned hereby certifies that the above signature of Mark C. Whitworth is the
true and lawful specimen signature of Mark C. Whitworth ;City Administrator of the City.
OHS Wes1:26Id09670.2
$37,640,000
CITY OF VERNON
ELECTRIC SYSTEM REVENUE BONDS
2012 SERIES A
$35,100,000
CITY OF VERNON
ELECTRIC SYSTEM REVENUE BONDS
2012 TAXABLE SERIES B
ORDER OF THE CITY
The Bank of New York Mellon Trust Company, N.A., as Trustee
700 South Flower Street, Suite 500
Los Angeles, CA 90017
Ladies and Gentlemen:
There has been heretofore delivered to you duly executed, $37,640,000 aggregate
principal amount of Electric System Revenue Bonds, 2012 Series A (the "2012 Series A Bonds")
and $35,100,000 aggregate principal amount of Electric System Revenue Bonds, 2012 Taxable
Series B (the "2012 Series B Bonds" and, together with the 2012 Series A Bonds, the "2012
Series Bonds") of the City of Vernon (the "City"), issued under and pursuant to the Indenture of
Trust (the "Master Indenture'), dated as of September 1, 2008, by and between the City and The
Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee'), as amended and
supplemented by the Third Supplemental Indenture of Trust (the "Third Supplemental
Indenture"), dated as of January 1, 2012, by and between the City and the Trustee;
In addition, the following are being delivered to you simultaneously with the delivery of
this order so as to meet the conditions precedent to the authentication and delivery of the 2012
Series Bonds set forth in Section 2.04 of the Master Indenture:
1. executed counterparts of the Master Indenture and the Third Supplemental
Indenture;
2. an Opinion of Bond Counsel as to the due execution, delivery and validity of the
Master Indenture and the Third Supplemental Indenture;
3. a certificate of the City regarding Additional Parity Obligations as required under
Section 2.07(e) of the Master Indenture;
4. an Opinion of Bond Counsel to the effect that the Refunded 2009 Series A Bonds
are deemed paid as required under Section 2.04(a)(4) of the Master Indenture; and
5. a written order as to the delivery of the 2012 Series Bonds (this letter constitutes
such order).
Other than the receipt of the purchase price of the 2012 Series Bonds, such documents
constitute all of the conditions precedent to the authentication and delivery of the 2012 Series
Bonds by you as Trustee under the Master Indenture. Upon confirmation of receipt of the
purchase price of the 2012 Series Bonds as such purchase price is set forth below, you are hereby
requested and directed to authenticate the 2012 Series Bonds and to deliver the 2012 Series
Bonds to or upon the order of E. J. De La Rosa & Co., Inc. (the "Underwriter"), under that
Of IS Wcs1.261409670.2
certain Contract of Purchase, dated January 10, 2012, by and between the City and the
Underwriter.
Upon receipt from the Underwriter of $37,575,330.41, which is the purchase price of the
2012 Series A Bonds payable to the Trustee (representing the total principal amount of the 2012
Series A Bonds of $37,640,000, plus a net original issue premium in the amount of $199,159.15,
less Underwriter's discount of $263,828.74), you are hereby further authorized and directed to
apply the purchase price of the 2012 Series A Bonds as set forth below:
S 2,099,106.88 Deposited into the 2012 Capitalized Interest Fund
476,223.53 Deposited into the 2012 Series A Costs Account
within the 2012 Costs of Issuance Fund
35,000,000.00 Deposited into the 2012 Series A Account within the
2012 Capital Improvement Fund
37,575,330.41 TOTAL PURCHASE PRICE.
Upon receipt from the Underwriter of $33,487,059.63, which is the purchase price of the
2012 Series B Bonds payable to the Trustee (representing the total principal amount of the 2012
Series B Bonds of $35,100,000, less a net original issue discount in the amount of $1,331,653.55,
less Underwriter's discount of $281,286.82), you are hereby further authorized and directed to
apply the purchase price of the 2012 Series B Bonds as set forth below:
$30,050,542.49 Deposited into the 2012 Escrow Fund
436,517.14 Deposited into the 2012 Series B Costs Account
within the 2012 Costs of Issuance Fund
3,000,000.00 Deposited into the 2012 Series B Account within the
2012 Capital Improvement Fund
$33,487,059.63 TOTAL PURCHASE PRICE
[Remainder of Page Intentionally Left Blank]
Of IS Wcs1:261409670.2
Capitalized terms used herein not otherwise defined shall have the meanings given such
terms under the Master Indenture, as amended and supplemented by the Third Supplemental
Indenture.
Dated: January 19, 2012.
CITY OF VERNON
By: ±rn 'D ""1
Rory Burnett
City Treasurer
Accepted:
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
By:
Authorize fficer
01s west:251409670.2
$37,640,000 $35,100,000
CITY OF VERNON CITY OF VERNON
ELECTRIC SYSTEM REVENUE BONDS ELECTRIC SYSTEM REVENUE BONDS
2012 SERIES A 2012 TAXABLE SERIES B
CERTIFICATE OF THE CITY
We, Mark C. Whitworth, City Administrator of the City of Vernon (the "City"), and
Willard G. Yamaguchi, City Clerk and Chief Deputy City Attorney of the City, HEREBY
CERTIFY as follows:
1. that, on January 10, 2012 and on the date hereof, (a) the descriptions and
statements of or pertaining to the City and its Electric System contained in the Official
Statement, dated January 10, 2012 (the "Official Statement"), relating to the City's Electric
System Revenue Bonds, 2012 Series A and Electric System Revenue Bonds, 2012 Taxable
Series B (collectively, the "2012 Series Bonds") were and are true and correct in all material
respects; (b) the Official Statement did not, and as of the date hereof does not, contain any untrue
statement of a material fact or omit to state a material fact which is necessary to make the
statements made therein, in the light of the circumstances under which they were made, not
misleading (provided that no representation is made regarding information relating to the
Depository Trust Company and its operations), and insofar as the descriptions and statements,
including financial data, of or pertaining to, entities other than the City and their activities
contained in the Official Statement are concerned, such descriptions, statements and data have
been obtained from sources which the City believes to be reliable and the City has no reason to
believe that they are untrue in any material respect;
2. that the representations and warranties of the City in the Contract of Purchase,
dated January 10, 2012 (the "Contract of Purchase"), by and between E. J. De La Rosa & Co.,
Inc. and the City, are true and correct as of the date hereof as if made on and as of the date
hereof, and the City has complied with and performed all of its covenants and agreements in the
Contract of Purchase to be complied with and performed at or prior to the date hereof;
3. that, other than as described in the Official Statement, no litigation is pending
(with the City having received service of process) or, to our knowledge, threatened in any court
(i) in any way questioning the corporate existence of the City or the titles of the officers of the
City to their respective offices; (ii) seeking to restrain or enjoin the delivery of the 2012 Series
Bonds, or the collection of Net Revenues of the Electric System or other amounts pledged to pay
the principal of, premium, if any, and interest on such 2012 Series Bonds; (iii) in any way
contesting or affecting the validity of the 2012 Series Bonds, the Indenture of Trust, dated as of
September 1, 2008, by and between the City and The Bank of New York Mellon Trust
Company, N.A., as trustee (the "Trustee"), as amended and supplemented by the First
Supplemental Indenture of Trust, dated as September 1, 2008, by and between the City and the
Trustee, the Second Supplemental Indenture of Trust, dated as of May 1, 2009 and the Third
Supplemental Indenture of Trust, dated as of January 1, 2012 (as so amended and supplemented,
"the "Indenture"), the Continuing Disclosure Agreement, dated as of January 1, 2012 (the
"Continuing Disclosure Agreement"), by and between the City and the Trustee or the Contract of
Purchase; (iv) in any way contesting or affecting the collection of said Net Revenues or the
OI IS Wes1261409670.2
pledge thereof, or contesting the powers of the City or any authority for the issuance and delivery
of the 2012 Series Bonds and the performance of its obligations contained therein or the
execution and delivery of the Indenture, the Continuing Disclosure Agreement or the Contract of
Purchase, and the performance of its obligations contained therein; (v) which would be likely to
result in any material adverse change in the business, properties, assets or the financial condition
of the Electric System or which would likely have a material adverse affect on the ability of the
City to meet its obligations under the Indenture; or (vi) asserting that the Official Statement
contained any untrue statement of a material fact or omitted to state any material fact necessary
to make the statements made therein, in light of the circumstances under which they were made,
not misleading; and
4. that (i) the projected Adjusted Net Revenues during each of the five complete
Fiscal Years beginning with the first Fiscal Year following the issuance of the 2012 Series Bonds
in which interest thereon is not capitalized, in whole or in part, amounted to at least 1.25 times
the Maximum Adjusted Annual Debt Service on all Parity Obligations, including the 2012 Series
Bonds, to be Outstanding during the applicable Fiscal Year; and (ii) that the projected Net
Revenues during each of the five complete Fiscal Years beginning with the first Fiscal Year
following the issuance of the 2012 Series Bonds which interest thereon is not capitalized, in
whole or in part, amounted to at least 1.00 times the Maximum Adjusted Annual Debt Service on
all Parity Obligations, including the 2012 Series Bonds, to be Outstanding during the applicable
Fiscal Year.
[Remainder of Page Intentionally Left Blank]
OHS Wcst261409670.2
Capitalized terms used herein and not otherwise defined shall have the respective
meanings given such terms pursuant to the Indenture.
2012.
IN WITNESS WHEREOF, we have hereunto set our hands this l9th day of January,
CITY OF VERNON
By. /JL&"4
Mark C. Whitworth
City Administrator
M
Clerk and Chief gepfity CtZy Attorney
Of IS Wes1:26140Y670.2 3
TAX CERTIFICATE
Pursuant in part to Treasury Regulations Section 1.148-2(b)(2), the City of
Vernon, California (the "City") hereby makes the following representations of facts and
expectations and covenants to comply with the requirements of this Tax Certificate (the "Tax
Certificate") in connection with the issuance of its $37,640,000 aggregate principal amount of
Electric System Revenue Bonds, 2012 Series A (the "Bonds"). The representations and
covenants made herein by the City are in furtherance of the covenants contained in Section 5.01
of the Third Supplemental Indenture of Trust, dated as of January 1, 2012, by and between the
City and The Bank of New York Mellon Trust Company, N.A., as trustee hereunder (the
"Trustee"), and supplementing the Indenture of Trust, dated as of September 1, 2008 (the
"Original Indenture"), as theretofore amended and supplemented (as amended and supplemented,
the "Indenture"). Capitalized terms not defined herein shall have the respective meanings set
forth in the Indenture.
I.
In General
1.1 The City. The City is a charter city and municipal corporation duly
organized and existing under and by virtue of its charter and the laws of the State of California.
The City has the general authority to exercise the power of eminent domain in furtherance of its
governmental purposes.
1.2 Purpose of Tax Certificate. The City is delivering this Tax Certificate
(including all Exhibits hereto) to Orrick, Herrington & Sutcliffe LLP ("Bond Counsel'), with the
understanding and acknowledgment that Bond Counsel will rely upon this Tax Certificate
(including all Exhibits hereto) in rendering its opinion that the interest on the Bonds is excluded
from gross income for federal income tax purposes under Section 103 of the Internal Revenue
Code of 1986.
1.3 Delivery of the Bonds. The Bonds are being delivered to E. J. De La
Rosa & Co., Inc., as underwriter of the Bonds (the "Underwriter"), on the date hereof.
1.4 Purpose of Financing. The Bonds are being executed and delivered
pursuant to the Indenture to provide funds to (i) pay a portion of the costs of the Project, as
defined below; (ii) provide for capitalized interest on the Bonds; and (iii) pay certain costs of
issuing the Bonds.
1.5 Reliance on Other Parties. The expectations of the City concerning
certain uses of the proceeds of the Bonds and certain other matters described herein are based in
whole or in part upon representations of other parties set forth in this Tax Certificate or exhibits
hereto (including the Certificate of the Underwriter attached hereto as Exhibit A). The City is
not aware of any facts or circumstances that would cause it to question the accuracy or
reasonableness of any representation made in this Tax Certificate or the exhibits hereto.
1.6 Single Issue. The Bonds were sold to the Underwriter on January 10,
2012 (the "Sale Date"), pursuant to the same plan of financing, and are expected to be paid out of
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substantially the same source of funds. No other governmental obligations which are expected to
be paid out of substantially the same source of funds as the Bonds have been or will be sold
within the 31-day period beginning 15 days before the Sale Date pursuant to the same plan of
financing as the Bonds.
On the date hereof, the City is also delivering the City of Vernon Electric System
Revenue Bonds, 2012 Taxable Series B (the "Series B Bonds"). The Series B Bonds are taxable
bonds, the interest on which is not excluded from gross income for federal income tax purposes.
The City will track proceeds of the Bonds separately from the Series B Bonds.
1.7 Definitions. Unless the context otherwise requires, the following
capitalized terms have the following meanings for purposes of this Tax Certificate:
Adjusted Gross Proceeds means Gross Proceeds, adjusted as set forth in Treasury
Regulations Section 1.148-7(c)(3). Thus, Adjusted Gross Proceeds generally means
Gross Proceeds, less Gross Proceeds held in the Bona Fide Debt Service Funds.
Available Construction Proceeds means all Sale Proceeds (reduced by costs of
issuing the Bonds financed from such Sale Proceeds), plus all Investment Proceeds
earned or reasonably expected to be earned thereon, before the earlier of two years after
the Closing Date or substantial completion of Project construction.
Bona Fide Debt Service Funds means those funds and accounts (or portions of
such funds and accounts) described in Section 3.9 hereof.
Bond Year means the period beginning on the Closing Date and ending on the
first anniversary of the Closing Date (unless the City selects otherwise) and each
succeeding one-year period (with the last Bond Year ending on the first date that none of
the Bonds remain outstanding). For purposes of the preceding sentence, the City may
(prior to the fifth anniversary of the Closing Date) select any date prior to the first
anniversary of the Closing Date in lieu of the first anniversary of the Closing Date.
Closing Date means the date of this Tax Certificate.
Code means the Internal Revenue Code of 1986, or any successor, and the
applicable Treasury Regulations promulgated thereunder.
Governmental Unit means any State, or political subdivision of a State, but
excludes the United States and its agencies or instrumentalities.
Gross Proceeds has the meaning used in Treasury Regulations Section 1.148-
I(b), and generally means all proceeds derived from or relating to the Bonds, including
amounts received as a result of investing the Sale Proceeds, amounts pledged to pay debt
service on the Bonds, and amounts expected to be used to pay debt service on the Bonds.
Investment Proceeds means the earnings from the investment and reinvestment of
all Sale Proceeds.
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Investment Property means any security or obligation (other than a Tax -Exempt
Bond), any annuity contract, or any other investment -type property.
Minor Portion means a portion of the proceeds of the Bonds in an amount not
exceeding $100,000.
Net Sale Proceeds means the amount of Sale Proceeds, less any amount deposited
in a reasonably required reserve fund (if any) or invested as part of a Minor Portion
pursuant to Section 148(e) of the Code.
Nongovernmental Person means any person other than a State or a political
subdivision of a State (within the meaning of Section 103(c) of the Code).
Nonpurpose Investment means any Investment Property in which Gross Proceeds
are invested.
Opinion of Counsel means a written opinion of nationally recognized bond
counsel to the effect that interest on the Bonds is not included in gross income for federal
income tax purposes.
Preliminary Expenditures means architectural, engineering, surveying, soil
testing, costs of issuing the Bonds and similar costs paid with respect to the Project in an
aggregate amount not exceeding 20% of the issue price of the Bonds and of bonds that
finance or are reasonably expected by the City to finance the Project. However,
Preliminary Expenditures do not include land acquisition, site preparation or similar costs
incident to the commencement of construction.
Project means the following Capital Improvements to the City's Electric System:
(i) upgrades to the distribution facilities of the Electric System consisting primarily of the
conversion of such facilities from a 7 kV capability to a 16 kV capability; (ii) the
undergrounding of distribution facilities; (iii) improvements to and expansion of existing
substations; and (iv) street and other improvements in connection with each of the
foregoing. See Exhibit C attached hereto.
Rebate Requirement means the amount of rebatable arbitrage earned with respect
to Gross Proceeds which do not qualify for an exception from the requirements of
Section 148(t)(2) of the Code as described in Section 5.5 of this Tax Certificate,
computed as of the last day of any Bond Year pursuant to Treasury Regulations
Section 1.148-3.
Sale Proceeds means $37,839,159.15, consisting of the principal amount of the
Bonds $37,640,000, plus a net original issue premium thereon of $199,159.15.
Tax -Exempt Bond means any obligation the interest on which is excluded from
federal gross income pursuant to the provisions of Section 103 of the Code, unless such
obligation is a "specified private activity bond" within the meaning of Section 57(a)(5)(c)
of the Code.
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Yield means that discount rate calculated as described in Section 4.1 of this Tax
Certificate.
II.
General Tax Limitations
2.1 Cross -Reference. Article III below refers to the expectations and
limitations relating to arbitrage; Article IV below refers to the expectations and limitations
relating to yield and yield restriction; and Article V below refers to the expectations and
limitations relating to rebate.
2.2 Expenditure of Gross Proceeds. For purposes of this Tax Certificate,
Gross Proceeds will be treated as spent when they are used to pay or reimburse disbursements by
the City that are (i) capital expenditures, (ii) costs of issuing the Bonds, (iii) interest on the
Bonds through the later of three years after the Closing Date or one year after the Project (or
each component thereof) is placed in service, (iv) initial operating expenses directly associated
with the Project (in aggregate amount not exceeding 5% of the Sale Proceeds) or (v) other
miscellaneous expenditures described in Treasury Regulations Section 1.148-6(d)(3)(ii).
Absent an Opinion of Counsel, all expenditures of Gross Proceeds will be made in
respect of (a) Preliminary Expenditures, (b) capital expenditures reimbursed in respect of
payments made by the City on or after the date which is, sixty days prior to the date the City
made its declaration of intent to reimburse for costs of the Project, (c) costs of issuing the Bonds
or (d) other payments made by the City on or after the Closing Date. In connection with all
expenditures of Gross Proceeds described in (b), the reimbursement allocation will be made no
later than the later of 18 months after the date of the expenditure or 18 months after the date on
which the Project is placed in service, but if the latter, then in no event later than three years after
the date of expenditure.
The City expects no reimbursements from the proceeds of the Bonds.
2.3 Information Reporting. The City shall file or cause to be filed an
Internal Revenue Service Form 8038-G with respect to the Bonds no later than May 15, 2012.
2.4 No Pooling. None of the proceeds of the Bonds will be used to make
loans to two or more ultimate borrowers.
2.5 No Hedge Bonds. The City reasonably expects that more than 85% of
Net Sale Proceeds will be expended for governmental purposes of the Bonds before January 19,
2015. The City also reasonably expects that at least 10% of the Net Sale Proceeds will be
expended for governmental purposes of the Bonds before January 19, 2013, and that at least 30%
of the Net Sale Proceeds will be expended for governmental purposes of the Bonds before
January 19, 2014. Not more than 50% of proceeds of the Bonds will be invested in Nonpurpose
Investments having a substantially guaranteed yield for four years or more. In addition, the
payment of legal and underwriting costs associated with issuance of the Bonds is not contingent,
and at least 95% of all legal and underwriting costs associated with issuance of the Bonds will be
paid no later than the 180th day after the Closing Date.
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2.6 No Refunding. Proceeds of the Bonds will not be used directly or
indirectly to make principal, interest or premium payments with respect to any governmental
obligation other than the Bonds.
2.7 Retention of Records. The City covenants to maintain all records
relating to the requirements of the Code and the representations, certifications and covenants set
forth in this Tax Certificate until the date three years after the last outstanding Bond has been
retired. If any of the Bonds are refunded or prepaid by other Tax -Exempt Bonds (the
"Refunding Obligations"), the City covenants to maintain all records required to be retained by
this Section 2.7 until the later of the date three years after the last outstanding Bonds have been
retired or the date three years after the last Refunding Obligations have been retired. The records
that must be retained include, but are not limited to:
(i) Basic records and documents relating to the Bonds
(including the Indenture, this Tax Certificate and the opinion of Bond Counsel);
(ii) Documentation evidencing the expenditure of Bond
proceeds;
(iii) Documentation evidencing the use of the Prepayment by
public and private sources i.e., copies of management contracts, research agreements, leases,
etc.);
(iv) Documentation evidencing all sources of payment or
security for the Bonds; and
(v) Documentation pertaining to any investment of Bond
proceeds (including the purchase and sale of securities, SLGs subscriptions, yield calculations
for each class of investments, actual investment income received from the investment of
proceeds, guaranteed investment contracts, and rebate calculations).
Arbitrage
3.1 Reasonable Expectations; Reliance on Others. This Article III states
the reasonable expectations of the City with respect to the amounts and uses of the proceeds of
the Bonds and certain other funds. The expectations of the City concerning certain uses of
proceeds of the Bonds and certain other moneys described herein and other matters are based in
whole or in part upon representations of other parties as set forth in this Tax Certificate or
exhibits hereto. The City is not aware of any facts or circumstances that would cause it to
question the accuracy or reasonableness of any representations made in this Tax Certificate,
including exhibits attached to this Tax Certificate.
3.2 Reoffering Price. The City is delivering the Bonds to the Underwriter on
the date hereof in exchange for payment of the total amount of Sale Proceeds, less underwriter's
discount for the Bonds, all as set forth in Section 3.3 herein and the pricing materials attached
hereto as Exhibit B. As represented by the Underwriter (attached hereto as Exhibit A), all of the
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Bonds have been reoffered to the public (excluding any bondhouse, broker or other intermediary)
at the prices set forth on such respective exhibit, and at least 10% of each maturity of the Bonds
actually has been sold at such prices. Also as reflected in Exhibit A hereto, the Underwriter has
represented that such initial reoffering prices were reasonable under customary standards in the
applicable tax-exempt market as of the Sale Date.
3.3 Application of Sale Proceeds. The Sale Proceeds will be used or
deposited as follows:
2012 Capitalized Interest Fund
$ 2,099,106.88
2012 Costs of Issuance Fund
2012 Series A Costs Account
476,223.53
2012 Series A Account within the
2012 Capital Improvement Fund
35,000,000.00
Underwriter's Discount
263,828.74
TOTAL
$37.839.159.15
A copy of the pricing numbers, prepared by the Underwriter, is attached hereto as
Exhibit B.
3.4 Investment Proceeds. Investment Proceeds allocable to all funds and
accounts established in connection with the Bonds shall be retained therein.
3.5 Funds and Accounts. The following funds and accounts relating to the
Bonds have been or may be established:
Debt Service Fund
Interest Account
Principal Account
Sinking Fund Account
Redemption Fund
Expense Stabilization Fund
Rebate Fund
2012 Capital Improvement Fund
2012 Series A Account
2012 Costs of Issuance Fund
2012 Series A Costs Account
2012 Capitalized Interest Fund
Neither the City nor any other person benefiting from the issuance of the Bonds
expects to use any fund or account other than the Bona Fide Debt Service Funds, directly or
indirectly, to pay principal of or interest on the Bonds. Other than the Bona Fide Debt Service
Funds, no fund or account, however established, is pledged as security for the Bonds such that
there is a reasonable assurance that amounts held in such other fund or account will be available
if needed to pay debt service on the Bonds.
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3.6 No Replacement Proceeds/No Other Replacement Proceeds. Neither
the City nor any related person will use any proceeds of the Bonds directly or indirectly to
replace funds of the City or any related person that are used directly or indirectly to acquire
investment property reasonably expected to produce a yield materially higher than the yield on
the Bonds. The weighted average maturity of the Bonds (25.3894 years) does not exceed 120%
of the expected weighted average economic useful life of the Project.
3.7 No Overissuance. Taking into account anticipated investment earnings,
proceeds from the sale of the Bonds do not exceed the amount necessary to pay costs of the
Project and to pay costs of issuing the Bonds.
3.8 2012 Capital Improvement Fund. The Indenture establishes the 2012
Capital Improvement Fund. Amounts held in the 2012 Capital Improvement Fund will be used
to pay a portion of the costs of the Project. Upon the receipt by the Trustee of a certificate of an
Authorized City Representative requesting the Trustee to close the 2012 Capital Improvement
Fund (or any account therein), and after payment from the 2012 Capital Improvement Fund (or
any account therein) of all amounts included in requisitions submitted by the City pursuant to the
Indenture, the Trustee shall transfer any moneys remaining in the 2012 Capital Improvement
Fund (or any account therein) to the account in the Debt Service Fund specified by the City.
Amounts in the 2012 Capital Improvement Fund may be invested and reinvested to the fullest
extent practicable in Permitted Investments which mature not later than such times as shall be
necessary to provide moneys when needed for payments to be made from the 2012 Capital
Improvement Fund (or any account therein).
3.9 Bona Fide Debt Service Funds.
3.9.1 The Bonds area limited obligation of the City payable from Net
Revenues of the City relating to its Electric System and amounts held in the funds and accounts
established pursuant to the Indenture (other than the Rebate Fund and the 2012 Costs of Issuance
Fund).
3.9.2 In addition to requiring that all Net Revenues be deposited in the
Debt Service Fund, the Indenture directs the application of Net Revenues held in the Debt
Service Fund. Net Revenues will exceed debt service on the Bonds during each payment period.
3.9.3 The Debt Service Fund (including all accounts therein), the
Redemption Fund and the Expense Stabilization Fund (to the extent amounts therein are used to
pay debt service on the Bonds) (collectively, the "Bona Fide Debt Service Funds"), will be used
primarily to achieve a proper matching of revenues and debt service within each Bond Year for
the Bonds. Such funds in the aggregate will be depleted at least once a year except for a
carryover amount not to exceed the greater of the earnings on such funds for the immediately
preceding Bond Year or 1/12th of debt service on the Bonds for the immediately preceding Bond
Year. Amounts contributed to each such fund will be spent within thirteen months after the date
of the initial contribution to any such fund, and any amounts received from the investment or
reinvestment of moneys held in such funds will be expended within one year after the date of
accumulation thereof in such funds. Amounts in the Bona Fide Debt Service Funds will be
invested without regard to yield.
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3.10 Rebate Fund. As set forth in the Indenture, the City has covenanted not
to use moneys on deposit in any fund or account in connection with the Bonds in a manner which
will cause the Bonds to be arbitrage bonds within the meaning of Section 148 of the Code. To
that end, the Rebate Fund is created under the Indenture. The amount required to be held in the
Rebate Fund at any point in time is determined pursuant to the requirements of the Code,
including particularly Section 148(f) of the Code and the regulations applicable thereto. Moneys
in the Rebate Fund are neither pledged to nor expected to be used to pay debt service on the
Bonds. Sale Proceeds and Investment Proceeds are not expected to be held in the Rebate Fund.
Any Sale Proceeds and Investment Proceeds that are nonetheless held in the Rebate Fund must
be yield -restricted to the yield on the Bonds as set forth in Section 4.2.1 herein.
3.11 Expense Stabilization Fund. The Indenture establishes an Expense
Stabilization Fund. No Sale Proceeds will be deposited in the Expense Stabilization Fund on the
Closing Date. The City will decide what sources of funds will be used to fund the Expense
Stabilization Fund in the future. Amounts in the Expense Stabilization Fund may be used for a
variety of purposes, including paying operating and maintenance costs of the Project or any other
capital facility of the City, Costs of Issuance of the Bonds, or debt service on the Bonds.
Notwithstanding the foregoing, amounts in the Expense Stabilization Fund are not pledged to the
payment of debt service on the Bonds such that there is a reasonable assurance that amounts
therein will be available for such purpose in the event of financial difficulties of the Prepayment
or the City. Accordingly, amounts in the Expense Stabilization Fund may be invested without
regard to yield.
3.12 2012 Capitalized Interest Fund. The Indenture establishes the 2012
Capitalized Interest Fund. Amounts held in the 2012 Capitalized Interest Fund will be used to
pay interest on the Bonds. Moneys held in the 2012 Capitalized Interest Fund may be invested
and reinvested to the fullest extent practicable in Permitted Investments which mature not later
than such times as shall be necessary to provide moneys when needed for payments to be made
from the 2012 Capitalized Interest Fund. Any investment earnings on moneys on deposit in the
2012 Capitalized Interest Fund shall be deposited in the 2012 Capitalized Interest Fund and be
used in the same manner as other amounts on deposit in the 2012 Capitalized Interest Fund,
3.13 2012 Costs of Issuance Fund. The Indenture establishes the 2012 Costs
of Issuance Fund. Amounts held in the 2012 Series A Costs Account within the 2012 Costs of
Issuance Fund will be used to pay the costs of issuing the Bonds. Any amounts remaining in the
2012 Series A Costs Account within the 2012 Costs of Issuance Fund after all costs of issuance
are paid will be transferred to the 2012 Series A Account within the 2012 Capital Improvement
Fund. Amounts in the 2012 Costs of Issuance Fund may be invested without regard to yield for
13 months from the Closing Date.
3.14 No Expected Sale. It is not expected that the Project or any part thereof
financed in whole or in part by the Bonds will be sold or otherwise disposed of before August 1,
2041, the last scheduled maturity date of the Bonds.
3.15 No Abusive Arbitrage Device. The Bonds are not and will not be part of
a transaction or series of transactions (i) that attempts to circumvent the provisions of
Section 148 of the Code, or any successor thereto, and the regulations promulgated thereunder or
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under any predecessor thereto, enabling the City or any related person to exploit the difference
between tax-exempt and taxable interest rates to gain a material financial advantage, and (ii) that
increases the burden on the market for tax-exempt obligations in any manner, including, without
limitation, by selling bonds that would not otherwise be sold, or selling more bonds, or issuing
bonds sooner, or allowing bonds to remain outstanding longer, than otherwise would be
necessary. In addition, the structure of debt service on the Bonds is not to create replacement
proceeds or other proceeds that would be otherwise available to pay such debt service on the
Bonds or any other tax-exempt obligations of the City.
IV.
Yield and Yield Restriction
4.1 Yield. The aggregate issue price of the Bonds is $37,839,159.15, based
on representations of the Underwriter set forth in Exhibit A hereto regarding the prices at which
the Bonds were offered to the ultimate purchaser(s). The Yield on the Bonds has been calculated
to be at least 5.37336%. Such yield has been calculated as set forth in Section 148(b) of the
Code and Treasury Regulations Sections 1.148-4 and 1.148-5 for purposes of this Tax
Certificate. Thus, yield on the Bonds or yield on Investment Property generally means that
discount rate which, when used in computing the present value of all unconditionally payable
payments representing principal adjusted, as required, for any substantial discounts, interest and
costs of qualified guarantees, produces an amount equal to the issue price of the Bonds or the
purchase price of the Investment Property, as appropriate.
4.2 Yield on Investments of Bond Proceeds.
4.2.1 Yield Restriction. Unless otherwise authorized by an Opinion of
Counsel, if the sum of (A) all proceeds from the investment or reinvestment of Bond proceeds
remaining unexpended one year after the date of receipt of such amounts i.e., the "One -Year
Temporary Period for Investment Proceeds"), plus (B) any amounts held in the Bona Fide Debt
Service Funds or any Sale Proceeds and Investment Proceeds in the 2012 Costs of Issuance Fund
remaining unexpended after thirteen (13) months from the date of accumulation in such funds,
plus (C) any Restricted Amount, plus the 2012 Costs of Issuance Fund, at any time in the
aggregate exceeds $100,000, the excess will be invested either (i) in assets that are not
Investment Property or (ii) in Investment Property with a yield not exceeding the yield on the
Bonds.
4.2.2 Yield Reduction Payments. For purposes of determining the
yield on the Investment Property, any amount paid to the United States in accordance with
Treasury Regulations Section 1.148-5(c) (subject to the limitation set forth in Section 1.148-
10(b)(1)(ii)) is treated as a payment for such Investment Property that reduces the yield on such
Investment Property. Treasury Regulations Section 1.148-5(c) provides, inter alia, that (i) yield
reduction payments are generally to be made at the same time and in the same manner as rebate
payments are required to be paid (see Section 5.5 hereof) or at such other time or in such other
manner as the Commissioner of Internal Revenue may provide; and (ii) yield reduction payments
may be made with respect to Nonpurpose Investments allocable to proceeds of the Bonds that
qualified for the One -Year Temporary Period for Investment Proceeds (see Section 4.2.1 hereof).
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4.3 No Qualified Hedges. No contract has been and (absent an Opinion of
Counsel) no contract will be entered into such that failure to take the contract into account would
distort the Yield on the Bonds or otherwise would fail clearly to reflect the economic substance
of the transaction.
4.4 No Qualified Guarantee. On the Closing Date, there are no qualified
guarantees that have been obtained in connection with the Bonds.
lv
Rebate
5.1 Undertakings. The City, pursuant to the Indenture, has covenanted to
comply with certain requirements of the Code. The City acknowledges that the United States
Department of the Treasury has issued regulations with respect to certain of these undertakings,
including the proper method for computing whether any rebate amount is due the federal
government under Section 148(f) of the Code. (Treasury Regulations Sections 1.148-0 through
1.148-11, 1.150-1 and 1.150-2.) The City further acknowledges that the United States
Department of the Treasury has not yet issued regulations with respect to certain others of these
undertakings. The City covenants that it will undertake to determine precisely what is required
with respect to the rebate provisions contained in Section 148(f) of the Code and said regulations
from time to time and will comply with any requirements that may be applicable to the Bonds.
Except to the extent inconsistent with any requirements of the Code or the regulations (including
any future regulations), the City will undertake the methodology described in this Tax
Certificate.
5.2 Rebate Fund. The Rebate Fund has been established pursuant to the
Indenture. The City will keep the Rebate Fund (or have it kept) separate and apart from all other
funds and moneys held by it.
5.3 Recordkeeping. The City shall maintain or cause to be maintained
detailed records with respect to each Nonpurpose Investment attributable to Gross Proceeds of
the Bonds, including: (i) purchase date, (ii) purchase price, (iii) information establishing fair
market value on the date such investment became a Nonpurpose Investment, (iv) any accrued
interest paid, (v) faceamount, (vi) coupon rate, (vii) periodicity of interest payments,
(viii) disposition price, (ix) any accrued interest received, and (x) disposition date. Such detailed
record keeping is required to facilitate the calculation of the Rebate Requirement.
5.4 Exceptions to Rebate Requirement.
5.4.1 Bona Fide Debt Service Funds Exception. Subject to the
representations and certifications made in Section 3.9 of this Tax Certificate, no rebate
calculations will need to be made with respect to any moneys in the Bona Fide Debt Service
Funds.
5.4.2 Six -Month Expenditure Exception. In general, no rebate
calculations will be required with respect to Adjusted Gross Proceeds if all such Adjusted Gross
Proceeds actually are spent within six months after the Closing Date.
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5.4.3 Eighteen -Month Expenditure Exception. In general, no rebate
calculations will be required with respect to Sale Proceeds or Investment Proceeds, if at least
15% of expected Adjusted Gross Proceeds actually are spent within six months after the Closing
Date, at least 60% of expected Adjusted Gross Proceeds actually are spent within twelve months
after the Closing Date, and 100% of actual Adjusted Gross Proceeds actually are spent within
eighteen months after the Closing Date. For purposes of the 15% and the 60% expenditure
exceptions listed in the previous sentence, the amount of Investment Proceeds that is included in
Adjusted Gross Proceeds is determined based only on the expected investment earnings as of the
Closing Date. The requirement that 100% of actual Adjusted Gross Proceeds be spent within
eighteen months after the Closing Date will be met if at least 95% of Adjusted Gross Proceeds is
spent within eighteen months and the remainder is held as a reasonable retainage, as permitted by
contracts with the City's contractors, and such remainder is spent within thirty months after the
Closing Date.
5.4.4 Two -Year Construction Expenditures Exception. In
determining the amount of Available Construction Proceeds as of any date, there shall be
included the amount of investment earnings reasonably expected after such date, together with
investment earnings actually received or accrued as of such date. See Section 1.7 of this Tax
Certificate, defining "Available Construction Proceeds." The City reasonably expects that at
least 75% of Available Construction Proceeds will be expended for construction expenditures
with respect to the Project. For this purpose, construction expenditures include costs of
reconstruction and rehabilitation, but do not include costs of acquiring any interest in land or
other existing real or personal property. In general, no rebate calculations will be required in
respect of Available Construction Proceeds if Available Construction Proceeds in fact are spent
at least as quickly as follows:
10%
within six months after the Closing Date
45%
within twelve months after the Closing Date
75%
within eighteen months after the Closing Date
100%
within twenty-four months after the Closing Date
For purposes of the first three expenditure requirements above, the amount of Investment
Proceeds included in the Available Construction Proceeds is determined based only on the City's
reasonable expectations as of the Closing Date. The requirement that 100% of Available
Construction Proceeds be spent within twenty-four months after the Closing Date will be met if
at least 95% of Available Construction Proceeds is spent within twenty-four months and the
remainder is held as a reasonable retainage, as permitted by contracts with the City's contractors,
and such remainder is spent within thirty-six months after the Closing Date.
5.5 Rebate Requirement Calculation and Payment. The City will rebate or
cause to have rebated any arbitrage profits earned on the investment of Gross Proceeds which do
not qualify for an exception from the requirements of Section 148(f)(2) of the Code to the Unitec
States pursuant to the following procedures:
5.5.1 The City will prepare or have prepared an annual calculation of the
Rebate Requirement consistent with the rules described in this Section 5.5. The rebate
calculation should be made as of the end of each Bond Year; however, the interim calculations
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not falling at the close of the periods referred to in Section 5.5.3 below may be made as of other
dates more convenient to the City, and such dates shall be treated as the close of Bond Years for
purposes of this Section 5.5. The City will prepare or have prepared a completed copy of the
annual calculation of the Rebate Requirement within 55 days after the close of each Bond Year
and within 55 days after the first date on which there are no outstanding Bonds. Concurrent with
the preparation of such calculations, the City shall deposit in each Rebate Fund an amount
which, when added to amounts already on deposit therein, will equal the Rebate Requirement. If
an amount in excess of the amount of the Rebate Requirement is held in each Rebate Fund, the
City may remove such excess and use it for any lawful purpose (e. to finance additional capital
expenditures or to pay debt service with respect to the Bonds) consistent with this Tax Certificate
e(e., such excess will not be used in a manner that creates "replacement proceeds" as described
in Section 3.6.4 hereof).
5.5.2 For purposes of calculating the Rebate Requirement (i) the
aggregate amount earned with respect to a Nonpurpose Investment shall be determined by
assuming that the Nonpurpose Investment was acquired for an amount equal to its fair market
value (determined as provided in Section 1.148-5(d)(6) of the Treasury Regulations as
applicable) at the time it becomes a Nonpurpose Investment, and (ii) the aggregate amount
earned with respect to any Nonpurpose Investment shall include any unrealized gain or loss with
respect to the Nonpurpose Investment (based on the assumed purchase price at fair market value
and adjusted to take into account amounts received with respect to the Nonpurpose Investment
and earned original issue discount or premium) on the first date when there are no outstanding
Bonds or when the investment ceases to be a Nonpurpose Investment.
5.5.3 The City shall pay to the United States Department of the Treasury
from the Rebate Fund (A) not later than 60 days after the end of the fifth Bond Year and each
succeeding fifth Bond Year thereafter, a payment equal to 90% of the Rebate Requirement with
respect to the Bonds; and (B) not later than 60 days after the first date when there are no
outstanding Bonds, an amount equal to 100% of the Rebate Requirement (determined as of the
first date when there are no outstanding Bonds) plus any actual or imputed earnings on such
Rebate Requirement, all as set forth in Sections 1.148-1 through 1.148-11 of the Treasury
Regulations.
5.5.4 Each payment required to be made pursuant hereto shall be filed
with the Internal Revenue Service Center, Ogden, Utah 84201, on or before the date such
payment is due, and shall be accompanied by Form 8038-T. The City must retain records of the
calculations required by this Section 5.5 until 6 years after the retirement of the last of the Bonds.
5.6 Prohibited Investments and Dispositions.
5.6.1 General Rule. No Investment Property may be acquired with
Gross Proceeds for an amount (including transaction costs, except as otherwise provided in
Section 1.148-5(e) of the Treasury Regulations) in excess of the fair market value of such
Investment Property. No Investment Property may be sold or otherwise disposed of for an
amount (including transaction costs, except as otherwise provided in Section 1.148-5(e) of the
Treasury Regulations) less than the fair market value of the Investment Property.
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5.6.2 Fair Market Value. In general, the fair market value of any
Investment Property is the price which a willing buyer would pay to a willing seller to acquire
the Investment Property, with no amounts paid to artificially reduce or increase the yield on such
Investment Property. Other criteria may be used to establish fair market value; provided
however, that such methods comply with the requirements of Section 1.148-5(d)(6) of the
Treasury Regulations.
(a) If Investment Property is acquired pursuant to an arm's length
transaction without regard to any amount paid to reduce the yield on the
Investment Property, the fair market value of the Investment Property shall be the
amount paid for the Investment Property (without increase for transaction costs,
except as otherwise provided in Section 1.148-5(e) of the Treasury Regulations).
(b) If Investment Property is sold or otherwise disposed of in an arm's
length transaction without regard to any reduction in the disposition price to
reduce the Rebate Requirement, the fair market value of the Investment Property
shall be the amount realized from the sale or other disposition of the Investment
Property (without reduction for transaction costs, except as otherwise provided in
Section 1.148-5(e) of the Treasury Regulations).
(e) If a United States Treasury obligation is acquired directly from or
disposed of directly to the United States Department of the Treasury (as in the
case of United States Treasury Securities - State and Local Government Series
("SLGS") obligations), such acquisition or disposition shall be treated as
establishing a market for the obligation and as establishing the fair market value
of the obligation.
5.6.3 Investment Contracts. The purchase price of any Investment
Property acquired pursuant to a guaranteed investment contract (within the meaning of Section
1.148-1(b) of the Treasury Regulations) shall be determined as provided in Section 1.148-5 of
the Treasury Regulations. No investment contract shall be acquired with Gross Proceeds unless
the requirements of Section 1.148-5 of the Treasury Regulations and this Section 5.6.3 are
satisfied. With respect to any investment contract, the City will obtain from the provider of the
investment contract, broker thereof or other party, such information, certification or
representation as will enable the City to determine that these requirements are satisfied.
The purchase price of an investment contract will be considered to be fair
market value if:
(a) the City has made (or has had made on its behalf) a bona fide
solicitation for the investment contract; the solicitation must have specified the
material terms of the investment contract (i.e., all the terms that could directly or
indirectly affect the yield or the cost of the investment including the collateral
security requirements for the investment contract) and, unless the moneys
invested pursuant to such investment contract will be held in the Bona Fide Debt
Service Funds, the City's reasonably expected drawdown schedule for the moneys
to be invested; the solicitation has a legitimate business purpose (i.e., a purpose
OHS Wat:261413852.2
427952 13
other than to increase the purchase price or reduce the yield) for every term of the
bid specification;
(b) all bidders have an equal opportunity to bid so that, for example,
no bidder is given the opportunity to review other bids (a last look) before
bidding;
(c) the City solicits bids from at least three (3) investment contract
providers with established industry reputations as competitive providers of
investment contracts;
(d) the City includes in the bid specifications a statement to potential
bidders that by submitting a bid, the provider is making certain representations
that the bid is bona fide, and specifically that 1) the bidder did not consult with
any other potential provider about its bid, 2) the bid was determined without
regard to any other formal or informal agreement that the potential provider had
with the City or any other person, and 3) the bid was not submitted solely as a
courtesy to the City or any other person for purposes of satisfying the
requirements of Section 1.148-5 of the Treasury Regulations;
(e) at least three bids meeting the qualification requirements of the bid
solicitation (as set forth in (1) above) have been received from different providers
of investment contracts that have no material financial interest in the Bonds (the
following investment contract providers are considered to have a material
financial interest in the issue: 1) a lead underwriter in a negotiated underwriting,
but only until 15 days after the issue date of the issue, 2) an entity acting as a
financial advisor with respect to the purchase of the investment contract at the
time the bid specifications were forwarded to potential providers; and 3) any
related party to a provider that is disqualified for one of the two preceding
reasons);
(f) at least one of the bids received by the City that meets the
requirements of the preceding paragraph is from an investment contract provider
with an established industry reputation as a competitive provider of investment
contracts;
(g) the investment contract has a yield (net of any broker's fees) at
least equal to the highest yielding of the qualifying bids received from the bidders
that have no material financial interest in the Bonds; if the investment contract is
not the highest -yielding of the qualifying bids, the City must have significant non -
tax reasons, such as creditworthiness of the bidder, for failure to purchase the
highest -yielding investment contract offered;
(h) if an agent for the City conducts the bidding process, the agent
does not bid;
OHS West261413852.2
42797-2 14
(i) the provider of the investment contract certifies as to all
administrative costs to be paid on behalf of the City, including any fees paid as
broker commissions in connection with the investment contract.
5.6.4 Deemed Acquisition or Sale. The fair market value of any
Investment Property not directly purchased with Gross Proceeds for which there is an established
securities market generally is the price at which a willing buyer would purchase Investment
Property from a willing seller in a bona fide, arm's length transaction.
5.6.5 Certificates of Deposit. The fair market value of a certificate of
deposit issued by a commercial bank that has a fixed interest rate, a fixed principal payment
schedule, a fixed maturity and a substantial penalty for early withdrawal will be considered to be
fair market value if:
(a) the yield on the certificate of deposit is not less than the yield on
reasonably comparable direct obligations of the United States; and
(b) the yield on the certificate of deposit is not less than the highest
published yield of the provider thereof which is currently available on comparable
certificates of deposit offered to the public.
5.6.6 Broker Compensation. For purposes of computing the Yield on
any investment contract acquired through a broker, reasonable compensation received by such
broker, whether payable by or on behalf of the obligor or obligee of such investment contract,
may be taken into account in determining the cost of the investment contract (as provided in
Section 1.148-5(e)(2)(iii) of the Treasury Regulations). Compensation is deemed reasonable if
does not exceed the lesser of i) $37,000 or ii) 0.2% of the amount reasonably expected, as of the
date of acquisition of the investment contract, to be invested under the investment contract over
its term, or $4,000 (if 0.2% of such amount reasonably expected to be invested under the
investment contract over its term is less than $4,000). In addition, the total fees received by the
broker with respect to the investment of any proceeds of the Bonds that are taken into account
with respect to all investment contracts, at any time, may not exceed $103,000. All amounts
referenced are to be adjusted for inflation after the Closing Date.
5.7 Segregation of Proceeds. In order to perform the calculations required by
the Code, it is necessary to track separately all of the Gross Proceeds. To that end, the City shall
establish or have established separate sub -accounts or take other accounting measures in order to
account fully for all Gross Proceeds.
5.8 Filing Requirements. The City shall file or cause to be filed such reports
or other documents with the Internal Revenue Service as is required by the Code in accordance
with an Opinion of Counsel.
5.9 Retention of Firm. The City hereby undertakes to satisfy its obligation to
perform the rebate calculations that may be required to be made from time to time with respect to
the Bonds as follows:
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42797-2 15
X The City initially has retained the firm of BLX Group LLC to
perform rebate calculations that may be required to be made from time to time with respect to the
Bonds.
The City initially has retained the firm of to
perform rebate calculations that may be required to be made from time to time with respect to the
Bonds.
The of the City has undertaken full
responsibility for performing rebate calculations that may be required to be made from time to
time with respect to the Bonds.
The City has decided not, at this time, to designate a party
responsible for performing rebate calculations that may be required to be made from time to time
with respect to the Bonds and as a result undertakes and assumes full responsibility for rebate
compliance and acknowledges that bond counsel does not have any such responsibility (unless
later engaged in writing for such purpose).
The City has determined that under no circumstances will it earn
any arbitrage subject to rebate with respect to the Bonds.
VI.
Other Matters
6.1 Expectations. The undersigned is an authorized representative of the City
and is acting for and on behalf of the City in executing this Tax Certificate. To the best of the
knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that
would materially change the expectations as set forth herein, and said expectations are
reasonable.
6.2 Amendments. Notwithstanding any provision of this Tax Certificate, the
City may amend this Tax Certificate and thereby alter any actions allowed or required by this
Tax Certificate if such amendment is based on an Opinion of Counsel.
6.3 Compliance Procedures. The City's Tax Compliance procedures are
attached hereto as Exhibit D and the City hereby affirms the applicability of these procedures to
the Bonds.
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42797-2 16
6.4 Survival of Defeasance. Notwithstanding any provision in this Tax
Certificate or the Indenture to the contrary, the obligation to remit the Rebate Requirement, if
any, to the United States Department of the Treasury and to comply with all of the other
requirements contained in this Tax Certificate shall survive the defeasance of the Bonds.
Dated: January 19, 2012.
CITY OF VERNON
By:� f..
Ro • Burnett, Treasurer
AT"
By:
APPROV AS TO FORIv
By:
Willar .Yam
Chief Deputy City
Exhibit A
Certificate of the Underwriter
E. J. De La Rosa & Co., Inc., has served as underwriter (the "Underwriter") for
the $37,640,000 aggregate stated principal amount of the City of Vernon Electric System
Revenue Bonds, 2012 Series A (the "Bonds"), issued by the City of Vernon, California.
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto
in the Tax Certificate to which this certificate is attached. On behalf of the Underwriter, the
undersigned hereby certifies and represents the following:
A. Issue Price.
1. As of January 10, 2012 (the "Sale Date"), the Underwriter had offered or
reasonably expected to offer all of the Bonds to the general public (excluding bond houses,
brokers, or similar persons acting in the capacity of underwriters or wholesalers) in a bona fide
public offering at the prices set forth on the attached schedule (the "Initial Offering Prices").
2. The Initial Offering Prices represent fair market prices for the Bonds as of
the Sale Date.
3. As of the date of this certificate, all of the Bonds have been offered to the
general public (excluding bond houses, brokers, or similar persons acting in the capacity of
underwriters or wholesalers) in a bona fide offering at the Initial Offering Prices, and at least
10% of each maturity of the Bonds actually has been sold to the general public (excluding bond
houses, brokers, or similar persons acting in the capacity of underwriters or wholesalers) at such
Initial Offering Prices.
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42797-2 A-1
The undersigned is authorized to execute this certificate on behalf of the
Underwriter, which is based on one or more of (i) personal knowledge, (ii) inquiry deemed
adequate by the undersigned, and (iii) institutional knowledge regarding the matters set forth
herein.
Dated: January 19, 2012
E. J. DE LA ROSA & CO., INC.
By: � gz4l���
Authorized Re resentative