CC - Item 5G - Confirming the Issuance of 2016 Tax Allocation Refunding Bonds and Approving Preliminary And Final Official Statements and A Purchasing Contract Relating Thereto, and Providing for Other Matters Properly RelatingROSEMEAD SUCCESSOR
AGENCY STAFF REPORT
TO: THE HONORABLE CHAIR AND BOARD MEMBERS
FROM: BILL R. MANIS, EXECUTIVE DIRECTOR R
DATE: NOVEMBER 8, 2016
SUBJECT: CONFIRMING THE ISSUANCE OF 2016 TAX ALLOCATION
REFUNDING BONDS AND APPROVING PRELIMINARY AND FINAL
OFFICIAL STATEMENTS AND A PURCHASE CONTRACT RELATING
THERETO, AND PROVIDING FOR OTHER MATTERS PROPERLY
RELATING THERETO
SUMMARY
In 2006, the Rosemead Community Development Commission (the "Former Agency ") issued the
following tax allocation bonds for the purpose of financing and refinancing certain activities of
the Former Agency:
$14,005,000 initial principal amount of
Commission Redevelopment Project Area No
(the "Series 2006A Bonds "); and
$24,230,000 initial principal amount of
Commission Redevelopment Project Area No.
2006B (the "Series 2006B Bonds ").
Rosemead Community Development
1 Tax Allocation Bonds, Series 2006A
Rosemead Community Development
Tax Allocation Refunding Bonds, Series
As of October 2, 2016, there is $3,635,000 of principal amount outstanding of the Series 2006A
Bonds and $23,205,000 of principal amount outstanding of the Series 2006B Bonds (in
aggregate, $26,840,000 outstanding).
The Successor Agency to the Rosemead Community Development Commission (the "Successor
Agency ") assumed responsibility of all debt management with respect to the Former Agency in
2012 in accordance with and pursuant to the Dissolution Act. Under California Health and Safety
Code Section 34177.5, the Successor Agency may refinance outstanding bonds with approval
from the Oversight Board and the California Department of Finance ("DOE"), provided that the
total interest cost, principal amount, and final maturity on the refunding bonds do not exceed that
of the prior (outstanding) bonds. In other words, there must be debt service savings created by
the refinancing.
The Series 2006A Bonds and Series 2006B Bonds are currently eligible to be refinanced at any
time at the option of the Successor Agency, at interest rates lower than those at the time of
original issuance.
ITEM NUMBER:
Successor Agency Meeting
November 8, 2016
Page 2 of 3
On July 12, 2016, the Successor Agency directed staff to move forward with refinancing the
Series 2006A Bonds and Series 2006B Bonds and approved the financing team. Since then, the
Successor Agency (August 23), Oversight Board (August 29), and DOF (October 14) have all
approved the issuance of the Refunding Bonds. Now the Successor Agency is being asked to
approve the Preliminary Official Statement and Bond Purchase Agreement in connection with
the Refunding Bonds. If approval is given to proceed, the Refunding Bonds are expected to price
as early as mid - November and close a few weeks later in December.
STAFF RECOMMENDATION
That the Successor Agency approve Resolution No. 2016 -19 SA (Confirming the Issuance of
2016 Tax Allocation Refunding Bonds, Approving Preliminary and Final Official Statements
and a Purchase Contract relating thereto, and providing for other matters properly relating
thereto).
A description of each of the bond documents covered in the resolution is as follows
• Preliminary Official Statement: This is the offering document that provides a description
of the Successor Agency, the 2016 Bonds, and the sources of payment. It allows
prospective investors to make an informed investment decision about the purchase of
bonds. Federal securities laws require the Preliminary Official Statement to include all
facts that would be material to an investor in the 2016 Bonds. "Material" information is
information that there is a substantial likelihood would have actual significance in the
deliberations of the reasonable investor when deciding whether to buy or sell the 2016
Bonds. The resolution authorizes the Underwriter to distribute the Preliminary Official
Statement to prospective investors.
• Bond Purchase Agreement: This agreement provides for the purchase of the 2016 Bonds
by the Underwriter from the Successor Agency.
STRATEGIC PLAN IMPACT - None
DISCUSSION
Despite recent market volatility, interest rates continue to remain at attractive levels. Based on
current market conditions, the refinancing is estimated to generate around $3 million in debt
service savings over the next 16 years (approximately $2.4 million of net present value savings,
or 9% of par value being refunded). The debt service savings amount would be allocated to
enforceable obligations, administrative cost and /or split among taxing entities, including Los
Angeles County, Garvey and Rosemead School Districts, and the City of Rosemead's General
Fund. Market conditions at the time the refunding bonds are priced will dictate the final debt
service savings amount. If approval is given to proceed, the refunding bonds could be priced as
early as mid - November.
FISCAL IMPACT
As mentioned above, based on current market conditions, the refunding bonds generate an
Successor Agency Meeting
November 8, 2016
Page 3 of 3
estimated total debt service savings of approximately $3 million or an average of over $170,000
per year. Please note that these savings estimates are net of all costs of issuance. Based on the
City's allocation of the residual, around $400,000 would flow into the City's General Fund over
the next 16 years.
The final maturity date of the refunding bonds would match the final maturity of the outstanding
bonds. The refunding bonds would not be an obligation of the City, but rather the Successor
Agency. As such, the source of repayment of the refunding bonds would be limited to tax
increment revenues generated in the Rosemead Merged Project Area as described in the
Indenture of Trust.
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Submitted by:
Carolyn A. Chu, Finance Director
Attachment A: Resolution No. 2016 -19 SA
Attachment B: Preliminary Official Statement
Attachment C: Bond Purchase Agreement
� I 1T
Resolution No. 2016 -19 SA
RESOLUTION NO. 2016-19 SA
A RESOLUTION OF THE SUCCESSOR AGENCY TO THE ROSEMEAD
COMMUNITY DEVELOPMENT COMMISSION CONFIRMING THE
ISSUANCE OF 2016 TAX ALLOCATION REFUNDING BONDS AND
APPROVING PRELIMINARY AND FINAL OFFICIAL STATEMENTS
AND A PURCHASE CONTRACT RELATING THERETO, AND
PROVIDING FOR OTHER MATTERS PROPERLY RELATING
THERETO
WHEREAS, the Rosemead Community Development Commission (the "Former
Agency ") was a public body, corporate and politic, duly established and authorized to transact
business and exercise powers under and pursuant to the provisions of the Community
Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the Health and
Safety Code of the State (the "Redevelopment Law ");
WHEREAS, redevelopment plans for the redevelopment project area designated
"Redevelopment Project Area No. 1" in the City of Rosemead, California, were adopted in
compliance with all requirements of the Redevelopment Law;
WHEREAS, pursuant to Section 34172(a) of the California Health and Safety Code
(unless otherwise noted, all Section references hereinafter being to such Code), the Former Agency
has been dissolved and no longer exists as a public body, corporate and politic, and pursuant to
Section 34173, the City of Rosemead has become the successor entity to the Former Agency (the
"Successor Agency ");
WHEREAS, prior to dissolution of the Former Agency, the Former Agency issued the
following outstanding series of bonds (collectively, the "2006 Bonds ") pursuant to an Indenture,
dated as of October 1, 1993, as supplemented, by and between the Former Agency and U.S. Bank
National Association, as Trustee, for the purpose of financing redevelopment activities:
(i) $14,005,000 initial principal amount of Rosemead Community
Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds,
Series 2006A, for the purpose of financing and refinancing certain redevelopment activities
of the Former Agency; and
(ii) $24,230,000 initial principal amount of Rosemead Community
Development Commission Redevelopment Project Area No. 1 Tax Allocation Refunding
Bonds, Series 2006B, for the purpose of financing and refinancing certain redevelopment
activities of the Former Agency.
WHEREAS, Section 34177.5(a)(1) authorizes the Successor Agency to undertake
proceedings for the refunding of outstanding bonds and other obligations of the Former Agency in
order to achieve debt service savings within the parameters set forth in Section 34177.5(a)(1) (the
"Savings Parameters "), and to issue bonds for such purpose pursuant to Article 11 (commencing
with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code (the
"Refunding Law ")
WHEREAS, the Successor Agency determined that it will achieve debt service savings on
the 2006 Bonds in compliance with the Savings Parameters as evidenced by the analysis prepared
by its Financial Advisor, Urban Futures, Inc., describing potential savings that will accrue to the
Successor Agency and to applicable taxing entities as a result of the refunding of the 2006 Bonds
(the "Debt Service Savings Analysis ");
WHEREAS, the Successor Agency has determined that the potential debt service savings
evidenced by the Debt Service Savings Analysis can be achieved by refunding the 2006 Bonds
through the issuance, as authorized by Section 34177.5(f), by the Successor Agency of its
"Successor Agency to the Rosemead Community Development Commission 2016 Subordinate
Tax Allocation Refunding Bonds" (the "Refunding Bonds ") pursuant to the Redevelopment Law,
the Refunding Law and the form of a Indenture of Trust approved by the Successor Agency
pursuant to the Resolution No. 2016 -12 SA, adopted August 23, 2016, (the "Resolution of
Issuance ");
WHEREAS, pursuant to Section 34179, an oversight board (the "Oversight Board ") has
been established for the Successor Agency and pursuant to Section 34177.5(f), the Oversight
Board by Resolution No. 2016 -009 OB, adopted August 29, 2016, directed the Successor Agency
to undertake such refunding proceedings and approved the issuance, sale and delivery of refunding
bonds by the Successor Agency for the purpose of refunding the 2006 Bonds;
WHEREAS, Resolution No. 2016 -009 OB of the Oversight Board was submitted to the
California Department of Finance for its approval of such approval by the Oversight Board and
the Department of Finance in a letter dated October 14, 2016, approved Resolution No. 2016 -009
OB in accordance with Section 34177.5(f);
WHEREAS, the Agency has determined to sell the Refunding Bonds to Stifel, Nicolaus
& Company, Incorporated (the "Underwriter ") pursuant to a Purchase Contract between the
Successor Agency and the Underwriter (the "Purchase Contract'), the form of which is on file
with the Secretary;
WHEREAS, the Successor Agency has caused to be prepared a form of Official Statement
describing the Refunding Bonds and containing material information relating to the Refunding
Bonds, the preliminary form of which is on file with the Secretary;
WHEREAS, the Successor Agency, with the aid of its staff, has reviewed the Purchase
Contract and the Official Statement and wishes at this time to approve the foregoing as in the
public interests of the Successor Agency and applicable taxing entities;
NOW THEREFORE, THE CITY COUNCIL ACTING AS SUCCESSOR AGENCY
HEREBY RESOLVES AS FOLLOWS:
Section 1. Confirmation of Approval of Issuance of the Bonds. The Successor Agency
hereby confirms its actions in the Resolution of Issuance authorizing and approving the issuance
of the Refunding Bonds pursuant to the Indenture and under the Redevelopment Law and the
Refunding Law.
Section 2. Approval of Official Statement. The Successor Agency hereby approves the
preliminary Official Statement describing the Refunding Bonds, in substantially the form on file
with the Secretary. Each of the Mayor of the City of Rosemead, as Chair of the Successor Agency,
the City Manager of the City of Rosemead, as the Executive Director of the Successor Agency,
the Finance Director, as the chief financial officer of the Successor Agency, or the written designee
of any such officer (each, an "Authorized Officer "), is hereby authorized and directed to execute
and deliver the final Official Statement for and on behalf of the Successor Agency, to deliver to
the Underwriter a certificate with respect to the information set forth therein and to deliver to the
Underwriter a Continuing Disclosure Certificate substantially in the form appended to the final
Official Statement. Distribution of the preliminary Official Statement by the Underwriter is hereby
approved, and, prior to the distribution of the preliminary Official Statement, either Authorized
Officer is authorized and directed, on behalf of the Successor Agency, to deem the preliminary
Official Statement "final" pursuant to Rule 15c2 -12 under the Securities Exchange Act of 1934
(the "Rule "). The executed final Official Statement, which shall include such changes and
additions thereto deemed advisable by an Authorized Officer, including bond insurance and/or a
reserve surety if deemed by an Authorized Officer to be appropriate for savings, and such
information permitted to be excluded from the preliminary Official Statement pursuant to the Rule,
is hereby approved for delivery to the purchasers of the Refunding Bonds.
Section 3. Purchase Contract. The Successor Agency hereby approves the Purchase
Contract prescribing the provisions for purchase and sale of the Refunding Bonds. Each
Authorized Officer is hereby authorized and directed to execute and deliver, and the City Clerk,
as the secretary of the Successor Agency, is hereby authorized and directed to attest to, the
Purchase Contract for and in the name and on behalf of the Successor Agency, in substantially the
form on file with the City Clerk, with such changes therein, deletions therefrom and additions
thereto as the Authorized Officer shall approve, such approval to be conclusively evidenced by the
execution and delivery of the Purchase Contract. The Successor Agency hereby authorizes the
delivery and performance of the Purchase Contract.
Section 4. Official Actions. All actions heretofore taken by the officers and agents of the
Successor Agency with respect to the issuance of the Refunding Bonds are hereby approved,
confirmed and ratified. The Authorized Officers, the City Attorney as general counsel of the
Successor Agency, the Secretary and any and all other officers of the Successor Agency are hereby
authorized and directed, for and in the name and on behalf of the Successor Agency, to do any and
all things and take any and all actions, including but not limited to execution and delivery of any
and all assignments, certificates, requisitions, including requisitions for the payment of costs of
issuance of the Refunding Bonds, agreements, including an escrow agreement determined to be
necessary by an Authorized Officer in order to provide for payment of the 2006 Bonds, all as
determined by an Authorized Officer to be necessary and appropriate in connection with the
issuance of the Refunding Bonds and in customary form, and notices, consents, and other
documents, which an Authorized Officer may deem necessary or advisable, in order to
consummate the sale, issuance and delivery of the Refunding Bonds to the Underwriter.
Section 5. Effective Date. This Resolution shall take effect from and after the date of
approval and adoption thereof.
PASSED, APPROVED, AND ADOPTED this 8 th day of November, 2016.
APPROVED AS TO FORM:
Rachel Richman, Successor Agency Counsel
Sandra Armenta, Successor Agency Chair
ATTEST:
Marc Donohue, Successor Agency Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES) §
CITY OF ROSEMEAD )
I, Marc Donohue, Successor Agency Clerk to the Rosemead Community Development
Commission of the City of Rosemead, California, do hereby certify that the foregoing Successor
Agency Resolution, No. 2016 -19 SA, was duly adopted by the Board of the Successor Agency, at
a regular meeting thereof held on the 8` day of November, 2016, by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Marc Donohue, Successor Agency Clerk
Attachment B
Preliminary Official Statement
OH &S 10/30/16 Draft
PRELUMINARY OFFICIAL STATEMENT DATED NOVEMBER , 2016
NEW ISSUE BOOK ENTRY ONLY
RATINGS: S &P (Insured 2016 Bonds):
S &P (Underlying): "
See "OTHER INFORMATION - Ratings"
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however, to certain
qualifications described herein, under existing law, the interest on the 2016 Bonds is excluded from gross income for federal income tax purposes
and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations,
although for the proposes of computing the alternative minimum tax imposed on certain corporations such interest is taken into account in
determining certain income and earnings. In the further opinion of Bond Counsel such interest is exempt from California personal income taxes.
See "OTHER INFORMATION— Tcu Matters "herein.
Successor Agency to the Rosemead Community Development Commission
2016 Subordinate Tax Allocation Refunding Bonds
Dated: Date of Delivery Due: December 1, as shown on inside cover page
The Successor Agency to the Rosemead Community Development Commission 2016 Subordinate Tax Allocation Refunding Bonds (the
"2016 Bonds ") are being issued by the Successor Agency to the Rosemead Community Development Commission (the "Successor Agency ") to
refinance certain outstanding bonds of the Successor Agency as further described herein. The 2016 Bonds will be secured and payable under an
Indenture of Trust, dated as of December 1, 2016 (the "Indenture "), by and between the Successor Agency and U.S. Bank National Association, as
trustee (the "Trustee "). The payments due under the Indenture will be secured by a pledge of, security interest in and lien on Subordinate Tax
Revenues (as defined in the Indenture and described herein), including all of the Subordinate Tax Revenues in the Redevelopment Obligation
Retirement Fund (as defined in the Indenture and described herein) and certain funds and accounts established pursuant to the Indenture. The
payment of debt service on the 2016 Bonds is subordinate to the payment of amounts payable under the Pass - Through Agreement, Statutory Pass -
Through Payments and debt service on the Senior Bonds (each as defined herein) outstanding in the aggregate principal amount of $
The Successor Agency has covenanted not to issue any obligations payable from Tax Revenues on a senior basis to the 2016 Bonds. See
"SBCURiTY FOR THE BONDS" herein.
The 2016 Bonds are being issued in folly registered form, and when issued, will be registered in the name of Cede & Co., as nominee of
The Depository Trust Company ( "DTC "), New York, New York. DTC will act as securities depository for the 2016 Bonds. Individual purchases of
the 2016 Bonds may be made in book -entry form only, in denominations of $5,000 or any integral multiple thereof. Purchasers of interests in the
2016 Bonds will not receive certificates from the Successor Agency or the Trustee representing their interest in the 2016 Bonds purchased. Interest
on the 2016 Bonds will be payable semiannually on June 1 and December 1 of each year, commencing June 1, 2017. Payments of principal,
premium, if any, and interest on the 2016 Bonds will be payable by the Trustee, to DTC, which is obligated in turn to remit such principal, premium,
if any, and interest to the DTC Participants for subsequent disbursement to the Beneficial Owners of the 2016 Bonds, as more fully described herein,
The 2016 Bonds are subject to optional redemption and mandatory sinking fund redemption prior to maturity as described herein.
See "THE 2016 BONDS — Redemption of the 2016 Bonds" herein.
The Successor Agency has applied for a municipal bond insurance policy which may insure some or all maturities of the 2016 Bonds and a
debt service reserve fund policy for the 2016 Bonds as described herein. If any such policies are purchased, the Official Statement will be revised to
specify the insured maturities of the 2016 Bonds and to reflect the material terms of such municipal bond insurance and /or debt service reserve fund
policies and the Indenture will be revised to reflect such terms and the rights and obligations of the provider.
The 2016 Bonds are limited obligations payable solely from certain payments from the Successor Agency and certain other funds. Neither
the City of Rosemead (the "City"), the County of Los Angeles (the "County"), the State of California (the "State ") nor any political subdivision
thereof, except the Successor Agency, shall be obligated to pay the principal of the 2016 Bonds, or the interest thereon, except from the funds
described above, and neither the faith and the credit nor the taxing power of the County, the State nor any political subdivision thereof is pledged to
the payment of the principal of or the interest on the 2016 Bonds. The issuance of the 2016 Bonds shall not directly, indirectly or contingently
obligate the City, the County, the State or any political subdivision thereof to levy or pledge any form of taxation whatever therefor or to make any
appropriations for their payment. The Successor Agency has no taxing power.
This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of this
issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision.
Capitalized terms used and not defined on this cover page shall have the meanings set forth herein.
For a discussion of some of the risks associated with a purchase of the 2016 Bonds, see "RISK FACTORS" herein.
Preliminary, subject to change.
OHSUSA:765600743.3
MATURITY SCHEDULE
See inside front cover
The 2016 Bonds are offered when, as and if issued, subject to the approval of their legality by Jones Hall, A Professional Law Corporation,
San Francisco, California, Bond Counsel. Certain disclosure matters will be passed upon for the Successor Agency by Orrick Herrington & Sutcliffe
LLP, Los Angeles, California, as Disclosure Counsel. Certain matters will be passed upon for the Successor Agency by the City Attorney, Burke,
Williams & Sorensen, LLP, as general counsel to the Successor Agency, and for the Underwriter by Norton Rose Fulbright US LLP, Los Angeles,
California. It is anticipated that the 2016 Bonds will be available for delivery in definitive form on or about December 2016
[Stifel]
Dated: November _, 2016
OHSUSA:765600743.3
MATURITY SCHEDULE
Successor Agency to the Rosemead Community Development Commission
2016 Subordinate Tax Allocation Refunding Bonds
(Base CUSIPt No.:
$ 2016 Serial Bonds
Maturity Date Principal Interest
(December 1) Amount Rate
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Yield Price CUSIP t
$ % 2016 Term Bonds due December 1, 20_ - Yield: _% CUSIP No.
* Preliminary, subject to change.
t CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the
American Bankers Association by S &P Capital IQ. Copyright(c) 2016 CUSIP Global Services. All rights reserved. CUSH`@ data herein is
provided by CUSIP Global Services, This data is not intended to create a database and does not serve in any way as a substitute for the CGS
database. CUSIP® numbers are provided for convenience of reference only. Neither the Underwriter nor the Successor Agency or their
agents or counsel assume responsibility for the accuracy of such numbers.
OHSUSA:765600743.3
SUCCESSOR AGENCY TO THE
ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION
CITY COUNCIL
Sandra Armenta, Mayor /Chair
Polly Low, Mayor Pro- Tem/Vice Chair
Bill Alarcon, Council MemberBoard Member
Margaret Clark, Council Member /Board Member
Steven Ly, Council Member /Board Member
SUCCESSOR AGENCYICITY STAFF
Bill R. Maris, City Manager
Carolyn A. Chu, Finance Director
Brad McKinney, Assistant City Manager
Burke, Williams & Sorenson, LLP, City Attorney and General Counsel to the Successor Agency
SPECIAL SERVICES
Bond Counsel
Jones Hall, A Professional Law Corporation
San Francisco, California
Disclosure Counsel
Orrick, Herrington & Sutcliffe LLP
Los Angeles, California
Municipal Advisor
Urban Futures, Inc.
Orange, California
Fiscal Consultant
Urban Futures, Inc.
Orange, California
Trustee
U.S. Bank National Association
Los Angeles, California
Verification Agent
OHSUSA:765600743.3
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No dealer, broker, salesperson or other person has been authorized by the Successor Agency to give any
information or to make any representations in connection with the offer or sale of the 2016 Bonds other than as
contained in this Official Statement, and if given or made, such other information or representations must not be
relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any sale of the 2016 Bonds by any person, in any
jurisdiction where such offer, solicitation or sale would be unlawful.
The information set forth herein has been obtained from sources that are believed to be reliable, but is not
guaranteed as to accuracy or completeness, and is not to be construed as a representation, by the Successor Agency.
Neither the delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any
implication that there has been no change in the affairs of the Successor Agency since the date hereof. The
information and expressions of opinion stated herein are subject to change without notice.
Certain statements contained in this Official Statement reflect not historical facts but forecasts and "forward -
looking statements." All forward - looking statements are predictions and are subject to known and unknown risks and
uncertainties. No assurance can be given that the future results discussed herein will be achieved, and actual results
may differ materially from the forecasts described herein. In this respect, the words "estimate," "project,"
"anticipate," "expect," "intend," "believe" and similar expressions are intended to identify forward - looking
statements. All projections, forecasts, assumptions, expressions of opinions, estimates and other forward - looking
statements are expressly qualified in their entirety by the cautionary statements set forth in this Official Statement.
The achievement of certain results or other expectations contained in such forward - looking statements involves
known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or
achievements described to be materially different from any future results, performance, or achievements expressed or
implied by such forward - looking statements. No updates or revisions to these forward - looking statements are
expected to be issued if or when the expectations, events, conditions, or circumstances on which such statements are
based change. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD -
LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF.
All summaries of the Indenture (as defined herein) and of statutes and other documents referred to herein do
not purport to be comprehensive or definitive and are qualified in their entireties by reference to each such statute and
document. This Official Statement, including any amendment or supplement hereto, is intended to be deposited with
one or more depositories. This Official Statement does not constitute a contract between any Owner of a 2016 Bond
and the Successor Agency.
The issuance and sale of the 2016 Bonds have not been registered under the Securities Act of 1933 or the
Securities Exchange Act of 1934, both as amended, in reliance upon exemptions provided thereunder by Sections
3(a)(2) and 3(a)(12), respectively, for the issuance and sale of municipal securities.
The Underwriter has provided the following sentence for inclusion in this Official Statement: The
Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its
responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this
transaction, but the Underwriter do not guarantee the accuracy or completeness of such information.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR AFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2016 BONDS AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY
OFFER AND SELL THE 2016 BONDS TO CERTAIN DEALERS AND OTHERS AT PRICES LOWER THE
PUBLIC OFFERING PRICE STATED ON THE INSIDE COVER PAGE HEREOF. THE OFFERING PRICES
MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.
The City maintains a website. However, the information presented at such website is not part of this Official
Statement, is not incorporated by reference herein, and must not be relied upon in making an investment decision
with respect to the 2016 Bonds.
011SUSA:765600743.3
TABLE OF CONTENTS
Page
INTRODUCTION.........................................................................................................
............................... 1
General...................................................................................................................
............................... 1
Purpose...................................................................................................................
............................... 1
TheCity ..................................................................................................................
............................... 2
TheSuccessor Agency ...........................................................................................
............................... 2
TheProject Area ....................................................................................................
............................... 3
Authority for Issuance of the 2016 Bonds .............................................................
............................... 3
Securityfor the 2016 Bonds ...................................................................................
............................... 3
Termsof the 2016 Bonds .......................................................................................
............................... 5
Municipal Bond Insurance Policy and Reserve Fund Surety .................................
............................... 5
Professionals Involved in the Offering ..................................................................
............................... 5
ContinuingDisclosure ............................................................................................
............................... 6
Reference to Underlying Documents .....................................................................
............................... 6
PLANOF REFUNDING ...............................................................................................
............................... 6
ESTIMATED SOURCES AND USES OF FUNDS .....................................................
............................... 7
ANNUAL DEBT SERVICE REQUIREMENTS OF THE BONDS .............................
............................... 8
THE2016 BONDS ........................................................................................................
............................... 8
General...................................................................................................................
............................... 8
Redemptionof the 2016 Bonds ..............................................................................
............................... 9
SECURITY FOR THE BONDS .................................................................................. ...............................
11
Subordinate Tax Revenues ................................................................................... ...............................
11
Limitation on Issuance of Senior Bonds .............................................................. ...............................
13
Pass - Through Arrangements ................................................................................ ...............................
13
ReserveAccount .................................................................................................. ...............................
15
2016 Bonds Not a Debt of the City, County or the State ..................................... ...............................
15
AdditionalParity Debt ......................................................................................... ...............................
16
BONDINSURANCE .................................................................................................. ...............................
16
THESUCCESSOR AGENCY .................................................................................... ...............................
16
General................................................................................................................. ...............................
16
SuccessorAgency Staff ........................................................................................ ...............................
17
OversightBoard ................................................................................................... ...............................
17
Department of Finance Finding of Completion ................................................... ...............................
18
State Controller Asset Transfer Review ............................................................... ...............................
18
THEPROJECT AREA ................................................................................................ ...............................
18
General................................................................................................................. ...............................
18
Merged Project Area Description ......................................................................... ...............................
19
PropertyValue by Land Use ................................................................................ ...............................
20
AssessedValues .....................................................................................................
.............................22
Ten Largest Assessees .......................................................................................... ...............................
22
Property Tax Collection Procedures and Delinquencies ...................................... ...............................
23
Low and Moderate Income Housing Set -Aside ................................................... ...............................
24
Redevelopment Property Tax Trust Fund ............................................................ ...............................
25
-i-
OHSUSA:765600743.3
TABLE OF CONTENTS
(continued)
Page
Allocation of Taxes Subsequent to the Dissolution Act ...................................... ............................... 25
Recognized Obligation Payment Schedule .......................................................... ............................... 25
AssessmentAppeals ............................................................................................. ............................... 28
Property Tax Administrative Costs ...................................................................... ............................... 31
PlanLimitations ................................................................................................... ............................... 31
Last and Final Recognized Obligation Payment Schedule .................................. ............................... 31
ESTIMATED REVENUES AND BOND RETIREMENT ......................................... ............................... 33
RISKFACTORS ......................................................................................................... ............................... 36
Limited Special Obligations .................................................................................
............................... 36
SubordinateLien Risks ........................................................................................
............................... 36
Recognized Obligation Payment Schedule ..........................................................
............................... 36
Real Estate and General Economic Risks ............................................................
............................... 37
Reductionin Taxable Value .................................................................................
............................... 37
AssessmentAppeals .............................................................................................
............................... 37
Reduction in Inflationary Rate and Changes in Legislation .................................
............................... 38
EstimatedRevenues .............................................................................................
............................... 38
Levy and Collection of Taxes ............................................................. ..............................;
................. 39
NoTeeter Plan .....................................................................................................
............................... 39
Concentrationof Land Ownership .......................................................................
............................... 39
Acceleration of Senior Bonds ..............................................................................
............................... 39
Bond Insurance Risk Factors ...............................................................................
............................... 39
Changein Law .....................................................................................................
............................... 40
Lossof Tax Exemption ..........................................................................................
.............................40
IRSAudit of Bond Issues .....................................................................................
............................... 41
CertainBankruptcy Risks ....................................................................................
............................... 41
Bankruptcy of Landowners ....................................................................................
.............................41
Riskof Earthquake ...............................................................................................
............................... 41
HazardousSubstances ............................................................................................
.............................42
StateBudget .........................................................................................................
............................... 42
Direct and Overlapping Indebtedness ..................................................................
............................... 43
Future Legislation and Initiatives .........................................................................
............................... 43
InvestmentRisk ....................................................................................................
............................... 43
Challenges to Dissolution Act ..............................................................................
............................... 43
SecondaryMarket ................................................................................................
............................... 44
LIMITATIONS ON TAX REVENUES ......................................................................
............................... 44
Property Tax Limitations - Article XIIIA ............................................................
............................... 44
ImplementingLegislation ....................................................................................
............................... 47
RedevelopmentPlan Limits .................................................................................
............................... 47
UnitaryProperty ...................................................................................................
............................... 47
Tax Increment Limitations; Senate Bill 107 ........................................................
............................... 48
Property Taxes; Delinquencies ............................................................................
............................... 49
TaxCollection Fees .............................................................................................
............................... 49
FutureInitiatives ..................................................................................................
............................... 49
OTHERINFORMATION ........................................................................................... ............................... 49
-ii-
OHSUSA:765600743.3
TABLE OF CONTENTS
(continued)
Page
Certain Information Concerning the City ............................................................. ...............................
49
FinancialStatements ............................................................................................ ...............................
49
ContinuingDisclosure .......................................................................................... ...............................
50
Litigation.............................................................................................................. ...............................
50
TaxMatters .......................................................................................................... ...............................
50
MunicipalAdvisor ............................................................................................... ...............................
52
LegalOpinion ...................................................................................................... ...............................
52
Verification of Mathematical Accuracy ............................................................... ...............................
52
Ratings................................................................................................................. ...............................
52
Underwriting........................................................................................................ ...............................
53
Miscellaneous....................................................................................................... ...............................
53
APPENDIX A FISCAL CONSULTANT REPORT ................................................ ...............................
A -1
APPENDIX B GENERAL INFORMATION CONCERNING THE CITY OF ROSEMEAD ..............
B -1
APPENDIX C CITY OF ROSEMEAD COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2015 .................................................. ...............................
C -1
APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE .............................
D -1
APPENDIX E FORM OF OPINION OF BOND COUNSEL .................................. ...............................
E -1
APPENDIX F FORM OF CONTINUING DISCLOSURE CERTIFICATE ............... ............................F
-1
APPENDIX G DTC AND BOOK -ENTRY ONLY SYSTEM ................................. ...............................
G -1
APPENDIX H FORM OF DEBT SERVICE RESERVE FUND SURETY BOND ...............................
H -1
APPENDIX I SPECIMEN MUNICIPAL BOND INSURANCE POLICY .................. ............................I
-1
-iii -
OHSUSA:765600743.3
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OHSUSA:765600743.3
Successor Agency to the Rosemead Community Development Commission
2016 Subordinate Tax Allocation Refunding Bonds
INTRODUCTION
This Introduction is subject in all respects to the more complete information contained elsewhere
in this Official Statement and the offering of the 2016 Bonds to potential investors is made only by means
of the entire Official Statement. Capitalized terms used and not defined in this Introduction shall have the
meanings assigned to them elsewhere in this Official Statement.
General
This Official Statement, including the cover page, inside cover page and appendices hereto,
provides information in connection with the issuance by the Successor Agency to the Rosemead
Community Development Commission (the "Successor Agency ") of its 2016 Subordinate Tax Allocation
Refunding Bonds (the "2016 Bonds "). The 2016 Bonds are being issued to refinance certain outstanding
bonds with respect to the Rosemead Merged Project Area of the Successor Agency (the "Project Area "),
as further described herein.
The 2016 Bonds will be secured and payable under an Indenture of Trust, dated as of December
1, 2016 (the "Indenture "), by and between the Successor Agency and U.S. Bank National Association, as
trustee (the "Trustee "). The payments due under the Indenture will be secured by a pledge of, security
interest in and lien on Subordinate Tax Revenues (as defined in the Indenture and described herein),
including all of the Subordinate Tax Revenues in the Redevelopment Obligation Retirement Fund (as
defined in the Indenture and described herein) and certain funds and accounts established pursuant to the
Indenture. The payment of debt service on the 2016 Bonds is subordinate to the payment of amounts
payable under the Pass - Through Agreement, Statutory Pass - Through Payments and debt service on the
Senior Bonds (each as defined herein) outstanding in the aggregate principal amount of $ .* The
Successor Agency has covenanted not to issue any obligations payable from Tax Revenues, described
herein, on a senior basis to the 2016 Bonds. See "SECURITY FOR THE BONDS" herein.
Purpose
The 2016 Bonds are being issued to refund, on a current basis, all of the outstanding Rosemead
Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series
2006A, initially issued in the principal amount of $14,005,000, of which $3,635,000 principal amount is
currently outstanding (the "Series 2006A Bonds ") and the Rosemead Community Development
Commission Redevelopment Project Area No. 1 Tax Allocation Refunding Bonds, Series 2006B, initially
issued in the principal amount of $24,230,000, of which $23,205,000 principal amount is currently
outstanding (the "Series 2006B Bonds" and, together with the Series 2006A Bonds, the "Refunded
Bonds "). Proceeds of the 2016 Bonds will additionally be applied to pay costs of issuance of the 2016
Bonds, including the premium for the Policy and the 2016 Reserve Surety (as such terms are defined
below). See "PLAN OF REFUNDING" and "ESTIMATED SOURCES AND USES OF FUNDS" herein.
* Preliminary, subject to change.
OHSUSA:765600743.3
The City
The City of Rosemead (the "City ") encompasses approximately 5 1 /2 square miles located in the
central northwestern section of Los Angeles County, approximately 12 miles east of the central business
district of Los Angeles. The City shares common boundaries with the municipalities of San Gabriel,
Temple City, El Monte, Montebello, Monterey Park and Alhambra. The City's current population is
approximately 55,23 1.
Incorporated in August 4, 1959, the City operates as a general law city. It has a council- manager
form of government, with five council members elected at large for four -year overlapping terms. The
Rosemead City Council (the "City Council ") selects a mayor and mayor pro -tem each year from its
membership.
The City Council is responsible for enacting local legislation, establishing general policy for the
City and adopting the annual budget. The City Council's duties also include the appointment of a City
Manager, City Attorney, City Clerk and City Treasurer and the selection of citizens to serve of the City's
various advisory commissions.
The City contracts with the Los Angeles County Sheriff's Department for sheriff services. Fire
protection is provided through the Los Angeles County Fire Protection District. Two fire stations are
located in the City.
For additional information regarding the City, see APPENDIX B — "GENERAL
INFORMATION CONCERNING THE CITY OF ROSEMEAD."
The Successor Agency
As described below, the Successor Agency has succeeded to certain rights of the former
Rosemead Community Development Commission. The Rosemead Redevelopment Agency, later known
as the Rosemead Community Development Commission (the "Former Agency "), was activated in 1972
by City ordinance. The City Council adopted the Redevelopment Plan for Redevelopment Project Area
No. 1 on June 27, 1972, by Ordinance No. 340. That Redevelopment Plan has been amended three times:
on December 9, 1986, by Ordinance No. 592, to establish the tax increment collection limit and to
establish an eminent domain sunset date; on December 20, 1994, by Ordinance No. 752, to comply with
provisions of Assembly Bill 1290; and on January 22, 2002, by Ordinance No. 822, to eliminate the date
restriction on establishing loans, advances and indebtedness.
Pursuant to California legislation enacted in 2011 and 2012 and most recently in 2014 and 2015
(as more fully described herein, the "Dissolution Act "), redevelopment agencies in the State of California
(the "State "), including the Former Agency, were dissolved, and with certain exceptions, could no longer
conduct redevelopment activities. The Successor Agency, however, is authorized to continue to refinance
existing bonds in order to achieve savings in debt service, and to finance and refinance other obligations
of the Successor Agency. See " —The Project Area" below. Additional amendments constituting a portion
of the Dissolution Act resulted from the enactment of Senate Bill No. 107 ( "SB 107 ") (Chapter 325,
Statutes of 2015), which became effective on September 22, 2015. See "THE SUCCESSOR AGENCY"
for a discussion of the Dissolution Act, the formation of the Successor Agency and the current powers,
and limitations thereon, of the Successor Agency.
2
OHSUSA:765600743.3
The Project Area
The Successor Agency has two component project areas, the Project Area No. 1 Component
( "Component Area No. 1 ") and the Project Area No. 2 Component ( "Component Area No. 2 "). By
Ordinance No. 871 adopted by the City Council on March 10, 2009, the City Council adopted a merger
amendment, merging the Redevelopment Plans for Component Area No. 1 and the Component Area No.
2, creating the Project Area, as defined herein.
Component Area No. 1. Component Area No. 1 is a contiguous area of about 510 acres and is
roughly triangular with Garvey Avenue, San Gabriel Boulevard and Walnut Grove Avenue being the
major thoroughfares traversing the area. Component Area No. 1 is within a few miles of the City's Civic
Center and is located between the San Bernardino and Pomona Freeways to the north and south,
respectively.
Component Area No. 2. The City Council adopted the Redevelopment Plan for Redevelopment
Project Area No. 2 on June 27, 2000, by Ordinance No. 809. The territory within Component Area No. 2
includes about 205 acres. The Component Area No. 2 is a contiguous area of about 205 acres and
encompasses Valley Boulevard from the eastern and western boundaries of the City and Rosemead
Boulevard from the southern and northern boundaries of the City.
Authority for Issuance of the 2016 Bonds
The 2016 Bonds are being issued by the Successor Agency pursuant to the provisions of the
Dissolution Act, the Redevelopment Law and Article 11 (commencing with Section 53588) of Chapter 3
of Part 1 of Division 2 of the Government Code of the State of California.
The issuance of the 2016 Bonds was subject to approvals under the Dissolution Act, of the
Successor Agency's Oversight Board, as described below, and the Department of Finance of the State of
California (the "DOF "). All such approvals have been obtained. See "THE SUCCESSOR AGENCY."
The Successor Agency approved the issuance of the 2016 Bonds by resolution adopted on August 23,
2016. The Oversight Board for the Successor Agency approved the issuance of the 2016 Bonds by the
Successor Agency by resolution adopted on August 29, 2016. The DOF released its letter approving the
Oversight Board Resolution approving the issuance of the 2016 Bonds on October 14, 2016. The 2016
Bonds are being issued by the Successor Agency pursuant to the provisions of the Dissolution Act, the
Redevelopment Law and Article 11 (commencing with Section 53588) of Chapter 3 of Part 1 of Division
2 of the Government Code of the State of California.
Security for the 2016 Bonds
The 2016 Bonds shall be payable from Subordinate Tax Revenues. As defined in the Indenture,
the term "Subordinate Tax Revenues" means, for each Fiscal Year, the Tax Revenues, as defined in the
Senior Indenture and as defined herein, minus (i) the amount needed by the Successor Agency for
payment of debt service on the Senior Bonds and any other payment obligations due under the Senior
Indenture, (ii) amounts payable by the Successor Agency pursuant to Sections 33676, 33607.5, 33607.7
and 34183(a)(1) of the Law ( "Statutory Pass - Through Payments "), and (iii) amounts payable under the
Pass - Through Agreement. Upon satisfaction of the Successor Agency's obligations under the Senior
Bonds and Senior Indenture, Subordinate Tax Revenues shall mean Tax Revenues as defined herein,
subject to amounts due under the Pass - Through Agreement and for Statutory Pass - Through Payments.
Pursuant to the Indenture, the Bonds and any Parity Debt shall be equally secured by a pledge of,
security interest in and lien on all of the Subordinate Tax Revenues in the Redevelopment Obligation
OHSUSA:765600743.3
Retirement Fund and a first and exclusive pledge of, security interest in and lien upon all of the moneys in
the Debt Service Fund, the Interest Account, Principal Account and the Redemption Account, established
under the Indenture. See "SECURITY FOR THE BONDS."
As used in this Official Statement and in the Fiscal Consultant's Report attached to this Official
Statement as APPENDIX A, the term "Gross Tax Revenues" means all property tax revenues deposited in
the designated property tax (formerly tax increment revenues) related to the Project Area, which will
include, moneys deposited, from time to time, in the Redevelopment Property Tax Trust Fund held and
administered by the Office of the Auditor Controller of the County of Los Angeles (the "County Auditor -
Controller") with respect to the Successor Agency (the "Redevelopment Property Tax Trust Fund" or
"RPTTF "). The Senior Bonds are generally secured by "Pledged Revenues" which are equal to Gross
Tax Revenues less County Administrative Fees and amounts payable by the Successor Agency pursuant
to the Pass - Through Agreement.
As defined in the Indenture, the term "Tax Revenues" means, for each Fiscal Year, all moneys
derived from that portion of taxes levied upon assessable property within the Project Area deposited from
time to time in the Redevelopment Property Tax Trust Fund, as provided in paragraph (2) of subdivision
(a) of Section 34183 of the Law, excluding amounts if any, payable by the Successor Agency pursuant to
Sections 33676, 33607.5, 33607.7 and 34183(a)(1) of the Law, including amounts payable under the
Pass - Through Agreement, except to the extent that such amounts are payable on a basis subordinate to the
payment of Annual Debt Service on the 2016 Bonds or any Parity Debt pursuant to Sections 33607.5(e)
and 34177.5(c) of the Law or pursuant to the terms of the Pass - Through Agreement, as applicable.
The Bonds shall be also equally secured by the pledge and lien created with respect to the Bonds
by Section 34177.5(g) of the Law on the Tax Revenues deposited from time to time in the RPTTF. As
provided in the Indenture, the Successor Agency shall deposit all Tax Revenues into the Redevelopment
Obligation Retirement Fund promptly upon receipt thereof. Except for the Tax Revenues and such
moneys, no funds or properties of the Successor Agency shall be pledged to, or otherwise liable far, the
payment of principal of or interest on the 2016 Bonds or any amounts due and owing to the Insurer with
respect to the Policy or the 2016 Reserve Surety.
Pursuant to the Indenture, the Bonds shall be additionally secured by a first and exclusive pledge
of, security interest in and lien upon all of the moneys in the Reserve Account established under the
Indenture.
The Senior Bands as defined herein, consisting of $ currently outstanding principal
amount of the $11,230,000 Rosemead Merged Project Area, Tax Allocation Bonds, Series 2010A (the
"Senior Bonds ") were issued by the Former Agency on July 15, 2010. The proceeds from the sale of the
Senior Bonds were used to: (i) finance the cost of certain redevelopment projects within the Project Area,
(ii) fund a reserve account for the Senior Bonds, and (iii) pay costs associated with the issuance of the
Senior Bonds. The Senior Bonds are secured from tax increment revenues generated from the Project
Area. The Senior Bonds were issued pursuant to an Indenture, dated as of June 1, 2010 (the "Senior
Indenture "), by and between the Former Agency and U.S. Bank National Association, as trustee.
SB 107, which became effective September 22, 2015, amended the Dissolution Act to provide
that the time limits for receiving property tax revenues and the limitation on the amount of property tax
revenues that may be received by the Successor Agency set forth in the Redevelopment Plan are not
effective for purposes of paying the Successor Agency's enforceable obligations such as the Senior
Bonds, the 2016 Bonds and Parity Debt. Accordingly, the projections set forth in this Official Statement
and in the Fiscal Consultant's Report attached to this Official Statement as APPENDIX A were prepared
without regard to the time and financial limitations set forth in the Redevelopment Plan.
4
OHSUSA:765600743.3
Terms of the 2016 Bonds
The 2016 Bonds will be issued in denominations of $5,000 and any integral multiple thereof (the
"Authorized Denominations "). The 2016 Bonds will be dated their date of delivery and are payable with
respect to interest semiannually each June 1 and December 1, commencing on June 1, 2017.
The 2016 Bonds will be delivered in fully - registered form only, and when delivered, will be
registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New
York ( "DTC "). DTC will act as securities depository for the 2016 Bonds. Ownership interests in the 2016
Bonds may be purchased in book -entry form only. Principal of and interest on the 2016 Bonds will be
paid by the Trustee to DTC or its nominee, which will in turn remit such payments to its Participants
(defined herein) for subsequent disbursement to the Owners of the 2016 Bonds. See APPENDIX G —
"DTC AND BOOK -ENTRY ONLY SYSTEM" attached hereto.
The 2016 Bonds are subject to redemption prior to maturity, as described herein. See "THE 2016
BONDS — Redemption of the 2016 Bonds" herein.
Municipal Bond Insurance Policy and Reserve Fund Surety
The Successor Agency has applied for a municipal bond insurance policy which may insure some
or all maturities of the 2016 Bonds and a debt service reserve fund policy for the 2016 Bonds as described
herein. If any such policies are purchased, the Official Statement will be revised to specify the insured
maturities of the 2016 Bonds and to reflect the material terms of such municipal bond insurance and /or
debt service reserve fund policies and the Indenture will be revised to reflect such terms and the rights and
obligations of the provider.
Professionals Involved in the Offering
U.S. Bank National Association, Los Angeles, California, will act as trustee with respect to the
2016 Bonds under the Indenture.
Urban Futures, Inc., Orange, California, has acted as Municipal Advisor to the Successor Agency
in the structuring and presentation of the financing.
Urban Futures, Inc., Orange, California, has also acted as Fiscal Consultant to the Successor
Agency and has prepared an analysis of taxable values and tax increment revenues in the Project Area.
See APPENDIX A — "FISCAL CONSULTANT REPORT" herein.
All proceedings in connection with the issuance of the 2016 Bonds are subject to the approval of
Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. Orrick,
Herrington & Sutcliffe LLP is acting as Disclosure Counsel. Certain legal matters will be passed on for
the Successor Agency by the City Attorney, Burke, Williams & Sorensen, LLP, as general counsel to the
Successor Agency, and for the Underwriter by Norton Rose Fulbright US LLP, Los Angeles, California.
Bond Counsel, Disclosure Counsel and Underwriter's Counsel undertake no responsibility for the
accuracy, completeness or fairness of this Official Statement. The fees and expenses of the Municipal
Advisor, Bond Counsel, Disclosure Counsel and Underwriter's Counsel are contingent upon the sale and
delivery of the 2016 Bonds.
OHSUSA:765600743.3
Continuing Disclosure
With respect to continuing disclosure, the Successor Agency will prepare and provide annual
updates of the information contained in the tables included in this Official Statement with respect to
property tax revenues, collections, any material delinquencies, principal taxpayers, and notices of
enumerated events as required under the Continuing Disclosure Certificate. Initially, the Successor
Agency will act as Dissemination Agent and will ensure that the annual reports and notices are filed with
the Municipal Securities Rulemaking Board (the "MSRB ") through its Electronic Municipal Market
Access system ( "EMMA "). See the caption "OTHER INFORMATION — Continuing Disclosure" and
APPENDIX F — "FORM OF CONTINUING DISCLOSURE CERTIFICATE."
Reference to Underlying Documents
Brief descriptions of the 2016 Bonds, the Indenture, the Successor Agency, the Project Area and
other related information are included in this Official Statement. Such descriptions and information do not
purport to be comprehensive or definitive. The summaries of and references to all documents, statutes,
reports and other instruments referred to herein is qualified in its entirety by reference to such document,
statute, report or instrument, copies of which are all available for inspection at the offices of the Successor
Agency. Certain capitalized terms used and not defined herein shall have the meaning given to those
terms in APPENDIX D — "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" attached
hereto.
PLAN OF REFUNDING
Net proceeds of the 2016 Bonds, together with other available moneys, will be applied to refund
and redeem all of the outstanding Refunded Bonds. The following table details the Refunded Bonds.
Series 2006A Bonds Series 2006B Bonds
Maturity
Date
Principal
Interest
Principal
Interest
(October 1)
Amount
Rate
CUSIP No.
Amount
Rate
CUSIP No.
2017
$1,200,000
4.000%
777510AMO
$ 95,000
3.700%
777510BD9
2018
1,250,000
4.250
777510AN8
100,000
3.750
777510BE7
2019
280,000
4.000
777510AP3
725,000
4.000
777510BF4
2019
--
--
400,000
4.500
777510BR8
2020
290,000
4.125
77751OAQI
1,175,000
4.000
777510BG2
2021
300,000
4.125
777510AR9
1,220,000
4.000
77751OBHO
2022
315,000
4.125
777510AS7
1,270,000
4.125
777510BJ6
2023
--
1,320,000
4.200
777510BK3
2024
1,375,000
4.250
777510BL1
2025
1,430,000
4.250
777510BM9
2033
10,595,000
4.375
777510BP2
2033
3,500,00
5.000
777510BQO
$3,635,000
$23,205,000
On the date of issuance of the 2016 Bonds, a portion of the proceeds thereof, together with other
available moneys, will be deposited in a special fund for the outstanding Series 2006A Bonds (the "Series
2006A Bonds Refunding Fund") and a special fund for the outstanding Series 2006B Bonds (the "Series
2006B Bonds Refunding Fund "), to be held in trust by U.S. Bank National Association, as prior trustee,
in accordance with those Irrevocable Refunding Instructions with respect to the Refunded Bonds dated
December _, 2016 (the "Instructions "). The Successor Agency expects to apply remaining amounts in
OHSUSA:765600743.3
the aggregate amount of $ currently on deposit under the indentures for the Refunded Bonds in
accordance with the Instructions. Such funds on hand and proceeds deposited, respectively, into the
2006A Bonds Refunding Fund and the 2006B Bonds Refunding Fund (together referred to herein as the
"Refunding Funds ") pursuant to the Instructions will be held uninvested, and applied to pay the
redemption price of the respective series of Refunded Bonds on December _, 2016, at a redemption price
equal to 100% of their principal amount as specified in the Instructions, plus accrued interest. See
"ESTIMATED SOURCES AND USES OF FUNDS." Upon deposit of such proceeds and other moneys
into the Refunding Funds, the Refunded Bonds will no longer be deemed outstanding.
The moneys held in accordance with the Instructions are pledged solely to the payment of the
Refunded Bonds and are not available to pay principal of or interest on the 2016 Bonds or other
outstanding bonds of the Successor Agency.
See "ESTIMATED SOURCES AND USES OF FUNDS" below. See also "OTHER
INFORMATION — Verification of Mathematical Accuracy" below.
ESTIMATED SOURCES AND USES OF FUNDS
Set forth below are the estimated sources and uses of proceeds of the 2016 Bonds.
Sources:
Par Amount of 2016 Bonds
Net Original Issue Premium (Discount)
Amounts Released from accounts of Refunded Bonds
TOTALSOURCES
Uses:
Deposit to Refunding Fund
Costs of Issuance
TOTAL USES:
P) Includes $ for deposit in the 2006A Bonds Refunding Fund and $ for deposit in the
2006B Bonds Refunding Fund under the Instructions to be applied to the refunding of the Refunded
Bonds.
(a) Deposit to the Costs of Issuance Account includes premiums for the Policy and the 2016 Reserve
Surety, Underwriter's discount, legal fees, printing, rating agency fees and expenses, fees of the
Municipal Advisor, fees of the Fiscal Consultant, and other issuance costs of the 2016 Bonds.
OHSUSA:765600743.3
ANNUAL DEBT SERVICE REQUIREMENTS OF THE BONDS
The following table provides the annual debt service requirements of the Senior Bonds and the
2016 Bonds.
Fiscal
Year
Ended
(Dec. 1)
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Total
Senior Bonds
2016 Bonds
Principal Interest Total Annual Total
Nate: Totals may not 6e due to rounding.
General
THE 2016 BONDS
The 2016 Bonds will be dated as of the date of original delivery (the "Closing Date "), will bear
interest at the rates per annum and will mature on the dates and in the amounts set forth on the inside
cover page hereof. The 2016 Bonds will be issued in fully registered form, without coupons, in the
denomination of $5,000 each or any integral multiple thereof. Interest on the 2016 Bonds is payable
semiannually on June 1 and December 1 of each year, commencing June 1, 2017 (each an "Interest
Payment Date "). While the 2016 Bonds are held in the book -entry only system of DTC, all such
payments of principal, interest and premium, if any, will be made to Cede & Co. as the registered owner
of the 2016 Bonds, for subsequent disbursement to Participants and beneficial owners. See APPENDIX G
— "DTC AND BOOK -ENTRY SYSTEM."
Interest on the 2016 Bonds (including the final interest payment upon maturity or earlier
redemption) shall be payable on each Interest Payment Date to the person whose name appears on the
Registration Books as the Owner thereof as of the fifteenth day of the month preceding the Interest
Payment Date (the "Record Date ") immediately preceding each such Interest Payment Date, such interest
to be paid by check of the Trustee mailed by first class mail, postage prepaid, on the Interest Payment
Date, to such Owner at the address of such Owner as it appears on the Registration Books as of such
Record Date; provided however, that payment of interest may be by wire transfer to an account in the
United States of America to any registered owner of 2016 Bonds in the aggregate principal amount of
OHSUSA:765600743.3
$1,000,000 or more who shall furnish written wire instructions to the Trustee prior to the applicable
Record Date. Principal of and redemption premium (if any) on any 2016 Bond shall be paid upon
presentation and surrender thereof, at maturity or earlier redemption, at the Principal Corporate Trust
Office of the Trustee. Both the principal of and interest and redemption premium (if any) on the 2016
Bonds shall be payable in lawful money of the United States of America.
Each 2016 Bond shall bear interest from the Interest Payment Date next preceding the date of
authentication thereof, unless (a) it is authenticated after a Record Date and on or before the following
Interest Payment Date, in which event it shall bear interest from such Interest Payment Date; or (b) a 2016
Bond is authenticated on or before the first Record Date, in which event it shall bear interest from the
Closing Date; provided, however, that if, as of the date of authentication of any 2016 Bond, interest
thereon is in default, such 2016 Bond shall bear interest from the Interest Payment Date to which interest
has previously been paid or made available for payment thereon.
Redemption of the 2016 Bonds
Optional Redemption. The 2016 Bonds maturing on or before December 1, 20_ are not subject
to optional redemption prior to maturity. The 2016 Bonds maturing on and after December 1, 20, are
subject to redemption, at the option of the Successor Agency on any date on or after December 1, 20_, as
a whole or in part, by such maturities as shall be determined by the Successor Agency, and by lot within a
maturity, from any available source of funds, at a redemption price equal to the principal amount of the
2016 Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption,
without premium.
The Successor Agency will give the Trustee written notice of its intention to redeem 2016 Bonds
by optional redemption with a designation of the principal amount and maturities to be redeemed at least
forty -five (45) days prior to the date fixed for such redemption (or such later date as is acceptable to the
Trustee)..
Mandatory Sinking Account Redemption. The 2016 Bonds that are Term Bonds maturing
December 1, 20_ and maturing December 1, 20_ shall be subject to mandatory redemption in whole, or
in part by lot, on December 1 in each year, commencing December 1, 20_, as set forth below, from
sinking fund payments made by the Successor Agency to the Principal Account at a redemption price
equal to the principal amount thereof to be redeemed, without premium, in the aggregate respective
principal amounts and on December 1 in the respective years as set forth in the following table; provided
however, that in lieu of redemption thereof such Term Bonds may be purchased by the Successor Agency
pursuant to the Indenture:
Sinking Payment Principal Amount
Date (December 1) to be Redeemed
20
20
20—*
Final Maturity.
If some but not all of such Term Bonds have been optionally redeemed pursuant to the Indenture,
the total amount of all future sinking fund payments shall be reduced by the aggregate principal amount
of such Term Bonds so redeemed, to be allocated among such sinking fund payments in integral multiples
of $5,000 as determined by the Successor Agency (notice of which determination shall be given by the
Successor Agency to the Trustee) and shall include a revised sinking fund schedule.
OHSUSA:765600743.3
Notice of Redemption. The Trustee on behalf and at the expense of the Successor Agency will
mail (by first class mail, postage prepaid) notice of any redemption at least twenty (20) but not more than
forty -five (45) days prior to the redemption date, to (i) to the Owners of any 2016 Bonds designated for
redemption at their respective addresses appearing on the Registration Books, and (ii) the Securities
Depositories and to the Information Services; but such mailing shall not be a condition precedent to such
redemption and neither failure to receive any such notice nor any defect therein shall affect the validity of
the proceedings for the redemption of such 2016 Bonds or the cessation of the accrual of interest thereon.
Such notice will state the redemption date and the redemption price, will state that optional redemption is
conditioned upon the timely delivery of the redemption price by the Successor Agency to the Trustee for
deposit in the Redemption Account, will designate the CUSIP number of the 2016 Bonds to be redeemed,
will state the individual number of each Bond to be redeemed or will state that all 2016 Bonds between
two stated numbers (both inclusive) or all of the Bonds Outstanding are to be redeemed, and will require
that such 2016 Bonds be then surrendered at the Principal Corporate Trust Office of the Trustee for
redemption at the redemption price, giving notice also that further interest on such 2016 Bonds will not
accrue from and after the redemption date.
The Successor Agency has the right to rescind any notice of the optional redemption of 2016
Bonds by written notice to the Trustee on or prior to the date fixed for redemption, and the redemption
notice may provide that the proposed redemption is subject to the availability of sufficient funds on the
scheduled redemption date. Any notice of optional redemption will be cancelled and annulled if for any
reason funds will not be or are not available on the date fixed for redemption for the payment in full of the
2016 Bonds then called for redemption, and such cancellation shall not constitute an Event of Default.
The Successor Agency and the Trustee have no liability to the Owners or any other party related to or
arising from such rescission of redemption. The Trustee will mail notice of such rescission of redemption
in the same manner as the original notice of redemption was sent.
Upon the payment of the redemption price of 2016 Bonds being redeemed, each check or other
transfer of funds issued for such purpose will, to the extent practicable, bear the CUSM number
identifying, by issue and maturity, the 2016 Bonds being redeemed with the proceeds of such check or
other transfer.
Partial Redemption of 2016 Bonds. In the event only a portion of any 2016 Bond is called for
redemption, then upon surrender of such 2016 Bond the Successor Agency shall execute and the Trustee
shall authenticate and deliver to the Owner thereof, at the expense of the Successor Agency, a new 2016
Bond or 2016 Bonds of the same interest rate and maturity, of authorized denominations, in aggregate
principal amount equal to the unredeemed portion of the 2016 Bond to be redeemed.
Effect of Redemption. From and after the date fixed for redemption, if funds available for the
payment of the redemption price of and interest on the 2016 Bonds so called for redemption shall have
been duly deposited with the Trustee, such 2016 Bonds so called shall cease to be entitled to any benefit
under the Indenture other than the right to receive payment of the redemption price and accrued interest to
the redemption date, and no interest shall accrue thereon from and after the redemption date specified in
such notice.
Manner of Redemption. Whenever any 2016 Bonds or portions thereof are to be selected for
redemption by lot within a maturity, the Trustee shall make such selection, in such manner as the Trustee
shall deem appropriate, and shall notify the Successor Agency thereof to the extent 2016 Bonds are no
longer held in book -entry form. All 2016 Bonds redeemed or purchased under the Indenture shall be
cancelled and destroyed.
Purchase in Lieu of Redemption. In lieu of redemption of the Term Bonds, amounts on deposit in
the Principal Account may also be used and withdrawn by the Successor Agency and the Trustee,
respectively, at any time, upon the Written Request of the Successor Agency, for the purchase of the
Term Bonds at public or private sale as and when and at such prices (including brokerage and other
OHSUSA:765600743.3
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charges, but excluding accrued interest, which is payable from the Interest Account) as the Successor
Agency may in its discretion determine. The par amount of any Term Bonds so purchased by the
Successor Agency in any twelve -month period ending on October 1 in any year shall be credited towards
and shall reduce the par amount of the Term Bonds required to be redeemed on December 1 in each year;
provided that evidence satisfactory to the Trustee of such purchase has been delivered to the Trustee by
said October 1. In no event shall the Successor Agency purchase any Term Bonds in lieu of redemption
without canceling such Term Bonds.
SECURITY FOR THE BONDS
Subordinate Tax Revenues
Pursuant to the Indenture, the 2016 Bonds and any Parity Debt shall be equally secured by a
pledge of, security interest in and lien on all of the Subordinate Tax Revenues, including all of the
Subordinate Tax Revenues in the Redevelopment Obligation Retirement Fund and a first and exclusive
pledge of, security interest in and lien upon all of the moneys in the Debt Service Fund, the Interest
Account, Principal Account and the Redemption Account, established under the Indenture. The 2016
Bonds shall be additionally secured by a first and exclusive pledge of, security interest in and lien upon
all of the moneys in the Reserve Account established under the Indenture. The 2016 Bonds shall be also
equally secured by the pledge and lien created with respect to the Bonds by Section 34177.5(g) of the
Law on the Subordinate Tax Revenues deposited from time to time in the Redevelopment Property Tax
Trust Fund.
The 2016 Bonds shall be payable from Subordinate Tax Revenues. As defined in the Indenture,
the term "Subordinate Tax Revenues" means, for each Fiscal Year, the Tax Revenues, as defined in the
Senior Indenture and as defined herein, minus (i) the amount needed by the Successor Agency for
payment of debt service on the Senior Bonds and any other payment obligations due under the Senior
Indenture, (ii) amounts payable by the Successor Agency pursuant to Sections 33676, 33607.5, 33607.7
and 34183(a)(1) of the Law ( "Statutory Pass - Through Payments "), and (iii) amounts payable under the
Pass - Through Agreement. Upon satisfaction of the Successor Agency's obligations under the Senior
Bonds and Senior Indenture, Subordinate Tax Revenues shall mean Tax Revenues as defined herein,
subject to amounts due under the Pass - Through Agreement and for Statutory Pass - Through Payments.
Pursuant to the Indenture, the Bonds and any Parity Debt shall be equally secured by a pledge of,
security interest in and lien on all of the Subordinate Tax Revenues in the Redevelopment Obligation
Retirement Fund and a first and exclusive pledge of, security interest in and lien upon all of the moneys in
the Debt Service Fund, the Interest Account, Principal Account and the Redemption Account, established
under the Indenture. See "SECURITY FOR THE BONDS."
As used in this Official Statement and in the Fiscal Consultant's Report attached to this Official
Statement as APPENDIX A, the term "Gross Tax Revenues" means all property tax revenues deposited in
the designated property tax (formerly tax increment revenues) related to the Project Area, which will
include, moneys deposited, from time to time, in the Redevelopment Property Tax Trust Fund held and
administered by the Office of the Auditor Controller of the County of Los Angeles (the "County Auditor -
Controller") with respect to the Successor Agency (the "Redevelopment Property Tax Trust Fund" or
"RPTTF "). The Senior Bonds are generally secured by "Pledged Revenues" which are equal to Gross
Tax Revenues less County Administrative Fees and amounts payable by the Successor Agency pursuant
to the Pass - Through Agreement.
As defined in the Indenture, the term "Tax Revenues" means, for each Fiscal Year, all moneys
derived from that portion of taxes levied upon assessable property within the Project Area deposited from
time to time in the Redevelopment Property Tax Trust Fund, as provided in paragraph (2) of subdivision
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(a) of Section 34183 of the Law, excluding amounts if any, payable by the Successor Agency pursuant to
Sections 33676, 33607.5, 33607.7 and 34183(a)(1) of the Law, including amounts payable under the
Pass - Through Agreement, except to the extent that such amounts are payable on a basis subordinate to the
payment of Annual Debt Service on the 2016 Bonds or any Parity Debt pursuant to Sections 33607.5(e)
and 34177.5(c) of the Law or pursuant to the terms of the Pass - Through Agreement, as applicable.
The Bonds shall be also equally secured by the pledge and lien created with respect to the Bonds
by Section 34177.5(g) of the Law on the Tax Revenues deposited from time to time in the RPTTF. As
provided in the Indenture, the Successor Agency shall deposit all Tax Revenues into the Redevelopment
Obligation Retirement Fund promptly upon receipt thereof. Except for the Tax Revenues and such
moneys, no funds or properties of the Successor Agency shall be pledged to, or otherwise liable for, the
payment of principal of or interest on the 2016 Bonds or any amounts due and owing to the Insurer with
respect to the Policy or the 2016 Reserve Surety.
The term "Senior Bonds" is defined in the Indenture to mean the $ currently outstanding
principal amount of the $11,230,000 Rosemead Merged Project Area, Tax Allocation Bonds, Series
2010A payable on each June 1 and December 1, with a final maturity of December 1, 2023. The Senior
Bonds were issued pursuant to the Senior Indenture.
The term "Pass- Through Agreement' is defined in the Indenture to mean the Agreement for
Reimbursement of Tax Increment Funds (Rosemead Redevelopment Agency Project Area No. 1), made
and entered into on July 1, 1988, by and among the Former Agency, the County, the County Public
Library District (the "Library District') and the Consolidated Fire Protection District (the "Fire District'),
entered into by the Former Agency pursuant to Section 33401 of the Law.
Except for the Subordinate Tax Revenues and such moneys, no funds or properties of the
Successor Agency shall be pledged to, or otherwise liable for, the payment of principal of or interest on
the 2016 Bonds or any amounts due and owing to the Insurer with respect to the 2016 Insurance Policy or
the 2016 Reserve Surety.
The Successor Agency has heretofore established the Redevelopment Obligation Retirement
Fund pursuant to Section 34170.5(a) of the Law which the Successor Agency shall continue to hold and
maintain so long as any of the Bonds are Outstanding.
As provided in the Indenture, the Successor Agency shall deposit all Tax Revenues into the
Redevelopment Obligation Retirement Fund promptly upon receipt thereof.
All Subordinate Tax Revenues received by the Successor Agency in excess of amounts required
under the Indenture or as additionally required pursuant to a Supplemental Indenture or Parity Debt
Instrument, and except as may be provided to the contrary in the Senior Indenture or Parity Debt
Instrument, shall be released from the pledge and lien under the Indenture and shall be applied in
accordance with the Law, including but not limited to the payment of debt service on any Subordinate
Debt. Prior to the payment in full of the principal of and interest and redemption premium (if any) on the
Bonds and the payment in full of all other amounts payable under the Indenture and under any
Supplemental Indentures, the Successor Agency shall not have any beneficial right or interest in the
moneys on deposit in the Redevelopment Obligation Retirement Fund, except as may be provided in the
Indenture and in any Supplemental Indenture.
As defined in the Indenture, the term "Subordinate Debt' means any loan, advances or
indebtedness issued or incurred by the Successor Agency, which are either: (a) payable from, but not
secured by a pledge of or lien upon, the Subordinate Tax Revenues, including revenue bonds and other
debts and obligations scheduled for payment pursuant to Section 34183(a)(2) of the Law; or (b) secured
by a pledge of or lien upon the Subordinate Tax Revenues which is subordinate to the pledge of and lien
OHSUSA:765600743.3
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upon the Subordinate Tax Revenues hereunder for the security of the Bonds and payable on the same
dates as the Bonds.
As provided in the Indenture, pursuant to Section 34177 of the Law, not later than each date a
Recognized Obligation Payment Schedule is due, the Successor Agency shall submit to the Oversight
Board and the State Department of Finance, a Recognized Obligation Payment Schedule. The Successor
Agency shall take all actions required under the Law to include in the Recognized Obligation Payment
Schedule for each Semiannual Period (i) amounts due with respect to the Senior Bonds under the Senior
Indenture, (ii) debt service on the 2016 Bonds and (iii) all amounts due and owing to the Insurer under the
Indenture, so as to enable the County Auditor - Controller to distribute from the Redevelopment Property
Tax Trust Fund for deposit in the Redevelopment Obligation Retirement Fund on each January 2 and
June 1, as applicable, amounts required to enable the Successor Agency to pay timely principal of, and
interest on, the 2016 Bonds on a timely basis, as such amounts of debt service are set forth in the
Recognized Obligation Payment Schedule attached to the Indenture, as well as all amounts due and owing
to the Insurer thereunder.
Without limiting the foregoing, in order to ensure that amounts are available for the Trustee to
pay debt service on all Outstanding Bonds and all amounts due and owing to the Series Insurer under the
Indenture on a timely basis, the Successor Agency has agreed under the Indenture that not later than
February 1, 2017 and each February 1 thereafter (or at such earlier time as may be required by the
Dissolution Act), for so long as any Bonds are outstanding, the Successor Agency will submit an
Oversight Board- approved ROPS to the DOF and to the County Auditor - Controller that will include (a)
for distribution on the immediately succeeding June 1, interest on all Outstanding Bonds due on the
immediately succeeding December 1 plus 50% of principal due on the Outstanding Bonds on such
December 1, which amounts will distributed to the Successor Agency, (b) for distribution on the
immediately succeeding January 2, interest on all Outstanding Bonds due on the immediately succeeding
June 1 plus 50% of principal due on all Outstanding Bonds on the immediately succeeding December 1,
and (d) any amount required to cure any deficiency in the Reserve Account and subaccounts thereunder
pursuant to the Indenture (including any amounts required due to a draw on any Qualified Reserve
Instrument as well as all amounts due and owing to the Insurer under the Indenture).
In the event the provisions set forth in the Dissolution Act as of the Closing Date of the 2016
Bonds that relate to the filing of ROPS are amended or modified in any manner, the Successor Agency
agrees under the Indenture to take all such actions as are necessary to comply with such amended or
modified provisions so as to ensure the timely payment of debt service on the Bonds and, if the timing of
distributions of the RPTTF is changed, the receipt of (i) not less than one of half of debt service due
during each Bond Year on all Outstanding Bonds prior to June 1 of such Bond Year, and (ii) the
remainder of debt service due during such Bond Year on all Outstanding Bonds prior to the next
succeeding December 1.
Limitation on Issuance of Senior Bonds
The Successor Agency covenants under the Indenture that it will not issue any bonds, notes, or
other obligations that are payable from or secured by a lien on Tax Revenues that is superior to the lien
under the Indenture.
Pass - Through Arrangements
Pass - Through Agreement. Under the Pass - Through Agreement: (i) the Successor Agency, as
successor to the Former Agency, is to provide for a pass- through of a portion of its tax increment
revenues with respect to Component Area No. 1 received after July 1, 1988 for the Fire District; and (ii)
the Successor Agency, as successor to the Former Agency, is to allow an additional pass- through of tax
increment revenues with respect to Component Area No. 1 for the Library District at such time that the
OHSUSA:765600743.3
13
Former Agency or the City constructs a replacement facility. The Successor Agency currently does not
make any payments pursuant to the Pass - Through Agreement to the Library District because no such
facility has been constructed. The City and the Successor Agency have no current plans to proceed with
the construction of any replacement library facility.
The reimbursement of the Fire District is approximately 17% of gross tax revenues with respect
to Component Area No. 1 and the reimbursement to the Library District, if any, is 4% of gross tax
revenues with respect to Component Area No. 1. Such pass - through payments are payable from tax
increment revenues from Component Area No. 1 senior to the pledge and lien established pursuant to the
Indenture and will not be available to the Successor Agency to pay debt service on the 2016 Bonds.
Statutory Pass- Through Payments. The Successor Agency is obligated to make statutory pass -
through payments to all affected tax agencies that do not currently have a tax sharing agreements. [The
general levy share of all agencies that do not currently possess tax - sharing agreements is 83% of every
$1.00 of property tax generated.]
Affected taxing entities that may receive a share of Statutory Pass - Through Payments include the
City of Rosemead, County, Library District, Los Angeles County Flood Control District, Los Angeles
County Sanitation District No. 15, Upper San Gabriel Valley Metropolitan Water District, Los Angeles
County Office of Education (County School Services), Garvey School District, Rosemead School
District, Alhambra Unified School District, El Monte School District, Los Angeles Community College
District, Pasadena Community College District, and the Montebello School District. The Fire District is
not eligible to receive statutory pass through payments from Component Area No. 1, as it currently
receives pass through payments pursuant to the Pass - Through Agreement. The Fire District may receive
statutory pass through payments in Component Area No. 2. Although the Library District is a party to the
Pass - Through Agreement, pursuant to the terms of the Pass - Through Agreement the Library District is
not currently receiving payments under the Pass - Through Agreement, and the County and the Former
Agency agreed that the Library District is therefore eligible to receive statutory pass through payments
from Component Area No. 1.
These payments are a result of Senate Bill No. 211 (Statutes of 2001 Chapter 741) ( "SB 211 "),
which provided a procedure by which any redevelopment plan or amendment adopted prior to January 1,
1994 could extend the then current time limit to incur indebtedness of its plan or amendment to the
expiration date of the plan or amendment. As a result the Former Agency initiated statutory pass -
throughs to all affected tax agencies that did have tax sharing agreements.
The AB 1290 Pass Through Formula will apply to all taxing entities in Component Area No. 2
(and some of the Component Area No. 1 taxing entities, as noted above), and will be applied as follows:
Pass Through Percentagel
Tier A (Years 1 -45) 25%
Tier B (Years 11 -45) 21% k Tier A
Tier C (Years 31 -45) 14 %+ Tiers A & B
(t) Applied to the taxing entity's share of tax increment, reduced by a pro -
ram share of Agency's Former LW Housing Set - Aside.
Statutory pass- through payments are payable on a senior basis to debt service on bonds under the
Dissolution Act, unless the pass- through payments have been subordinated. The Redevelopment Law, as
amended by the Dissolution Act, allows statutory pass - through payments to be subordinated to debt
service on the Successor Agency's bonds. However, the Successor Agency did not seek or obtain the
consent from any taxing entities to subordinate their right to receive statutory payments to the payment of
14
OHSUSA:765600743.3
debt service on the 2016 Bonds. Accordingly, statutory pass - through payments from the Project Area are
payable on a senior basis to debt service on the 2016 Bonds.
See "APPENDIX A — FISCAL CONSULTANT'S REPORT."
See the projections of [Pledged Tax Revenues and Subordinate Tax Revenues] in Exhibit A to the
Fiscal Consultant's Report attached hereto as APPENDIX A and Table _ herein. The Successor Agency
does not pay a pass through payment to the Library District because no facility has been constructed.
[The County includes the unitary assessed values in its calculation of SB 211 pass - throughs. However,
there is no consistent methodology among various counties within the State as to the calculation of SB
211 pass - tbroughs. For the purpose of the projections set forth herein, the City has calculated the pass -
throughs based on the County's current methodology.]
Reserve Account
The Indenture provides for the establishment of a separate account within the Debt Service Fund
a separate account known as the "Reserve Account" which shall be held by the Trustee in trust for the
benefit of the Owners of the 2016 Bonds. The Reserve Requirement for the 2016 Bonds will be satisfied
by the delivery of the 2016 Reserve Surety by the Insurer on the Closing Date with respect to the 2016
Bonds, the policy premium for which will be paid from a portion of the proceeds derived from the
issuance and sale of the 2016 Bonds. For additional information regarding the Insurer, see "BOND
INSURANCE." All money in the Reserve Account shall be used and withdrawn by the Trustee solely for
the purpose of making transfers to the Interest Account and the Principal Account, in the event of any
deficiency at any time in any of such accounts or for the retirement of all the 2016 Bonds then
Outstanding. The term "Reserve Requirement" means, with respect to the 2016 Bonds, the lesser of (i)
10% of the original aggregate principal amount of the 2016 Bonds (if there is more than a de minimis
amount of original issue discount or premium (as defined in the Code), the issue price shall be used
instead of principal amount) or (ii) 125% of the average Annual Debt Service with respect to the 2016
Bonds or (iii) Maximum Annual Debt Service with respect to the 2016 Bonds.
The Successor Agency will have no obligation to replace the 2016 Policy or to fund the Reserve
Account with cash if, at any time that the 2016 Bonds are Outstanding, amounts are not available under
the 2016 Reserve Surety other than in connection with a draw on the 2016 Reserve Surety.
[Terms of Reserve Policy]
2016 Bonds Not a Debt of the City, County or the State
The 2016 Bonds are limited obligations of the Successor Agency and are payable, as to interest
thereon and principal thereof, exclusively from Subordinate Tax Revenues, including all of the
Subordinate Tax Revenues in the Redevelopment Obligation Retirement Fund and a first and exclusive
pledge of, security interest in and lien upon all of the moneys in certain funds and accounts established
under the Indenture as described in this Official Statement. The 2016 Bonds are also equally secured by
the pledge and lien created with respect to the 2016 Bonds by Section 34177.5(g) of the Law on the Tax
Revenues deposited from time to time in the Redevelopment Property Tax Trust Fund. The 2016 Bonds
are not a debt of the City, the State of California or any of its political subdivisions, and neither the City,
the State nor any of its political subdivisions is liable therefor, nor in any event will the 2016 Bonds be
payable out of any funds or properties other than those of the Successor Agency. The 2016 Bonds do not
constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction,
and neither the members of the Successor Agency nor any persons executing the 2016 Bonds are liable
personally on the 2016 Bonds by reason of their issuance.
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Additional Parity Debt
The Successor Agency may issue Parity Debt to refund all or a portion of the Outstanding Bonds
provided that with respect to any such refunding (i) debt service on such Parity Debt, as applicable, is
lower than debt service on the obligations being refunded during the remaining period the obligations
would otherwise be outstanding (ii) the final maturity of any such Parity Debt does not exceed the final
maturity of the obligations being refunded, (iii) the interest rate on the Parity Debt shall be fixed on the
date of issuance of the Parity Debt, and (iv) principal payments shall be on December 1 and interest
payments on June 1 and December 1. The Successor Agency further covenants in the Indenture not to
issue bonds on a parity with the Senior Bonds. Nothing in the Indenture shall prevent the Successor
Agency from issuing Subordinate Debt.
BOND INSURANCE
[TO COME]
THE SUCCESSOR AGENCY
General
As described below, the Successor Agency was established by the City Council following
dissolution of the Former Agency pursuant to the Dissolution Act. Set forth below is a discussion the
history of the Former Agency and the Successor Agency, the governance and operations of the Successor
Agency and its powers under the Redevelopment Law and the Dissolution Act, and the limitations
thereon.
The City, acting pursuant to the Redevelopment Law, activated the Former Agency in 1972 by
City ordinance. Under the terms of this Ordinance the City Council declared itself to be the governing
body of the Former Agency.
As a result of AB 1X 26 and the decision of the California Supreme Court in the California
Redevelopment Association case, as of February 1, 2012, all redevelopment agencies in the State were
dissolved, including the Former Agency, and successor agencies were designated as successor entities to
the former redevelopment agencies to expeditiously wind down the affairs of the former redevelopment
agencies and also to satisfy "enforceable obligations" of the former redevelopment agency all under the
supervision of a new oversight board, the State Department of the Finance and the State Controller.
The present members of the City Council acting as the board members of the Successor Agency
are as follows:
Sandra Armenta, Mayor
Polly Low, Mayor Pro -Tem
Bill Alarcon, Council Member
Margaret Clark, Council Member
Steven Ly, Council Member
The Successor Agency is a component unit of the City for financial reporting purposes and does
not have separate audited financial statements. The audited financial statements of the City for year
ending June 30, 2015, are included herein as APPENDIX C.
The Successor Agency has one project area, the Rosemead Merged Project Area, consisting of
two component areas, which is referred to as the Project Area herein (see "THE PROJECT AREA ").
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Successor Agency Staff
The City Manager also serves as the Executive Director of the Successor Agency. The City
Finance Director maintains the Successor Agency's financial records and serves as the Successor
Agency's Treasurer. The City Attorney also serves as the Successor Agency's counsel. Brief resumes of
the key staff at the City and Successor Agency are set forth below:
Bill R. Manis, City Manager. Bill R. Manis has worked in the public sector for 31 years and has
held numerous positions in seven jurisdictions. During his career, Mr. Manis has overseen over 10 million
square feet of development projects resulting in over 10,000 new jobs, implemented numerous programs
to help the economically disadvantaged, and served a key member of the San Bernardino Bankruptcy
Recovery Team. Mr. Manis received his Bachelors of Science Degree in City & Regional Planning from
California State Polytechnic University Pomona.
Carolyn A. Chu, Finance Director. Carolyn A. Chu has worked in the public sector for 29 years
serving as Finance Manager, Assistant Finance Director and Finance Director in three different cities.
Prior to that, Ms. Chu worked for a local CPA firm auditing municipal governments and obtained her
CPA license during that time. Ms. Chu has been with the City of Rosemead for 9 years where she has
prepared the annual budgets and annual financial reports. Ms. Chu obtained her Bachelor's degree in
Business Administration from California State Polytechnic University, Pomona.
Brad McKinney, Assistant City Manager. Brad McKinney has held several public sector
positions, including Assistant City Manager, Assistant to the City Manager, Senior Management Analyst,
and Administrative Analyst while in three jurisdictions. During his career, Mr. McKinney has managed
various areas of multiple departments, which include, budgets, compliance issues, human resources, risk
management, and economic development. Prior to his career in the public sector, Mr. McKinney worked
for municipal consultant firms. Mr. McKinney received his Master and Bachelor of Arts Degrees in
Business Administration from Azusa Pacific University.
Pursuant to Resolution No. 2012 -04 (the "Establishing Resolution ") adopted by the City Council
on January 10, 2012, and Sections 341710) and 34173 of the Dissolution Act, the City Council appointed
itself as successor to the Former Agency. On June 27, 2012, the Redevelopment Law was amended by
AB 1484, which clarified that successor agencies are separate political entities and that the successor
agency succeeds to the organizational status of the former redevelopment agency but without any legal
authority to participate in redevelopment activities except to complete the work related to an approved
enforceable obligation.
As discussed below, many actions of the Successor Agency are subject to approval by an
"oversight board" and the review or approval by the DOF, including the issuance of bonds such as the
2016 Bonds.
Oversight Board
The Oversight Board was formed pursuant to Establishing Resolution adopted by the City
Council on January _, 2012. The Oversight Board is governed by a seven - member governing board,
with one member appointed by each of the City, the County, the County Fire Protection District, and the
County of Los Angeles Superintendent of Schools, and one public appointee representative of the County
and one City employee representative.
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Department of Finance Finding of Completion
The Dissolution Act established a process for determining the liquid assets that redevelopment
agencies should have shifted to their successor agencies when they were dissolved, and the amount that
should be available for remittance by the successor agencies to their respective county auditor - controllers
for distribution to affected taxing entities within the project areas of the former redevelopment agencies.
This determination process was required to be completed through the final step (review by the DOF) by
November 9, 2012 with respect to affordable housing funds and by April 1, 2013 with respect to non-
housing funds. Within five business days of receiving notification from the DOE, a successor agency
must remit to the county auditor - controller the amount of unobligated balances determined by the DOE,
or it may request a meet and confer with the DOF to resolve any disputes.
[In Fiscal Year 2012 -13, the City received its Finding of Completion from the DOE, which was
the final step needed to utilize approximately $7 million in tax increment bond proceeds from the Former
Agency. In Fiscal Year 2014 -15, the City has included capital improvement project funding from these
bond proceeds in order to complete several projects that were either started in the prior year or have been
on hold for more than two years. These projects included the Rosemead Community Recreation Center
Expansion and Downtown Plaza as well as the Rosemead Park Improvements. These projects were
completed by the end of Fiscal Year 2015 -16.1
The Successor Agency has paid to the County Auditor - Controller all unobligated balances
relating to affording housing funds, as determined by the DOE. [Pursuant to Health and Safety Code
Section 34176 (a)(2), the City submitted a Housing Assets Transfer Form to the DOE on July 23, 2012 for
the period February 1, 2012 through July 23, 2012 which reported no housing assets.] The Successor
Agency has remitted to the County Auditor - Controller all unobligated balances relating to all other funds
determined by the DOE. The Successor Agency has made all payments required under AB 1484 and has
received its finding of completion from the DOF on April 18, 2013. On September 18, 2015, the DOF
approved the Successor Agency's Long -Range Property Management Plan which was submitted on
September 29, 2014 and revised and submitted on September 16, 2015.
State Controller Asset Transfer Review
The Dissolution Act requires that any asset of a former redevelopment agency transferred to a
city, county or other local agency after January 1, 2011, be sent back to the successor agency. The State
Controller reviewed and approved all transfers.
THE PROJECT AREA
General
The Merged Project Area evolved from an intent to achieve efficiencies and ease of
administration in the operation of the Successor Agency's two redevelopment areas. In 2009, a study
determined the basis for merger of the Former Agency's two redevelopment areas in accordance with the
California Community Redevelopment Law. The Redevelopment Plan for the Rosemead Merged Project
Area (the "Project Area ") was adopted by Ordinance No. 871 of the City Council adopted on March 10,
2009.
Redevelopment Project Area No. 1 evolved from a City Council study commenced in 1967. The
study determined areas in the City which were blighted within the meaning of the California Community
Redevelopment Law, and were therefore qualified for redevelopment. The Redevelopment Plan for the
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Redevelopment Project Area No. 1 was adopted by Ordinance No. 340 of the City Council on June 27,
1972.
Redevelopment Project Area No. 2 evolved from a City Council study commenced in 1999. The
study determined areas in the City which were blighted within the meaning of the California Community
Redevelopment Law, and were therefore qualified for redevelopment. The Redevelopment Plan for the
Redevelopment Project Area No. 2 was adopted by Ordinance No. 809, adopted by the City Council of
the City on June 27, 2000.
Merged Project Area Description
By Ordinance No. 871 adopted by the City Council on February 10, 2009, the City Council
adopted a merger amendment, merging the Redevelopment Plans for Component Area No. 1 and
Component Area No. 2, creating the Merged Project Area. The Merged Project Area encompasses an
area of 716 acres.
Component Area No. 1 encompasses an area of 511 acres. Component Area No. 1 is roughly
triangular with Garvey Avenue, San Gabriel Boulevard and Walnut Grove Avenue being the major
thoroughfares traversing the area. Component Area No. 1 is within a few miles of the City's Civic Center
and is located between the San Bernardino and Pomona Freeways to the north and south, respectively.
The area contains a complete cross section of the City's existing land uses. At the time of the
adoption of the Redevelopment Plan, major sections were composed of deteriorating commercial strips
along Garvey Avenue and San Gabriel Boulevard, industrial uses in the east Garvey area, large vacant
areas surrounding the Southern California Edison headquarters, several schoolyards, segments of the
Alhambra Wash, Southern California Edison rights -of -way, and residential areas with some deterioration
present.
The territory within Project Area No. 2 Component includes about 205 acres and encompasses
Valley Boulevard from the eastern and western boundaries of the City and Rosemead Boulevard from the
southern and northern boundaries of the City.
OHSUSA:765600743.3
19
Property Value by Land Use
Table 1 sets forth the distribution of property value located in the Project Area by principal
purpose for which the land is used.
Table 1
Successor Agency to the Rosemead Community Development Commission
Rosemead Merged Project Area
Land Use Summary
Fiscal Year 2016 -17
Land Use
Number of Secured Assessed Percent of
Parcels Valuation Secured AV
Commercial
Single Family Residential
Multi- Family Residential
Vacant Industrial
Vacant Commercial
Recreational
GovernmentaUInstitutional /Other
Vacant Residential
Vacant Governmental/Institutional/Other
Total All Secured
331
$483,200,505
57.96%
616
168,673,916
20.23
191
67,545,804
8.10
22
8,793,569
1.05
26
6,783,471
0.81
3
5,357,479
0.64
84
5,203,650
0.62
16
1,164,221
0.14
4
318,667
0.04
1,373
$833,689,284
100.00%
to Based on fiscal year 2016 -17 secured assessed valuation of $833,689.284.
Source: Urban Futures, Inc. with information from the Los Angeles County 2016 -17 Secured Property Tax Roll.
A map of the Project Area follows.
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OHSUSA:765600743.3
Roeemeed C9rdly
Development CommWaiao
MER GER AMENDMENT TO
THE REDEVELOPMENT PLANS FOR THE
ROSEIAEAD REDEVELOPMENT PROJECT
AREA NOS. 1. AND 2
PRWECT AREA MAP
Cw'. ttillN&
�ffi 0.1t 6� HYYaae.
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OHSUSA:765600743.3
Assessed Values
Taxable values are prepared and reported by the County Auditor - Controller each fiscal year and
represent the aggregation of all locally assessed properties within the Project Area. The assessments are
assigned Tax Rate Areas (TRA) that are coterminous to the boundaries of the project area in the first year
that an agency is eligible to receive tax increment revenue. The Project Area consists of 17 individual
TRAs. See the projections of [Pledged Tax Revenues and Subordinate Tax Revenues] in Exhibit A to the
Fiscal Consultant's Report attached hereto as APPENDIX A in Table 4 "ROJECT TAX RATE AREA ID
NUMBERS." The following table sets forth assessed values in the Project Area in Fiscal Years 2011 -12
through 2016 -17. Future assessed values and future Gross Tax Revenues will depend upon the rate of
growth in tax increment resulting from new development, change of ownership and inflation, assessment
appeals and adjustments of assessed values, and changes in tax rates, and may differ from the projections
presented herein.
Table 2
Successor Agency to the Rosemead Community Development Commission
Rosemead Merged Project Area
Historical Assessed Valuation
(Fiscal Year Ended June 30)
Roll 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17
Secured Assessed Value $708,846,863 $715,250,929 $738,211,814 $765,049,559 $804,545,813 $833,689,284
Unsecured Assessed Value 51,765,576 50,312,398 50,921,372 52,778,664 44,071,591 44,749,176
Total Assessed Value $760,612,439 $765,563,327 $789,133,186 $817,828,223 $848,617,404 $878,438,460
Percentage Change -- 0.65% 3.08% 3.64 % 3.76% 3.51%
Sources: Los Angeles County Auditor - Controller and Urban Futures, Inc.
Ten Largest Assessees
Table 3 sets forth the ten largest assessees in the Project Area whose property in the aggregate
comprises approximately 23.70% of the total taxable value in the Project Area. The following is
restricted to only locally assessed tax- payers, and does not include state assessed properties. Southern
California Edison, which owns a significant amount of property within the Project Area, is a public utility
and therefore its properties are state assessed and is, accordingly, not included in the following table of
top ten property owners. See "Unitary Property" above for a description of unitary revenues.
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Table 3
Successor Agency to the Rosemead Community Development Commission
Rosemead Merged Project Area
Largest Local Secured Taxpayers/Property Owners
Fiscal Year 2016 -17
(i) Based on Fiscal Year 2016 -17 secured assessed valuation of $833,689,284.
(2) Assessment appeals are pending for this property owner. See "Assessment Appeals" below.
Source: Urban Futures, Inc. with information from the Los Angeles County 2016 -17 Secured Property Tax Roll.
Among these ten largest secured tax payers for Fiscal Year 2016 -17, Rosemead Place LLC
ownership consist of the Target Superstore, Rosemead Place shopping center and two -story office
complex, which includes 596,000 square feet of retail, restaurant and office space within the 25.7 acre
property, located in the Component Area No. 2. The Wal -Mart Real Estate Business ownership consist of
Wal -Mart Supercenter, which includes 227,700 square feet of retail within a 20.8 acre property and the
Rosemead Hwang LLC ownership consists of the Diamond Square shopping center, which includes
325,800 square feet of retail, restaurant, and grocery store within a 7.3 acre property, each located in
Component Area No. 1.
There is some variety in use among the ten largest assesses. The top four are all
commercial/retail stores or plazas. One of the ten largest assesses has an appeal pending. See
"Assessment Appeals" below.
Property Tax Collection Procedures and Delinquencies
[The overall delinquency rate for the last full fiscal year (2015 -16) for all secured properties in
the Project Area was % as of August _, 2016.]
For assessment and collection purposes, property is classified either as "secured" or "unsecured"
and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the
assessment roll containing state - assessed public utilities property and property the taxes on which are a
lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes.
Other property is assessed on the "unsecured roll." A tax levied on unsecured property does not become a
lien against the unsecured property but may become a lien on certain other property owned by the
taxpayer. Every tax which becomes a lien on secured property has a priority over all other liens arising
pursuant to California law on the secured property, regardless of the time of creation of the other liens.
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Taxable Secured
Percent of
Percent of
Assessed
Primary
Secured
Incremental
Property Owner
Valuation
Land Use
AV
AV (2)
1.
Rosemead Place LLC
$ 48,976,049
Commercial
5.87%
6.89%
2.
Wal Mart Real Estate Business
35,607,894
Commercial
4.27
5.01
3.
Rosemead Hwang, LLC
35,030,575
Commercial
4.20
4.93
4.
420 Boyd Street LLC(2)
18,398,441
Commercial
2.21
2.59
5.
Shurl & Kay Curci Foundation
14,596,008
Commercial
1.75
2.05
6.
Taiking LLC
10,433,554
Commercial
1.25
1.47
7.
Bokai Investment Group LP
9,874,760
Commercial
1.18
1.39
8.
Citadel Panda Express Inc.
9,862,505
Commercial
1.18
1.39
9.
Su Joseph & Eva W
7,572,151
Commercial
0.91
1.07
10.
BMC Rosemead LLC
7,200,000
Industrial
0.86
1.01
Total
$197,551,937
23.70%
27.80%
(i) Based on Fiscal Year 2016 -17 secured assessed valuation of $833,689,284.
(2) Assessment appeals are pending for this property owner. See "Assessment Appeals" below.
Source: Urban Futures, Inc. with information from the Los Angeles County 2016 -17 Secured Property Tax Roll.
Among these ten largest secured tax payers for Fiscal Year 2016 -17, Rosemead Place LLC
ownership consist of the Target Superstore, Rosemead Place shopping center and two -story office
complex, which includes 596,000 square feet of retail, restaurant and office space within the 25.7 acre
property, located in the Component Area No. 2. The Wal -Mart Real Estate Business ownership consist of
Wal -Mart Supercenter, which includes 227,700 square feet of retail within a 20.8 acre property and the
Rosemead Hwang LLC ownership consists of the Diamond Square shopping center, which includes
325,800 square feet of retail, restaurant, and grocery store within a 7.3 acre property, each located in
Component Area No. 1.
There is some variety in use among the ten largest assesses. The top four are all
commercial/retail stores or plazas. One of the ten largest assesses has an appeal pending. See
"Assessment Appeals" below.
Property Tax Collection Procedures and Delinquencies
[The overall delinquency rate for the last full fiscal year (2015 -16) for all secured properties in
the Project Area was % as of August _, 2016.]
For assessment and collection purposes, property is classified either as "secured" or "unsecured"
and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the
assessment roll containing state - assessed public utilities property and property the taxes on which are a
lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes.
Other property is assessed on the "unsecured roll." A tax levied on unsecured property does not become a
lien against the unsecured property but may become a lien on certain other property owned by the
taxpayer. Every tax which becomes a lien on secured property has a priority over all other liens arising
pursuant to California law on the secured property, regardless of the time of creation of the other liens.
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Property taxes on the secured roll are due in two installments, on July 1 and February 1 of each
Fiscal Year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a
10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to
which taxes are delinquent is sold to the State on or about June 30 of the Fiscal Year. Such property may
thereafter be redeemed by payment of the delinquent taxes and delinquent penalty, plus a redemption
penalty of 1 1/2% per month to the time of redemption. If taxes are unpaid for a period of five years or
more, the property is deeded to the State and then is subject to sale by the County Tax Collector.
Current law provides for the supplemental assessment and taxation of property as of the
occurrence of a change of ownership or completion of new construction.
Property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent,
if unpaid, on the following August 31. A 10% penalty attaches to delinquent taxes on property on the
unsecured roll, and an additional penalty of 1 -1/2% per month begins to accrue on the first day of the
third month following the delinquency date. The taxing authority has four ways of collecting unsecured
personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the
County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the
taxpayer; (3) filing a certificate of delinquency for recording in the County Recorder's office, in order to
obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property,
improvements or possessory interests belonging or assessed to the assessee.
As described in more detail under the headings below, the Controller deposits property tax
revenues attributable to the Project Area into the RPTTF twice each year, once on January 2 and again on
June 1. The Successor Agency's annual debt service and contractual obligations are identified on a
Recognized Obligation Payment Schedule that is approved by the Successor Agency's Oversight Board
and by the DOE The Successor Agency prepares a single Recognized Obligation Payment Schedule each
year, covering payments due in the January to June period (referred to as ROPS "B ") and in the July to
December period (referred to as ROPS "A "). In order to have sufficient funds in a subsequent period, the
Successor Agency may identify on its Recognized Obligation Payment Schedule an amount necessary to
be retained in the RPTTF to be applied to obligations shown on a subsequent Recognized Obligation
Payment Schedule. Any amount remaining in the RPTTF after payment of administrative costs, pass -
through payments and Recognized Obligation Payment Schedule obligations is immediately distributed to
other taxing entities.
Low and Moderate Income Housing Set -Aside
Prior to the Dissolution Act, the Redevelopment Law required generally that redevelopment
agencies set aside in a low and moderate income housing fund not less than 20% of all tax revenues
allocated to such agencies. This 20% set -aside requirement was eliminated by the Dissolution Act. There
are currently no obligations outstanding which will have a prior lien on the low and moderate housing
fund. Accordingly, the former set aside requirement is included in Tax Revenues and, subject to the prior
claim, also in Subordinate Tax Revenues pledged to the payment of debt service on the Bonds, including
the 2016 Bonds.
The City's Rosemead Housing Development Corporation ( "RHDC "), and RHDC Fund receives
its funding from tenant rents and subsidies from the Successor Agency from [Subordinate Tax Revenues],
on a basis subordinate to the 2016 Bonds, as an enforceable obligation of the Successor Agency.
Revenues and expenditures in this fund will typically balance out at the end of each fiscal year.
OHSUSA:765600743.3
24
Redevelopment Property Tax Trust Pund
The Dissolution Act authorizes bonds, including the 2016 Bonds, to be secured by a pledge of
moneys deposited from time to time in a RPTTF held by a county auditor - controller with respect to a
successor agency, which are equivalent to the tax increment revenues that were formerly allocated under
the Redevelopment Law to the redevelopment agency and formerly authorized under the Redevelopment
Law to be used for the financing of redevelopment projects, less amounts deducted pursuant to Section
34183(a) of the Dissolution Act for permitted administrative costs of the county auditor - controller.
Successor agencies have no power to levy property taxes and must look specifically to the allocation of
taxes as described below.
Allocation of Taxes Subsequent to the Dissolution Act
The Dissolution Act requires the County Auditor - Controller to determine the amount of property
taxes that would have been allocated to the Former Agency (pursuant to subdivision (b) of Section 16 of
Article XVI of the State Constitution) had the Former Agency not been dissolved pursuant to the
operation of AB 26, using current assessed values on the last equalized roll on August 20, and to deposit
that amount in the RPTTF for the Successor Agency established and held by the County Auditor -
Controller pursuant to the Dissolution Act. The Dissolution Act provides that any bonds authorized
thereunder to be issued by the Successor Agency will be considered indebtedness incurred by the
dissolved Former Agency, with the same legal effect as if the bonds had been issued prior to the effective
date of AB 26, in full conformity with the applicable provision of the Redevelopment Law that existed
prior to that date so that property tax revenues (formerly tax increment revenues) are paid to the
Successor Agency in such amounts and on such dates to ensure the timely payment of debt service on the
Senior Bonds, the 2016 Bonds and any such Parity Debt. Pursuant to the Dissolution Act, the Successor
Agency has covenanted to take all actions necessary to ensure that the 2016 Bonds will be included in the
Successor Agency's Recognized Obligation Payment Schedules (as defined herein) as prepared from time
to time under the Dissolution Act. See "Recognized Obligation Payment Schedule" below.
Taxes levied on the property within the Project Area on that portion of the taxable valuation over
and above the taxable valuation of the applicable base year property tax roll within the Project Area, to
the extent they constitute Tax Revenues, less administrative costs, as described herein, will be deposited
in the RPTTF for transfer by the County Auditor - Controller to the Successor Agency's Redevelopment
Obligation Retirement Fund established pursuant to the Dissolution Act on January 2 and June 1 of each
year to the extent required for payments listed in the Successor Agency's Recognized Obligation Payment
Schedule in accordance with the requirements of the Dissolution Act. See "Recognized Obligation
Payment Schedule" below.
Recognized Obligation Payment Schedule
The Dissolution Act provides for the completion, approval and submission of an annual
Recognized Obligation Payment Schedule (the "Recognized Obligation Payment Schedule ") pursuant to
which enforceable obligations (as defined in the Dissolution Act) of the successor agency are listed,
together with the source of funds to be used to pay for each enforceable obligation. The timing for the
preparation and approval of a Recognized Obligation Payment Schedule, among other procedures, was
changed with the amendments to the Dissolution Act under SB 107. On or before each February 1,
commencing February 1, 2016, with respect to each fiscal year, the Dissolution Act requires successor
agencies to prepare and approve, and submit to the successor agency's oversight board and the DOF for
approval, a Recognized Obligation Payment Schedule pursuant to which enforceable obligations (as such
term is defined in the Dissolution Act) of the successor agency are listed, together with the source of
funds to be used to pay for each enforceable obligation. As defined in the Dissolution Act, "enforceable
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OHSUSA:765600743.3
obligation" includes bonds, including the required debt service, reserve set - asides and any other payments
required under the indenture or similar documents governing the issuance of the outstanding bonds of the
former redevelopment agency, as well as other obligations such as loans, judgments or settlements against
the former redevelopment agency, any legally binding and enforceable agreement that is not otherwise
void as violating the debt limit or public policy, contracts necessary for the administration or operation of
the successor agency, and amounts borrowed from the low and moderate housing fund. The Dissolution
Act permits a successor agency to request additional amounts on a Recognized Obligation Payment
Schedule to fund a reserve when required by a bond indenture or when the next property tax allocation
will be insufficient to pay all enforceable obligations due under the provisions of the bonds for the next
payment due in the following half of the calendar year.
Under the Dissolution Act, the categories of sources of payments for enforceable obligations
listed on a Recognized Obligation Payment Schedule are the following: (i) the low and moderate housing
fund; (ii) bond proceeds; (iii) reserve balances; (iv) administrative cost allowance; (v) the RPTTF (but
only to the extent that no other funding source is available or when payment from property tax revenues is
required by an enforceable obligation or otherwise required under the Dissolution Act); or (vi) other
revenue sources (including rents, concessions, asset sale proceeds, interest earnings, and any other
revenues derived from the former redevelopment agency, as approved by its oversight board).
The Dissolution Act provides that, commencing on the date that the first Recognized Obligation
Payment Schedule is valid, only those payments listed in the Recognized Obligation Payment Schedule
may be made by the Successor Agency from the funds specified in the Recognized Obligation Payment
Schedule. Each annual Recognized Obligation Payment Schedule may be amended once, provided that
(i) the Successor Agency submits the amendment to the DOF no later than October 1, (ii) the Oversight
Board makes a finding that the amendment is necessary for the payment of approved enforceable
obligations during the second half of the Recognized Obligation Payment Schedule period (from January
1 to June 30, inclusive), and (iii) the Successor Agency may only amend the amount requested for
payment of approved enforceable obligations. The DOF shall notify the Successor Agency and the
County Auditor - Controller as to whether the Successor Agency's requested amendment is approved at
least 15 days before the January 2 property tax distribution.
The Recognized Obligation Payment Schedule must be submitted by the Successor Agency, after
approval by the Oversight Board, to the County Administrative Officer, the County Auditor - Controller,
the DOF and the State Controller by February 1 in each year, commencing February 1, 2016. If the
Successor Agency does not submit an Oversight Board- approved Recognized Obligation Payment
Schedule by such deadline, the City will be subject to a civil penalty equal to $10,000 per day for every
day that the schedule is not submitted. Additionally, the Successor Agency's administrative cost
allowance will be reduced by 25% for any fiscal year for which the Successor Agency does not submit an
Oversight Board- approved Recognized Obligation Payment Schedule within 10 days of the February 1
deadline. If the Successor Agency fails to submit a Recognized Obligation Payment Schedule by the
February 1 deadline, any creditor of the successor agency or the department or any affected taxing entity
shall have standing to, and may request a writ of mandate to, require the Successor Agency to
immediately perform this duty. For additional information regarding procedures under the Dissolution
Act relating to late Recognized Obligation Payment Schedules and implications thereof on the 2016
Bonds, see the caption "RISK FACTORS — Recognized Obligation Payment Schedule."
With respect to each Recognized Obligation Payment Schedule submitted by the Successor
Agency, the Dissolution Act requires the DOF to make a determination of the enforceable obligations and
the amounts and funding sources available to pay approved enforceable obligations no later than April 15.
Within five business days of the determination by the DOF, the Successor Agency may request additional
review by the DOF and an opportunity to meet and confer on disputed items, if any. The DOF will notify
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OHSUSA:765600743.3
the Successor Agency and the County Auditor - Controller as to the outcome of its review at least 15 days
before the February 1 property tax distribution date preceding the applicable Recognized Obligation
Payment Schedule period. Additionally, the County Auditor - Controller may review a submitted
Recognized Obligation Payment Schedule and object to the inclusion of any items that are not
demonstrated to be enforceable obligations and may object to the funding source proposed for any items,
provided that the County Auditor - Controller must provide notice of any such objections to the Successor
Agency, the Oversight Board and the DOF at least 60 days prior to the next February 1 property tax
distribution date.
The Successor Agency has submitted each Recognized Obligation Payment Schedule to the DOF
on or before the applicable statutory deadline.
See the caption "— Last and Final Recognized Obligation Payment Schedule" below for a
description of the Last and Final Recognized Obligation Payment Schedule authorized by the Dissolution
Act pursuant to SB 107.
In connection with the allocation and distribution by the County Auditor - Controller of property
tax revenues deposited in the RPTTF, under the Dissolution Act the County Auditor - Controller must
prepare estimates of the amounts of: (i) property tax to be allocated and distributed; and (ii) the amounts
of pass - through payments to be made for the upcoming fiscal year, and provide those estimates to the
entities receiving the distributions and DOF by no later than October 1 and April 1 of each year, as
applicable. If, after receiving such estimate from the County Auditor - Controller, the Successor Agency
determines and reports, no later than December 1 or May 1, as applicable, that the total amount available
to the Successor Agency from the RPTTF allocation to the Successor Agency's Redevelopment
Obligation Retirement Fund, from other funds transferred from the Former Agency and from funds that
have or will become available through asset sales and all redevelopment operations, is insufficient to fund
the payment of pass- through obligations, Successor Agency enforceable obligations listed on the
Recognized Obligation Payment Schedule and the Successor Agency's administrative cost allowance, the
County Auditor- Controller must notify the State Controller and the DOF by no later than 10 days from
the date of the Successor Agency's notification. If the State Controller concurs that there are insufficient
funds to pay required debt service, and if the Successor Agency's tax sharing obligations described in
Section 38183(a)(1) of the Dissolution Act have been subordinated to the Successor Agency's
enforceable obligations, then the Dissolution Act provides for certain adjustments to be made to the
estimated distributions, as described in more detail under the caption "— Tax Increment Financing
Generally" above.
The Dissolution Act provides that any bonds authorized to be issued by the Successor Agency
will be considered indebtedness incurred by the dissolved Former Agency, with the same legal effect as if
such bonds had been issued prior to the effective date of AB Xl 26, in full conformity with the applicable
provision of the Redevelopment Law that existed prior to such date, will be included in the Successor
Agency's Recognized Obligation Payment Schedule and will be secured by a pledge of, and lien on, and
will be repaid from moneys deposited from time to time in the RPTTF established pursuant to the
Dissolution Act. Additionally, if an enforceable obligation provides for an irrevocable commitment of
property tax revenue and where allocation of revenues is expected to occur over time, the Dissolution Act
provides that a successor agency may petition the DOF to provide written confirmation that its
determination of such enforceable obligation as approved in a Recognized Obligation Payment Schedule
is final and conclusive, and reflects the DOF's approval of subsequent payments made pursuant to the
enforceable obligation. If the confirmation is granted by the DOF, then the DOF's review of such
payments in each future Recognized Obligation Payment Schedule will be limited to confirming that they
are required by the prior enforceable obligation.
OHSUSA:765600743.3
27
Pursuant to the Dissolution Act, the Successor Agency has covenanted to take all actions
necessary to ensure that the 2016 Bonds will be included in the Successor Agency's Recognized
Obligation Payment Schedules as prepared from time to time under the Dissolution Act.
[The Successor Agency has no power to levy and collect property taxes, and any property tax
limitation, legislative measure, voter initiative or provisions of additional sources of income to taxing
agencies having the effect of reducing the property tax rate could reduce the amount of Tax Increment
Revenues and, accordingly, Subordinate Tax Revenues that would otherwise be available to pay the
principal of, and interest on, the 2016 Bonds. Likewise, broadened property tax exemptions could have a
similar effect. See "RISK FACTORS" and "LIMITATIONS ON TAX REVENUES."
The Successor Agency cannot guarantee that this process prescribed by the Dissolution Act of
administering the Tax Increment Revenues and the statutory tax sharing amounts will effectively result in
adequate Subordinate Tax Revenues for the payment of principal and interest on the 2016 Bonds when
due. See "— Recognized Obligation Payment Schedule." See also "ESTIMATED REVENUES AND
BOND RETIREMENT" for additional information regarding the Statutory Pass - Through Amounts
applicable to the Successor Agency and the revenues derived from the Project Area. The Successor
Agency has no power to levy and collect taxes, and various factors beyond its control could affect the
amount of Subordinate Tax Revenues available in any six -month period to pay the principal of and
interest on the 2016 Bonds. See "RISK FACTORS."
The 2016 Bonds are not a debt of the City, the County, the State or any of its political
subdivisions (except the Successor Agency), and none of the City, the County, the State or any of its
political subdivisions (except the Successor Agency) is liable therefor. The 2016 Bonds do not constitute
indebtedness within the meaning of any constitutional or statutory debt limitation or restriction.)
Assessment Appeals
Property owners can appeal the assessment of their property to the county assessment appeals
board. See "RISK FACTORS — Assessment Appeals" and APPENDIX A — "FISCAL CONSULTANT
REPORT." The Fiscal Consultant conducted a review of pending and recently resolved assessment
appeals in order to determine potential impact on current and future Project Area value and tax increment
revenue. The results of this review are described in the Fiscal Consultant's Report attached as
APPENDIX A, portions of which are summarized below.
There are two basic types of assessment appeals provided for under California law. The first type
of appeal, commonly referred to as a base year assessment appeal, involves a dispute on the valuation
assigned by the county assessor immediately subsequent to a change in ownership or completion of new
construction. If the base year value assigned by the county assessor is reduced, the valuation of the
property cannot increase in subsequent years more than two percent annually unless and until another
change in ownership and/or additional new construction activity occurs.
The most common type of appeal filed is known as a Proposition 8 appeal, in which the property
owner seeks a reduction in a particular year's assessment based on the current economic value of the
property. The county assessor may also adjust valuations based on Proposition 8 criteria. Reductions in
valuation made under Proposition 8 are temporary, with valuations restored to their full assessments once
the economic reason for the reduction no longer applies. Such reductions can affect the Successor
Agency's tax increment while they are in effect.
The Los Angeles County Assessor (the "Assessor ") annually reports on the number of
assessments by city subject to Proposition 8 reductions, and the amount of Proposition 8 reductions. For
28
OHSUSA:765600743,3
Fiscal Year 2015 -16, the Assessor reports properties reduced through Proposition 8 in the City of
Rosemead and $ in reduced valuation. This compares to properties and $ in Proposition
8 reductions in Fiscal Year 2015 -16, _ properties and $ in Proposition 8 reductions in Fiscal Year
2014 -15, and, properties and $ in Proposition 8 reductions in Fiscal Year 2013 -14.
In Los Angeles County, a property owner desiring to reduce the assessed value of such owner's
property in any one year must submit an application to the Los Angeles County Assessment Appeals
Board (the "Appeals Board "). Applications for any tax year must be submitted by September 15 of such
tax year. The Appeals Board, within two years of each applicant's filing date, will hold a hearing and then
either reduce the assessment or confirm the assessment. As reported in the Fiscal Consultant's Report,
total assessment appeals pending in the Project Area represent real property with a total assessed
valuation of $116,132,448. Based on the applicants' opinion of value, the total requested reduction in
assessed valuation is $46,710,723.
Based on the actual valuation reductions allowed by the Appeals Board for property in the Project
Area over the last five years, the amount of the allowed reductions by the Appeals Board represented
approximately 10.79% of the total assessed valuation of the properties that were the subject of the
appeals. If the historical reduction percentage of 10.79% is applied to the total assessed valuation of the
currently outstanding appeals, it is estimated that the resolution of the current appeals pending could
result in a reduction to [Tax Revenues] in Fiscal Year 2016 -17 of $36,152. This amount has not been
deducted from the [Pledged Tax Revenues and Subordinate Tax Revenues] shown in Exhibit A, as the
outcome of pending appeals cannot be predicted with certainty.
[With respect to the Project Area, a review of the Project Area property tax rolls for Fiscal Year
2016 -7 indicates that a substantial number of residential parcels that appear to have previously been
subject to Proposition 8 reductions have had their valuations increased, while some vacant properties have
had their valuations reduced through what appear to be Proposition 8 reductions (the Assessor does not
indicate on the rolls which parcels are subject to Proposition 8). These reductions and restorations are
discussed further below and in the Fiscal Consultant's Report attached hereto as APPENDIX A.]
With respect to direct property owner appeals, the County experienced a high level of assessment
appeals in the late 1990's and again in 2007 and 2008. Within the Project Area, the primary cause of such
appeals was declining market value of improved and unimproved residential property. Further significant
appeals to assessed values in the Project Area may be filed from time to time in the future. The Successor
Agency cannot predict the extent of any such appeals or their likelihood of success.
The County has two years from the date of filing to rule on appeal requests. If the County reduces
the assessed value of any parcel, there can be no assurance that the reduction will be by the amount
estimated by the Fiscal Consultant. Also, additional appeals on property within the Project Area may be
filed in the future. The Successor Agency cannot predict the extent of any such appeals or their likelihood
of success.
The following table illustrates the pending and resolved assessment appeals in the Project Area,
and a projection of the estimated impact of pending appeals on assessed value.
OHSUSA:765600743.3
29
Table 4
Successor Agency to the Rosemead Community Development Commission
Rosemead Merged Project Area
Historical Assessment Appeals Reviewed January 1, 2011 through June 13, 2016
Number
of
Appeals
Filed
99
Roll Year
Appealed
2011
2012
2013
2014
2015
Number
Allowed
of
Assessed
Owner's
Reduction
Reductions
Successful
Value of
Opinion of
Total Requested
Allowed by
as % of
Appeals
Property
Value
AV Reduction
Board
Requested
28
$231,511,488
$130,828,536
$100,682,952
$10,867,295
10.79%
Outstanding Assessment
Appeals as of June 13,
2016
Estimated
Number
Reduction
of
Assessed
Owner's
Potential Loss
(based on
Appeals
Value of
Opinion of
of Assessed
Historical
historical
Filed
Property
Value
Value
Success Rate
success)
1
$ 1,469,091
$ 730,000
$ 739,091
10.79%
79,774
1
1,418,822
700,000
718,822
10.79
77,587
11
23,913,510
15,910,086
8,003,424
10.79
863,856
16
39,857,217
22,790,310
17,066,907
10.79
1,842,130
19
49,473,808
29,291,329
20,182,479
10.79
2,178,412
Source: Urban Futures, Inc. with data obtained from Los Angeles County.
[A number of the appeals in the Project Area that were allowed resulted in a reduction in value
were based on Section 51 of the Revenue and Taxation Code. This section requires that for each lien date
the value of real property shall be the lesser of its base year value annually adjusted by the inflation factor
pursuant to Article XIIIA of the State Constitution or its full cash value, taking into account reductions in
value due to damage, destruction, depreciation, obsolescence, removal of property or other factors
causing a decline in value. Significant reductions took place in some counties during the mid- 1990's due
to declining real estate values. Reductions made under this code section may be initiated by the Assessor
or requested by the property owner. After a roll reduction is granted under this section, the property is
reviewed on an annual basis to determine its full cash value and the valuation is adjusted accordingly,
which may result in either further reductions in or increases in assessed value. Such increases shall be in
accordance with the actual full cash value of the property and may exceed the maximum annual
inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once
the property has regained its prior value, adjusted for inflation it once again is subject to the annual
inflationary factor growth rate allowed under Article XIIIA.
Under Section 51 of the Revenue and Taxation Code the annual increase in assessed valuation for
real property is limited to the lesser of two percent or the October -to- October change in the California
Consumer Price Index (CCPI) preceding the January 1 lien date. The State Board of Equalization reports
the figure annually in late December. Since 197677 the CCPI has been above two percent in all but
seven years, with the lowest CCPIs being a negative 0.237 percent for Fiscal Year 2010 -11 and a positive
0.753% for Fiscal Year 2011 -12. The factor applied to the Fiscal Year 2012 -13 and Fiscal Year 2013 -14
rolls was 2.00 %. The factor for the Fiscal Year 2014 -15 rolls was 0.454% and the factor for the Fiscal
Year 2015 -16 roll was 1.998 %. The factor for Fiscal Year 2016 -17 is [1.525] %. This factor, referred to
at times in this Analysis as the Proposition 13 inflation factor, is applied to land and improvements where
30
OHSUSA:765600743.3
the property has not been sold or, in the case of improvements, newly constructed. Properties whose
valuations have been reduced under Proposition 8 continue to receive an inflationary adjustment under
Proposition 13 on the reduced valuation.]
The Successor Agency cannot predict whether any future appeals will be successful, or whether
the number of appeals may increase in the Project Area. Future reductions in taxable values in the Project
Area resulting from successful appeals by property owners will reduce the amount of Subordinate Tax
Revenues available to pay the principal of and interest on the 2016 Bonds.
Property Tax Administrative Costs
In 1990, SB 2557, and in 1992, SB 1559, authorized county auditors to determine property tax
administrative costs proportionately attributable to local jurisdictions and to charge agencies for such
costs. The Los Angeles County Auditor - Controller deducts administration charges and collection fees
from the tax increment distributed to the Successor Agency's RPTTF for the Project Area. In fiscal year
2015 -16, the County administration charges and collection fees totaled $137,352. The Fiscal Consultant
has estimated such fees and charges to be 1.64% of Gross Tax Revenues, which is consistent with
historical amounts. The Fiscal Consultant and the Successor Agency have assumed that the County fees
and charges will continue to be collected by the Auditor Controller and will increase or decrease
proportionally with the changes in revenues. County fees and charges have been deducted from the
projected [Pledged Tax Revenues and Subordinate Tax Revenues]. See the Fiscal Consultant's Report
attached hereto as APPENDIX A.
Plan Limitations
Under the provisions of Redevelopment Law prior to the Dissolution Act, certain time and
revenue limitations were imposed upon the redevelopment plan for the Project Area. SB 107, which
became effective September 22, 2015, amended the Dissolution Act to provide that the time limits for
receiving property tax revenues and the limitation on the amount of property tax revenues that may be
received by the Former Agency and the Successor Agency set forth in the Redevelopment Plan are not
effective for purposes of paying the Successor Agency's enforceable obligations such as the Senior
Bonds, the 2016 Bonds and Parity Debt. Accordingly, the projections set forth in this Official Statement
and in the Fiscal Consultant's Report attached to this Official Statement as APPENDIX A were prepared
without regard to the time and financial limitations set forth in the Redevelopment Plan.
See the projections of [Pledged Tax Revenues and Subordinate Tax Revenues] in Exhibit A to the
Fiscal Consultant's Report attached hereto as APPENDIX A in Table 3 "REDEVELOPMENT PLAN
LIMITATION DATES AND AMOUNTS."
Last and Final Recognized Obligation Payment Schedule
SB 107 amended the Dissolution Act to permit a successor agency to submit a Last and Final
Recognized Obligation Payment Schedule (a "Last and Final Recognized Obligation Payment Schedule ")
for approval by the oversight board and DOF if: (i) The successor agency's only remaining debt is
administrative costs and payments pursuant to enforceable obligations with defined payment schedules,
(ii) All remaining obligations have been previously listed on a Recognized Obligation Payment Schedule
and approved by DOF, and (iii) The successor agency is not a party to outstanding or unresolved
litigation. The Last and Final Recognized Obligation Payment Schedule must list the remaining
enforceable obligations of the successor agency in the following order: (A) enforceable obligations to be
funded from the RPTTF, (B) enforceable obligations to be funded from bond proceeds or other legally or
contractually dedicated or restricted funding sources, and (C) loans or deferrals authorized for repayment
31
OHSUSA:765600743.3
to the city that created the redevelopment agency or the successor to the former redevelopment agency's
housing functions and assets. The Last and Final Recognized Obligation Payment Schedule must also
include the total outstanding obligation and a schedule of remaining payments for each enforceable
obligation described in (A) and (B) above, and the total outstanding obligation and an interest rate of 4 %,
for any loans or deferrals listed pursuant to (C) above. The Last and Final Recognized Obligation
Payment Schedule will also establish the maximum amount of RPTTFs to be distributed to the successor
agency for each remaining fiscal year until all obligations have been fully paid. DOF approval is required
for any Last and Final Recognized Obligation Payment Schedule to become effective. The county
auditor - controller is also required to review the Last and Final Recognized Obligation Payment Schedule
and provide any objection to the inclusion of any items or amounts to the DOE Successor agencies may
only amend an approved Last and Final Recognized Obligation Payment Schedule twice. Commencing
on the effective date of the approved Last and Final Recognized Obligation Payment Schedule, the
successor agency will not prepare or transmit annual Recognized Obligation Payment Schedules.
After the Last and Final Recognized Obligation Payment Schedule is approved by DOF, the
county auditor - controller will continue to allocate moneys in the successor agency's RPTTF pursuant to
Section 34183 of the Dissolution Act; however, the county auditor - controller will allocate such moneys in
each fiscal period, after deducting the county auditor - controller's administrative costs, in the following
order of priority: (A) pass through payments pursuant to Section 34183(a)(1) of the Dissolution Act, (B)
scheduled debt service payments on tax allocation bonds listed and approved in the Last and Final
Recognized Obligation Payment Schedule, (C) scheduled payments on revenue bonds listed and approved
in the Last and Final Recognized Obligation Payment Schedule, but only to the extent the revenues
pledged for them are insufficient to make the payments and only if the successor agency's tax increment
revenues were also pledged for the repayment of bonds, (D) scheduled payments for debts and obligations
listed and approved in the Last and Final Recognized Obligation Payment Schedule to be paid from the
RPTTF, (E) payments listed and approved on the Last and Final Recognized Obligation Payment
Schedule that were authorized but unfunded in prior periods, (F) repayment of loans and deferrals to the
city that created the redevelopment agency or the successor to the former redevelopment agency's
housing functions and assets that are listed and approved on the Last and Final Recognized Obligation
Payment Schedule, and (G) any moneys remaining in the RPTTF after the payments and transfers
described in (A) to (F), above, will be distributed to taxing entities in accordance with Section
34183(a)(4) of the Dissolution Act.
If the successor agency reports to the county auditor - controller that the total available amounts in
the RPTTF will be insufficient to fund the successor agency's current or future fiscal year obligations,
and if the county auditor - controller concurs that there are insufficient funds to pay the required
obligations, the county auditor - controller may distribute funds pursuant to Section 34183(b) of the
Dissolution Act. See the caption "— Tax Increment Financing Generally" above.
[The Successor Agency is not currently eligible to submit a Last and Final Recognized Obligation
Payment Schedule and has no current plans to seek approval of a Last and Final Recognized Obligation
Payment Schedule.]
OHSUSA:765600743.3
32
ESTIMATED REVENUES AND BOND RETIREMENT
The Successor Agency has retained Urban Futures, Inc., Orange, California (the "Fiscal
Consultant "), to analyze the Project Area and to project future [Pledged Tax Revenues and Subordinate
Tax Revenues] shown for the Project Area. The Fiscal Consultant's report is included as APPENDIX A
and should be read in its entirety.
The Project Area's base year assessed valuation is approximately $170.4 million. The total
assessed valuation for Fiscal Year 2016 -17 is approximately $878.4 million, with approximately $833.7
million attributable to secured assessed value and approximately $44.7 million attributable to the
unsecured assessed value. The total assessed valuation for Fiscal Year 2009 -10 is approximately $878.4
million which produces a total incremental value of approximately $ million.
Gross Tax Revenues consist primarily of tax increment revenues generated from the application
of appropriate tax rates to the incremental taxable value of the Project Area. An additional significant
source of Gross Tax Revenues includes unitary property taxes. Unitary tax revenues make up a
substantial portion of the tax increment revenues received by the Successor Agency. This is primarily
because the headquarters of Southern California Edison are located within the Project Area. See
"LIMITATIONS ON TAX REVENUES — Unitary Property" herein. Reductions in Tax Revenues
received by the Successor Agency may result from declining tax rates, property tax administrative costs
and refunds resulting from successful appeals of assessed values.
[The Component Area No. 1 base year 1971 -72 assessed valuation is $ The assessed
valuation in Component Area No. 1 for Fiscal Year 2016 -17 is $ , which produces a total
incremental value of $ . The total Gross Tax Revenues for Fiscal Year 2016 -17 attributed to
Component Area No. 1 are estimated to be approximately $ and Subordinate Tax Revenues are
estimated to be approximately $ . ]
[The Component Area No. 2 base year 1999 -2000 assessed valuation is $ The assessed
valuation in Component Area No. 2 for Fiscal Year 2016 -17 is $ , which produces a total
incremental value of $ . The total Gross Tax Revenues for Fiscal Year 2016 -17 attributed to
Component Area No. 2 are estimated to be approximately $ and Subordinate Tax Revenues are
estimated to be approximately $ . ]
The Tax Rate calculated by the City is 1.000% for the secured roll and the unsecured roll for the
Successor Agency. In accordance with Health and Safety Code Section 33670(e) the Successor Agency
Tax Rate excludes taxes related to bonded indebtedness of the City approved by the voters of the City on
or after January 1, 1989, and issued for the acquisition or improvement of real property.
[Pledged Tax Revenues and Subordinate Tax Revenues] shown in Table 5 below and in Exhibit
A of the Fiscal Consultant's Report. Exhibit A in the Fiscal Consultant's Report attached hereto as
APPENDIX A sets forth estimated Fiscal Year 2016 -17 [Pledged Tax Revenues and Subordinate Tax
Revenues] shown and forecasts growth in [Pledged Tax Revenues and Subordinate Tax Revenues] shown
through Fiscal Year 2033 -34, incorporating the Proposition 13 adjustment of [1.525]% for real property
on the Fiscal Year 2016 -17 roll and assuming a 2% rate of growth in real property from Fiscal Year 2017-
18 forward. [No inflationary trend is applied to personal property value and the personal property
assessed valuation is assumed in each Fiscal Year presented below to remain at the 2016 -17 fiscal year
level.] These projections do not reflect changes to assessed valuation due to new construction, property
sales, Proposition 8 reductions, assessment appeals or other factors. The actual growth rate may be less
than the projected in the Project Area. Debt service is based on the maturity schedule and interest rates,
subject to prior redemption or acceleration, for the 2016 Bonds as set forth on the inside cover page
33
OHSUSA:765600743.3
hereof, and the debt service attributable to the Senior Bonds. Table 5 projects annual debt service
coverage based on the forecasts of [Pledged Tax Revenues and Subordinate Tax Revenues] shown.
Secured personal property, unsecured valuations and estimated unitary revenue in the amount of
$1,276,382 for Fiscal Year 2016 -17 are assumed to remain constant throughout.
[Consider General Projection Assumptions]
1. The revenue projections are based on the Fiscal Year 16 -17 assessed valuation of the
Project Area, with projected 2% annual assessed valuation growth thereafter.
2. The Project Area tax rate is assumed to be 1% in Fiscal Year 2016 -17 and thereafter.
3. Unitary revenues are projected to be $1,276,382 annually, based on historical receipts
and held constant at the 2016 -17 level. See "LIMITATIONS ON TAX REVENUES — Unitary Property."
4. Projected Gross Tax Revenues is based upon incremental taxable values factored against
an assumed project tax rate. The assumed future tax rates remain at $1.00 per $100 of taxable value as
reported by the County Auditor Controller.
5. With respect to pass - throughs, the Fire District receives approximately 17% of gross tax
revenues from the Component Area No. 1 pursuant to the Pass - Through Agreement. Statutory pass -
throughs to agencies that do not have a current tax sharing agreement receive a combined share of 82.9%
of general levy property tax. Payments under the Pass - Through Agreement and Statutory Pass -- through
payments are, pursuant to previous action of the Former Agency, subordinate to payments on the Senior
Bonds. Such payments are not subordinate to debt service on the 2016 Bonds.
6. Growth in real property land and improvement values have been limited to an assumed
rate of growth of real property taxable values of two percent annually as allowed under Article XIIIA of
the state Constitution. Should the future growth of taxable value in the project areas be less than two
percent, the resultant Gross Tax Revenues would be reduced proportionately. Future values will also be
impacted by changes of ownership and new construction not reflected in our projections. In addition, the
values of property previously reduced in value due to assessment appeals based on reduced market values
could increase more than two percent when real estate values increase more than two percent. The
Successor Agency, the City and the Underwriter are unable to make any representation that taxable values
will actually grow at the rate projected.
7. Los Angeles County Administration Fee is estimated at 1.5% of Gross Revenue based on
the actual 2016 -17 level.
34
OHSUSA:765600743.3
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RISK FACTORS
The following factors, along with all other information in this Official Statement, should be
considered by potential investors in evaluating the 2016 Bonds and the credit quality of the 2016 Bonds.
The following does not purport to be an exhaustive listing of risks and other considerations which may be
relevant to investing in the 2016 Bonds. In addition, the order in which the following information is
presented is not intended to reflect the relative importance of any such risks. For a discussion of certain
matters that will or could cause reductions in the Tax Revenues available in future years, see
"LIMITATIONS ON TAX REVENUES" of this Official Statement.
Limited Special Obligations
The 2016 Bonds are special obligations payable solely from certain payments from the Successor
Agency and certain other funds. Neither the City, the County, the State nor any political subdivision
thereof, except the Successor Agency, shall be obligated to pay the principal of the 2016 Bonds, or the
interest thereon, except from the funds described above, and neither the faith and the credit nor the taxing
power of the County, the State nor any political subdivision thereof is pledged to the payment of the
principal of or the interest on the 2016 Bonds. The issuance of the 2016 Bonds shall not directly,
indirectly or contingently obligate the City, the County, the State or any political subdivision thereof to
levy or pledge any form of taxation whatever therefor or to make any appropriations for their payment.
The Successor Agency has no taxing power.
Subordinate Lien Risks
The 2016 Bonds are payable from tax increment revenues from the Project Area on a basis junior
and subordinate to the payment of debt service on the Senior Bonds and the amounts payable under the
Pass - Through Agreement as described under the captions "INTRODUCTION - Security for the Bonds —
Outstanding Senior Bonds" and "SECURITY FOR THE BONDS — Subordinate Tax Revenues." In the
event of default or insufficiency of tax increment revenues from the Project Area that affects payment
under the Senior Bonds, the owners of such Senior Bonds will have the right to direct rights and remedies
including acceleration of the principal amount of such Senior Bonds, which would adversely affect the
availability of Subordinate Tax Revenues to the 2016 Bonds.
Recognized Obligation Payment Schedule
The Dissolution Act provides that only those payments listed in a Recognized Obligation
Payment Schedule may be made by the Successor Agency from the funds specified in the Recognized
Obligation Payment Schedule. The Successor Agency prepares a single Recognized Obligation Payment
Schedule each year, covering payments due in the January to June period (referred to as ROPS `B ") and
in the July to December period (referred to as ROPS "A "). In order to have sufficient funds in a
subsequent period, the Successor Agency may identify on its Recognized Obligation Payment Schedule
an amount necessary to be retained in the RPTTF to be applied to obligations shown on a subsequent
Recognized Obligation Payment Schedule. The Controller deposits funds into the RPTTF twice each
year, once on January 2 and again on June 1. Any amount remaining in the RPTTF after payment of
administrative costs, pass - through payments and Recognized Obligation Payment Schedule obligations is
immediately distributed to other taxing entities. Tax revenues will not be withdrawn from the RPTTF by
the County Auditor- Controller and remitted to the Successor Agency without a Recognized Obligation
Payment Schedule approved by the DOE See "THE PROJECT AREA - Recognized Obligation Payment
Schedule." If the Successor Agency were to fail to complete an approved Recognized Obligation Payment
Schedule, the availability of Subordinate Tax Revenues to the Successor Agency could be adversely
affected for such period.
36
OHSUSA:765600743.3
Real Estate and General Economic Risks
The Successor Agency's ability to make payments on the 2016 Bonds will depend upon the
economic strength of the Project Area. The general economy of the Project Area will be subject to all the
risks generally associated with real estate and real estate development. Property values and further
development in the Project Area, may be adversely affected by changes in general economic conditions,
fluctuations in the real estate market and interest rates, unexpected increases in development costs and by
other similar factors. Further, real estate development within the Project Area could be adversely affected
by future governmental policies, including governmental policies to restrict or control certain kinds of
development. If development activities in the Project Area encounter significant obstacles of the kind
described herein or other impediments, the economy of the Project Area could be adversely affected,
causing reduction of the Subordinate Tax Revenues available to repay the 2016 Bonds. In addition, if
there is a decline in the general economy of the region, the City or the Project Area, the owners of
property within the Project Area may be less able or less willing to make timely payments of property
taxes, causing a delay or stoppage of Tax Revenues received by the Successor Agency from the Project
Area.
Reduction in Taxable Value
Tax Increment Revenues allocated to the Successor Agency are determined by the amount of
incremental taxable value in the Project Area allocable to the Project Area and the current rate or rates at
which property in the Project Area is taxed. The reduction of taxable values of property caused by
economic factors beyond the Successor Agency's control, such as a relocation out of the Project Area by
one or more major property owners, or the transfer, pursuant to California Revenue and Taxation Code
Section 68, of a lower assessed valuation to property within the Project Area by a person displaced by
eminent domain or similar proceedings, appeals to value under Proposition 8 or other assessment appeals,
or the discovery of hazardous substances on a property within the Project Area (see "Hazardous
Substances," below) or the complete or partial destruction of such property caused by, among other
eventualities, an earthquake (see "Risk of Earthquake" below), flood or other natural disaster, could cause
a reduction in the Subordinate Tax Revenues securing the 2016 Bonds. Property owners may also appeal
to the Assessor for a reduction of their assessed valuations or the Assessor could order a blanket reduction
in assessed valuations based on then current economic conditions. See APPENDIX A — "FISCAL
CONSULTANT REPORT — Assessment Appeals."
To estimate the total tax increment revenues available to pay debt service on the Senior Bonds
and the 2016 Bonds, the Successor Agency has made certain assumptions with regard to the availability
of tax increment revenues. The Successor Agency believes these assumptions to be reasonable, but to the
extent tax increment revenues are less than anticipated, the total tax increment revenues available to pay
debt service on the 2016 Bonds may be less than those projected herein. Unless mentioned herein, no
independent third party has reviewed the estimates or assumptions made by the Successor Agency. See
"ESTIMATED REVENUES AND BOND RETIREMENT" herein.
Assessment Appeals
Property taxable values may be reduced as a result of Proposition 8, which reduces the assessed
value of property, or of a successful appeal of the taxable value determined by the Assessor. An appeal
may result in a reduction to the Assessor's original taxable value and a tax refund to the applicant
property owner. A reduction in taxable values within the Project Area and the refund of taxes which may
arise out of successful appeals by property owners will affect the amount of Subordinate Tax Revenues
under the Indenture. The Successor Agency has in the past experienced reductions in its Tax Increment
Revenues as a result of assessment appeals. The actual impact to tax increment is dependent upon the
37
OHSUSA:765600743.3
actual revised value of assessments resulting from values determined by the County Assessment Appeals
Board or through litigation and the ultimate timing of successful appeals. As discussed in this Official
Statement, based on the historical success rate of 10.79% for approved valuation reductions as a
percentage of the requested reduction amounts over the past five years, the estimated potential reduction
to [Tax Revenues] in Fiscal Year 2016 -17 is $36,152. This amount has not been deducted from the
[Pledged Tax Revenues and Subordinate Tax Revenues] shown in Exhibit A to the Fiscal Consultant's
Report attached hereto as APPENDIX A or in the projected Subordinate Tax Revenues and estimated
debt service coverage in this Official Statement. For a discussion of historical assessment appeals in the
Project Area and summary information regarding pending and resolved assessment appeals for the
Successor Agency, see "THE PROJECT AREA — Assessment Appeals" and APPENDIX A — FISCAL
CONSULTANT REPORT — Assessment Appeals."
The Successor Agency cannot predict whether any future appeals will be successful, or whether
the number of appeals may increase in the Project Area. Future reductions in taxable values in the Project
Area resulting from successful appeals by property owners will reduce the amount of Subordinate Tax
Revenues available to pay the principal of and interest on the 2016 Bonds. See "THE PROJECT AREA —
Assessed Values" herein.
Reduction in Inflationary Rate and Changes in Legislation
As described in greater detail below (see "LIMITATIONS ON TAX REVENUES "), Article
XIIIA of the California Constitution provides that the full cash value base of real property used in
determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed
a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or
comparable local data. Such measure is computed on a calendar year basis. Article XIIIA limits
inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2% and there have
been several years in which taxable values were adjusted by an actual inflationary rate that was less than
2 %. The adjusted inflationary rate for Fiscal Year 2015 -16 roll was 1.998 %; the factor for Fiscal Year
2016 -17 is [1.525] %. This factor, referred to at times in this Official Statement [and in the Fiscal
Consultant's Report] as the Proposition 13 inflation factor, is applied to land and improvements where the
property has not been sold or, in the case of improvements, newly constructed. Properties whose
valuations have been reduced under Proposition 8 continue to receive an inflationary adjustment under
Proposition 13 on the reduced valuation. The Successor Agency is unable to predict whether future
annual inflationary adjustments to the taxable value base of real property within the Project Area will be
in the amount of the full 2% permitted under Article XIIIA or will be in an amount less than 2 %.
Estimated Revenues
In estimating that tax increment revenues from the Project Area will be sufficient to pay debt
service on the Senior Bonds and the 2016 Bonds, the Successor Agency has made certain assumptions
with regard to present and future assessed valuation in the Project Area, future tax rates and percentage of
taxes collected. The Successor Agency believes these assumptions to be reasonable, but there is no
assurance these assumptions will be realized and to the extent that the assessed valuation and the tax rates
are less than expected, the tax increment revenues from the Project Area available to pay debt service on
the 2016 Bonds will be less than those projected and such reduced tax increment revenues from the
Project Area may be insufficient to provide for the payment of principal of, premium (if any) and interest
on the Senior Bonds, the 2016 Bonds and any Parity Debt.
OHSUSA:765600743.3
38
Levy and Collection of Taxes
The Successor Agency has no independent power to levy and collect property taxes. Any
reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease
could reduce the Tax Revenues and, accordingly, could have an adverse impact on the availability of
Subordinate Tax Revenues the ability of the Successor Agency to make debt service payments on the
2016 Bonds. Likewise, delinquencies in the payment of property taxes could have an adverse effect on the
Successor Agency's ability to make timely debt service payments on the 2016 Bonds.
No Teeter Plan
Certain counties in the State of California operate under a statutory program entitled Alternative
Method of Distribution of Tax Levies and Collections and of Tax Sales Proceeds (the "Teeter Plan ").
Under the Teeter Plan, local taxing entities receive 100% of their tax levies, net of delinquencies, but do
not receive interest or penalties on delinquent taxes collected by the county. The County of Los Angeles
has not adopted the Teeter Plan, and consequently the Teeter Plan is not available to local taxing entities
within the County, such as the Successor Agency. The Successor Agency's receipt of property taxes is
therefore subject to delinquencies in the Project Area.
Concentration of Land Ownership
Based upon Fiscal Year 2016 -17 assessed value data, approximately 24% of the total net secured
assessed property value in the Project Area is owned by the ten largest taxpayers. In addition, a
substantial portion, approximately 10% of Gross Tax Revenues are derived from unitary property taxes.
This is primarily because the headquarters of Southern California Edison are located within the Project
Area. See "LIMITATIONS ON TAX REVENUES — Unitary Property" herein. Reductions in Tax
Revenues received by the Successor Agency may result from declining tax rates, property tax
administrative costs and refunds resulting from successful appeals of assessed values. The inability or
unwillingness of such taxpayers to pay property taxes on their property in the Project Area might have an
adverse effect on the Successor Agency's ability to repay the 2016 Bonds. In addition, as a result of the
high concentration of land ownership in the Project Area, decreases in the assessed value of one or more
parcels of land may have a significant impact on the Tax Revenues. See "THE PROJECT AREA — Ten
Largest Assessees" herein.
Acceleration of Senior Bonds
The Senior Bonds are subject to acceleration upon an event of default under the Senior Indenture
pursuant to which such bonds were issued. See "SECURITY FOR THE BONDS" herein.
Bond Insurance Risk Factors
The scheduled payment of principal of and interest on the 2016 Bonds when due will be
guaranteed under the Policy. The following are risk factors relating to the Policy.
In the event of default of the scheduled payment of principal of or interest on the 2016 Bonds
when all or some becomes due, the Trustee on behalf of the Owners of the 2016 Bonds shall have a claim
under the Policy for such payments. However, in the event of any acceleration of the due date of such
principal by reason of mandatory or optional redemption or acceleration resulting from default or
otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the
payments are to be made in such amounts and at such times as such payments would have been due had
there not been any such acceleration. The Policy does not insure against redemption premium, if any. The
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payment of principal and interest in connection with mandatory or optional prepayment of the 2016
Bonds by the Successor Agency from the bond owner as a voidable preference under applicable
bankruptcy law is covered by the insurance policy, however, such payments will be made by the Insurer
at such time and in such amounts as would have been due absence such prepayment by the Successor
Agency unless the Insurer chooses to pay such amounts at an earlier date.
A default of payment of principal and interest does not result in an acceleration of the Bonds or
the obligations of the Insurer unless consented to by the Insurer. The Insurer may direct and must consent
to any remedies and the Insurer's consent may be required in connection with amendments to any
applicable bond documents.
In the event the Insurer is unable to make payment of principal and interest as such payments
become due under the Policy, the 2016 Bonds are payable solely from the moneys received pursuant to
the applicable bond documents. In the event the Insurer becomes obligated to make payments with
respect to the 2016 Bonds, no assurance is given that such event will not adversely affect the market price
of the 2016 Bonds or the marketability (liquidity) for the 2016 Bonds.
The insured ratings on the 2016 Bonds are dependent in part on the financial strength of the
Insurer and its claim paying ability. The Insurer's financial strength and claims paying ability are
predicated upon a number of factors which could change over time. No assurance is given that the ratings
of the Insurer and of the ratings on the 2016 Bonds insured by the Insurer will not be subject to
downgrade and such event could adversely affect the market price of the 2016 Bonds or the marketability
(liquidity) for the 2016 Bonds. See description of "OTHER INFORMATION — Ratings" herein.
The obligations of the Insurer are unsecured obligations and in an event of default by the Insurer,
the remedies available may be limited by applicable bankruptcy law or state law related to insolvency of
insurance companies.
Neither the Successor Agency nor the Underwriter have made independent investigation into the
claims paying ability of the Insurer and no assurance or representation regarding the financial strength or
projected financial strength of the Insurer is given. Thus, when making an investment decision, potential
investors should carefully consider the ability of the Successor Agency to pay principal and interest on the
2016 Bonds and the claims paying ability of the Insurer, particularly over the life of the investment. See
"BOND INSURANCE" herein for further information provided by the Insurer and the Policy, which
includes further instructions for obtaining current financial information concerning the Insurer.
Change in Law
In addition to the other limitations on Tax Revenues, the California electorate or Legislature
could adopt a constitutional or legislative property tax decrease with the effect of reducing Tax Revenues
payable to the Successor Agency. There is no assurance that the California electorate or Legislature will
not at some future time approve additional limitations that could reduce the Subordinate Tax Revenues
and adversely affect the security of the 2016 Bonds.
Loss of Tax Exemption
As discussed under the caption "TAX MATTERS" herein, interest on the 2016 Bonds could
become includable in gross income for purposes of federal income taxation retroactive to the date such
2016 Bonds were issued as a result of future acts or omissions of the Successor Agency in violation of its
covenants contained in the Indenture. Should such an event of taxability occur, the 2016 Bonds are not
subject to special redemption or any increase in interest rate and will remain outstanding until maturity.
1HSby11MaLSYSIIryF.ic ,!
40
IRS Audit of Bond Issues
The Internal Revenue Service has initiated an expanded program for the auditing of tax - exempt
bond issues, including both random and targeted audits. It is possible that the 2016 Bonds will be
selected for audit by the Internal Revenue Service. It is also possible that the market value of the 2016
Bonds might be affected as a result of such an audit of the 2016 Bonds (or by an audit of similar bonds).
Certain Bankruptcy Risks
The enforceability of the rights and remedies of the owners of the 2016 Bonds and the obligations
of the Successor Agency may become subject to the following: the federal bankruptcy code and
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the
enforcement of creditors' rights generally, now or hereafter in effect; usual equitable principles which
may limit the specific enforcement under state law of certain remedies; the exercise by the United States
of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary
exercise, in certain exceptional situations of the police power inherent in the sovereignty of the State of
California and its governmental bodies in the interest of servicing a significant and legitimate public
purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if
initiated, could subject the owners of the 2016 Bonds to judicial discretion and interpretation of their
rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification
of their rights. The opinion of Bond Counsel as to the enforceability of the obligation to make payments
on the 2016 Bonds will be qualified as to bankruptcy and such other legal events. See APPENDIX E —
"FORM OF OPINION OF BOND COUNSEL."
Bankruptcy of Landowners
The bankruptcy of a major assessee in the Project Area could delay and/or impair the collection
of property taxes by the County with respect to properties in the bankruptcy estate. Although the
Successor Agency is not aware of any major property owners in the Project Area that are in bankruptcy or
threatening to declare bankruptcy, the Successor Agency cannot predict the effects on the collections of
Tax Revenues if such an event were to occur.
Risk of Earthquake
The City, like most regions in California, is an area of significant seismic activity and, therefor, is
subject to potentially destructive earthquakes. The Los Angeles basin has experienced significant
earthquakes in the past. Most recently in the vicinity of the Project Area, on October 1, 1987, a 5.9
magnitude earthquake occurred on a previously unknown, concealed thrust fault approximately 11 miles
east of downtown Los Angeles, California, approximately 6 miles southeast of Pasadena and
approximately 1 mile southeast of the City. The earthquake resulted in eight fatalities and approximately
$358 million in property damage. Severe damage was confined mainly to communities east of Los
Angeles and near the epicenter in the City of Whittier. Significant structural damage to property within
the Project Area was reported and repairs were completed within one year of the earthquake.
If an earthquake were to substantially damage or destroy taxable property within the Project Area,
the assessed valuation of such property could be reduced. Such a reduction of assessed valuations could
result in a reduction of the Subordinate Tax Revenues that secure the 2016 Bonds, which in turn could
impair the ability of the Successor Agency to make payments of principal of and/or interest on the 2016
Bonds when due.
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OHSUSA:765600743.3
Hazardous Substances
An additional environmental condition that may result in the reduction in the assessed value of
property would be the discovery of a hazardous substance that would limit the beneficial use of taxable
property within the Project Area. In general, the owners and operators of a property may be required by
law to remedy conditions of the property relating to releases or threatened releases of hazardous
substances. The owner or operator may be required to remedy a hazardous substance condition of
property whether or not the owner or operator has anything to do with creating or handling the hazardous
substance. The effect, therefore, should any of the property within the Project Area be affected by a
hazardous substance, could be to reduce the marketability and value of the property by the costs of
remedying the condition.
State Budget
AB 26 and AB 1484 were enacted by the State Legislature and Governor as trailer bills necessary
to implement provisions of the State's budget acts for its Fiscal Years 2011 -12 and 2012 -13, respectively,
as efforts to address structural deficits in the State general fund budget. In general terms, these bills
implemented a framework to transfer cash assets previously held by redevelopment agencies to cities,
counties, and special districts to fund core public services, with assets transferred to schools offsetting
State general fund costs (then projected savings of $1.5 billion).
SB 107, which makes extensive amendments to the Dissolution Act, was enacted following the
adoption of the Fiscal Year 2015 -16 Budget, after having initially been presented as AB 113, a trailer bill
to the Fiscal Year 2015 -16 Budget. SB 107 changes the process for submitting Recognized Obligation
Payment Schedules from a six -month to an annual process, authorizes successor agencies to submit and
obtain DOF approval of a Last and Final Recognized Obligation Payment Schedule to govern all
remaining payment obligations of the successor agency, alters the provisions governing the distribution of
RPTTF moneys attributable to pension and State Water Project tax rate overrides, and eliminates the
impact of financial and time limitations in redevelopment plans for purposes of paying enforceable
obligations, among other changes to the Dissolution Act. These statutory amendments impact the manner
in which successor agencies claim RPTTF moneys for enforceable obligations and, for some successor
agencies, impact the amount of RPTTF moneys that will be available for payment of the successor
agency's enforceable obligations.
Certain litigation is challenging some of the terms of the Dissolution Act, and there can be no
assurance that additional legislation will not be enacted in the future to additionally implement provisions
relating to the State budget or otherwise that may affect successor agencies or tax increment revenues,
including Subordinate Tax Revenues. The Successor Agency cannot predict what measures may be
proposed or implemented for the current fiscal year or in the future.
Information about the State budget and State spending is available at various State maintained
websites. Text of the Fiscal Year 2016 -17 Budget and other documents related to the State budget may
be found at the website of the DOF, www.dof.ca.gov. A nonpartisan analysis of the budget is posted by
the Legislative Analyst's Office at www.lao.ca.gov. In addition, various State official statements, many
of which contain a summary of the current and past State budgets may be found at the website of the State
Treasurer, www.treasurer.ca.gov.
None of the websites or webpages referenced above is incorporated into this Official Statement.
They are cited for informational purposes only. The Successor Agency makes no representation as to the
accuracy or completeness of any of the information on such websites.
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Direct and Overlapping Indebtedness
The ability of land owners within the Project Area to pay property tax installments as they come
due could be affected by the existence of other taxes and assessments, imposed upon the land. In addition,
other public agencies whose boundaries overlap those of the Project Area could, without consent of the
Successor Agency, and in certain cases without the consent of the owners of the land within the Project
Area, impose additional taxes or assessment liens on the property to finance public improvements.
Future Legislation and Initiatives
Article XIIIA, Article XM and Proposition 218 were each adopted as measures that qualified
for the ballot pursuant to California's initiative process. From time to time other initiative measures could
be adopted, further affecting revenues of the Successor Agency or the Successor Agency's ability to
expend revenues. In addition, there are currently a number of proposed legislative changes to the
Dissolution Act which, if adopted, would also affect revenues of the Successor Agency or the Successor
Agency ability to expend revenues. The nature and impact of these measures cannot currently be
anticipated.
Investment Risk
Funds held under the Indenture are required to be invested in Permitted Investments as provided
under the Indenture. See APPENDIX D attached hereto for a summary of the definition of Permitted
Investments. All investments, including the Permitted Investments and those authorized by law from
time to time for investments by municipalities, contain a certain degree of risk. Such risks include, but are
not limited to, a lower rate of return than expected and loss or delayed receipt of principal. [Further, the
Successor Agency cannot predict the effects on the receipt of Tax Revenues if the County were to suffer
significant losses in its portfolio of investments or if the County or the City were to become insolvent or
declare bankruptcy. See "RISK FACTORS — Certain Bankruptcy Risks. "]
Challenges to Dissolution Act
Several successor agencies, cities and other entities have filed judicial actions challenging the
legality of various provisions of the Dissolution Act. One such challenge is an action filed on August 1,
2012, by Syncora Guarantee Inc. and Syncora Capital Assurance Inc. (collectively, "Syncora") against the
State, the State Controller, the State Director of Finance, and the Auditor - Controller of San Bernardino
County on his own behalf and as the representative of all other County Auditors in the State (Superior
Court of the State of California, County of Sacramento, Case No. 34- 2012- 80001215). Syncora are
monoline financial guaranty insurers domiciled in the State of New York, and as such, provide credit
enhancement on bonds issued by state and local governments and do not sell other kinds of insurance
such as life, health, or property insurance.
Syncora provided bond insurance and other related insurance policies for bonds issued by former
California redevelopment agencies. The complaint alleged that the Dissolution Act, and specifically the
"Redistribution Provisions" thereof (i.e., California Health and Safety Code Sections 34172(d), 34174,
34177(d), 34183(a)(4), and 34188) violate the "contract clauses" of the United States and California
Constitutions (U.S. Const. art. 1, § 10, cl.l; Cal. Const. art. 1, § 9) because they unconstitutionally impair
the contracts among the former redevelopment agencies, bondholders and Syncora. The complaint also
alleged that the Redistribution Provisions violate the "Takings Clauses" of the United States and
California Constitutions (U.S. Const. amend. V; Cal Const. art. 1 § 19) because they unconstitutionally
take and appropriate bondholders' and Syncora's contractual right to critical security mechanisms without
just compensation.
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After hearing by the Sacramento County Superior Court on May 3, 2013, the Superior Court
ruled that Syncora's constitutional claims based on contractual impairment were premature. The Superior
Court also held that Syncora's takings claims, to the extent based on the same arguments, were also
premature. Pursuant to a Judgment stipulated to by the parties, the Superior Court on October 3, 2013,
entered its order dismissing the action. The Judgment, however, provides that Syncora preserves its rights
to reassert its challenges to the Dissolution Act in the future. The Successor Agency can offer no
assurance that any reassertion of challenges by Syncora or that the final results of any of the judicial
actions brought by others challenging the Dissolution Act will not result in an outcome that may have a
material adverse effect on the Successor Agency's ability to timely pay debt service on the 2016 Bonds.
Secondary Market
There can be no guarantee that there will be a secondary market for the 2016 Bonds, or, if a
secondary market exists, that the 2016 Bonds can be sold for any particular price. Occasionally, because
of general market conditions or because of adverse history or economic prospects connected with a
particular issue, secondary marketing practices in connection with a particular issue are suspended or
terminated. Additionally, prices of issues for which a market is being made will depend upon the then
prevailing circumstances.
LIMITATIONS ON TAX REVENUES
Property Tax Limitations - Article XIIIA
Article XIIIA of the California Constitution. Section 1(a) of Article XIIIA of the California
Constitution limits the maximum ad valorem tax on real property to one percent of full cash value, to be
collected by the counties and apportioned according to law. Section 2 of Article XIIIA defines "full cash
value" to mean "the county assessor's valuation of real property as shown on the 1975/76 tax bill under
full cash value or, thereafter, the appraised value of real property when purchased, newly constructed, or a
change in ownership has occurred after the 1975 assessment." The full cash value may be adjusted
annually to reflect inflation at a rate not to exceed 2% per year, or reduction in the consumer price index
or comparable data for the area under taxing jurisdiction or reduced in the event of declining property
value caused by substantial damage, destruction or other factors. Legislation enacted by the California
Legislature to implement Article XHIA provides that notwithstanding any other law, local agencies may
not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters
as described above.
In the general elections of 1986, 1988, and 1990, the voters of the State approved various
measures which further amended Article XIIIA. One such amendment generally provides that the
purchase or transfer of (i) real property between spouses or (ii) the principal residence and the first
$1,000,000 of the full cash value of other real property between parents and children, do not constitute a
"purchase" or "change of ownership" triggering reassessment under Article XIIIA. This amendment will
reduce the tax increment of the Successor Agency. Other amendments permitted the Legislature to allow
persons over 55 who sell their residence and on or after November 5, 1986, to buy or build another of
equal or lesser value within two years in the same county, to transfer the old residence's assessed value to
the new residence, and permitted the Legislature to authorize each county under certain circumstances to
adopt an ordinance making such transfers or assessed value applicable to situations in which the
replacement dwelling purchased or constructed after November 8, 1988, is located within that county and
the original property is located in another county within California.
In the June 1990 election, the voters of the State approved additional amendments to Article
XIIIA permitting the State Legislature to extend the replacement dwelling provisions applicable to
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persons over 55 to severely disabled homeowners for replacement dwellings purchased or newly
constructed on or after June 5, 1990, and to exclude from the definition of "new construction" triggering
reassessment improvements to certain dwellings for the purpose of making the dwelling more accessible
to severely disabled persons. In the November 1990 election, the voters approved the amendment of
Article XIIIA to permit the State Legislature to exclude from the definition of "new construction" seismic
retrofitting improvements or improvements utilizing earthquake hazard mitigation technologies
constructed or installed in existing buildings after November 6, 1990.
Both the California Supreme Court and the United States Supreme Court have upheld the
constitutionality of Article XBIA.
Legislation Implementing Article XIIIA. Legislation has been enacted and amended a number of
times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted
to levy directly any property tax (except to pay voter - approved indebtedness). The 1% property tax is
automatically levied by the county and distributed according to a formula among taxing agencies. The
formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1978.
Increases of assessed valuation resulting from reappraisals of property due to new construction,
change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in
the "taxing area" based upon their respective "situs." Any such allocation made to a local agency
continues as part of its allocation in future years.
Article XIIIB of the California Constitution. On November 6, 1979, California voters approved
Proposition 4, the Gann Initiative, which added Article XM13 to the California Constitution. Under
Article XIIIB, as amended, state and local governmental entities have an annual "appropriations limit"
and are not permitted to spend certain moneys which are called "appropriations subject to limitation"
(consisting of tax revenues, state subventions and certain other funds) in an amount higher than the
"appropriations limit." The principal effect of Article XIH I3 is to limit the annual appropriations of the
State and any city, county, school district, authority or other political subdivision of the State to the level
of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and
services rendered by the government entity.
Appropriations subject to Article XIHB include generally the proceeds of taxes levied by the
State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit
payments from retirement, unemployment insurance and disability insurance funds.
Effective September 30, 1980, the California Legislature added Section 33678 to the Law which
provides that the allocation of taxes to a redevelopment agency for the purpose of paying principal of, or
interest on, loans, advances, or indebtedness will not be deemed the receipt by the Successor Agency of
proceeds of taxes levied by or on behalf of the Successor Agency within the meaning of Article XI11B or
any statutory provision enacted in implementation thereof, including Section 33678 of the Law. The
constitutionality of Section 33678 has been upheld by the Second and Fourth District Courts of Appeal in
two decisions: Bell Community Redevelopment Agency v. Woosely and Brown v. Community
Redevelopment Agency of the City of Santa Ana. On the basis of these decisions, the Successor Agency
has not adopted an appropriations limit.
Proposition 218. On November 5, 1996, the voters of the State approved Proposition 218, the
"Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XII D to the State Constitution,
which contain a number of provisions affecting the ability of the public agencies to levy and collect both
existing and future taxes, assessments, fees and charges.
OHSUSA:765600743.3
45
Article XEIC removes limitations on the initiative power in matters of local taxes, special taxes,
assessments, fees and charges. While the matter is not free from doubt, it is likely that a court would hold
that the initiative power cannot be used to reduce or repeal the levy of property taxes or to materially
affect the collection and pledge of Subordinate Tax Revenues.
The interpretation and application of the initiative provisions of Proposition 218 will ultimately
be determined by the courts with respect to a number of the matters discussed above, and while it is not
possible at this time to predict with certainly the outcome of such determination, the Successor Agency
does not believe that Proposition 218 will materially affect its ability to pay principal of and interest on
the 2016 Bonds.
Unitary Property. AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from
most utility property assessed by the State Board of Equalization ( "Unitary Property "), commencing with
the 1988 89 fiscal year, will be allocated as follows: (1) each jurisdiction, including the Project Area, will
receive up to 102% of its prior year State- assessed revenue; and (2) if county -wide revenues generated
from Unitary Property are less than the previous year's revenues or greater than 102% of the previous
year's revenues, each jurisdiction will share the burden of the shortfall or excess revenues by a specified
formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to
be allocated to individual tax rate areas. To administer the allocation of unitary tax revenues to
redevelopment agencies, the County no longer includes the taxable value of utilities as part of the
reported taxable values of the project area, therefore, the base year of project areas have been reduced by
the amount of utility value that existed originally in the base year.
The provisions of AB 454 do not constitute an elimination of the assessment of any State -
assessed properties nor a revision of the method of assessing utilities by the State Board of Equalization.
Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all
jurisdictions in a county.
In addition, a substantial portion, approximately 10% of Gross Tax Revenues are derived from
unitary property taxes. Unitary revenue of $1,237,273 is assumed to remain constant at that level for
projection purposes through the projections in the Fiscal Consultant's Report. This amount is reasonably
consistent with the unitary revenue allocations made to the Successor Agency in recent years. The
relatively high amount of unitary revenues is attributable to Southern California Edison properties
contained in the Component Area No. 1. In March 2010, Southern California Edison purchased 270,000
square feet of additional office space for their operations in the City, an investment of $33,750,000. The
Successor Agency and City believe this significant investment represents a desire for Southern California
Edison to remain in the City for the foreseeable future. However, it should be noted that unitary revenues
allocated to the Successor Agency come from several sources and are allocated based on the statutory
method described above and do not reflect the current unitary assessed value within the Component Area
No. 1 particularly or the Project Area. For purposes of projection, it is assumed herein that unitary tax
revenue will continue to be allocated in similar amounts over the life of the Project Area, and that unitary
tax will remain constant through the life of the project. Changes in law with respect to the allocation of
unitary values could impact Tax Revenues.
[The Successor Agency's unitary revenues have fallen by approximately 19.2% since 1992 -93.
According to the California State Board of Equalization, there have been two primary causes of the
decrease unitary assessed valuation in the County of Los Angeles. The first was the privatization of power
generation facilities in the late 1990's. When a power generation facility was sold to a private entity it
became locally assessed and was attributed to the Tax Rate Area (TRA) in which it is located. Assessment
of these facilities moved back to the State in 2003, but the value is associated with specific TRAs
according to California Revenue and Taxation Code Section 100.9. The second primary cause of a
OHSUSA:765(00743.3
46
decrease in unitary valuations within the County was due to a decrease in the assessed valuation of
telecommunication companies during the period 2002 through 2005.1
Implementing Legislation
Legislation enacted by the California Legislature to implement Article XIIIA provides that all
taxable property is shown at full assessed value as described above. In conformity with this procedure, all
taxable property value is shown at 100% of assessed value and all general tax rates reflect the $1.00 per
$100 of taxable value. Tax rates for bond debt service and pension liability are also applied to 100% of
assessed value.
Future assessed valuation growth allowed under Article XIIIA (new construction, change of
ownership, 2% annual value growth) will be allocated on the basis of "situs" among the jurisdictions that
serve the tax rate area within which the growth occurs. Local agencies and school districts will share the
growth of "base" revenue from the tax rate area. Each year's growth allocation becomes part of each
agency's allocation in the following year. The Successor Agency is not able to predict the nature or
magnitude of future revenue sources which may be provided by the State to replace lost property tax
revenues. Article XIIIA effectively prohibits the levying of any other ad valorem property tax above the
I% limit except for taxes to support indebtedness approved by the voters as described above.
Redevelopment Plan Limits
The redevelopment plans for each component project area comprising the Project Area originally
included separate time and financial limitations applicable to each project area comprising the Project
Area. SB 107, which became effective September 22, 2015, amended the Dissolution Act to provide that
the time limits for receiving property tax revenues and the limitation on the amount of property tax
revenues that may be received by the Former Agency and the Successor Agency set forth in the
Redevelopment Plan are not effective for purposes of paying the Successor Agency's enforceable
obligations such as the Senior Bonds, the 2016 Bonds and Parity Debt. Accordingly, the projections set
forth in this Official Statement and in the Fiscal Consultant's Report attached to this Official Statement as
APPENDIX A were prepared without regard to the time and financial limitations set forth in the
Redevelopment Plan. Previous descriptions of the source of payment and security for the Senior Bonds
included summary descriptions of time and financial limitations applicable to each project area
comprising the Project Area, which limits are no longer applicable to the repayment of principal of and
interest on the Senior Bonds or the 2016 Bonds.
Unitary Property
Assembly Bill 2890 (Statutes of 1986, Chapter 1457), which added Section 98.9 to the California
Revenue and Taxation Code, provided that, commencing with the Fiscal Year 1988 -89, assessed value
derived from State - assessed unitary property (consisting mostly of operational property owned by utility
companies) was to be allocated county -wide as follows: (i) each tax rate area will receive the same
amount from each assessed utility received in the previous fiscal year unless the applicable county -wide
values are insufficient to do so, in which case values will be allocated to each tax rate area on a pro rata
basis; and (ii) if values to be allocated are greater than in the previous fiscal year, each tax rate area will
receive a pro rata share of the increase from each assessed utility according to a specified formula.
Additionally, the lien date on State - assessed property was changed from March 1 to January 1.
Assembly Bill 454 (Statutes of 1987, Chapter 921) further modified the distribution of tax
revenues derived from property assessed by the State Board of Equalization. Chapter 921 provided for the
consolidation of all State- assessed property, except for regulated railroad property, into a single tax rate
47
OHSUSA:765600743.3
area in each county. Chapter 921 further provided for a new method of establishing tax rates on State -
assessed property and distribution of property tax revenues derived from State - assessed property to taxing
jurisdictions within each county as follows: for revenues generated from the 1% tax rate, each
jurisdiction, including redevelopment project areas, will receive a percentage up to 102% of its prior year
State - assessed unitary revenue; and if county -wide revenues generated for unitary property are greater
than 102% of the previous year's unitary revenues, each jurisdiction will receive a percentage share of the
excess unitary revenue generated from the application of the debt service tax rate to county -wide unitary
taxable value, further, each jurisdiction will receive a percentage share of revenue based on the
jurisdiction's annual debt service requirements and the percentage of property taxes received by each
jurisdiction from unitary property taxes in accordance with a new formula. Railroads will continue to be
assessed and revenues allocated to all tax rate areas where railroad property is sited.
The intent of Chapters 1457 and 921 was to provide redevelopment agencies with their
appropriate share of revenue generated from the property assessed by the State Board of Equalization.
As noted in the Fiscal Consultant's Report, Gross Tax Revenue includes estimated unitary
revenue in the amount of $1,276,382 annually, based on recent historical receipts. The secured roll
accounted for approximately 89% of the Gross Tax Revenues in Fiscal Year 2015 -16, with the unsecured
roll comprising approximately I M. There was no non - unitary utility roll valuation (the unitary utility roll
is based on countywide assessments and is not reported by project area). The Successor Agency cannot
predict the effect of any future litigation or settlement agreements on the amount of unitary tax revenues
received or to be received nor the impact on unitary property tax revenues of any transfer of electrical
transmission lines to tax - exempt agencies.
Tax Increment Limitations; Senate Bill 107
AB 1290, signed into law in December 1993, provided for the placement of time limits on the
effectiveness of every redevelopment plan, and provided that after 10 years from the termination date of a
plan's effectiveness, no redevelopment agency, subject to certain exceptions, will pay indebtedness or
receive property taxes in connection therewith. Subsequent bills, Senate Bill 1045 ( "SB 1045 ") and
Senate Bill 1096 (SB "1096 ") allowed the Former Agency to extend the effective date of the related
redevelopment plan, and the date to receive Tax Revenues in the Project Area, by one year, and two
years, subject to certain conditions and subject to compliance with major housing requirements. The
Former Agency has taken such action with respect to SB 1045. Pursuant to the related redevelopment
plan, the expiration date of the related redevelopment plan is as described in "THE PROJECT AREA,"
herein.
The redevelopment plans for each project area comprising the Project Area originally included
separate time and financial limitations applicable to the Project Area. SB 107, which became effective
September 22, 2015, amended the Dissolution Act to provide that the time limits for receiving property
tax revenues and the limitation on the amount of property tax revenues that may be received by the
Former Agency and the Successor Agency set forth in the Redevelopment Plan are not effective for
purposes of paying the Successor Agency's enforceable obligations. Accordingly, the projections set
forth in this Official Statement and in the Fiscal Consultant's Report attached to this Official Statement as
APPENDIX A were prepared without regard to the time and financial limitations set forth in the
Redevelopment Plan. With the passage of SB 107, the Successor Agency is no longer subject to either
the last date to repay indebtedness or the tax increment limit for purposes of payment of enforceable
obligations.
48
OHSUSA:765600743.3
Property Taxes; Delinquencies
[Under the mechanism used by the County to distribute tax increment revenue to the former
redevelopment agencies, the County pays one -half of the taxes from the net taxable assessed valuation
appearing on the equalized roll to each agency's RPTTF on January 2 and the other one -half on June 1;
delinquencies are not deducted from the RPTTF revenue, and delinquent tax payments and defaulted tax
redemptions, penalties and interest are not added to RPTTF revenue. Consequently, the Successor Agency
is not affected by delinquent tax payments. The overall delinquency rate for the last full fiscal year (2015-
16) for all secured properties in the Project Area was _% as of August _, 2016.]
Tax Collection Fees
Legislation enacted by the State Legislature authorizes county auditors to determine property tax
administration costs proportionately attributable to local jurisdictions and to submit invoices to the
jurisdictions for such costs. Subsequent legislation specifically includes redevelopment agencies among
the entities which are subject to a property tax administration charge. The County administration fee
amounts to approximately 2% of the tax increment revenues from a project area. The calculations of Tax
Revenues take such administrative costs into account.
Future Initiatives
Article XIHA, Article XIIIB and Proposition 218 were each adopted as measures that qualified
for the ballot under California's initiative process. From time to time other initiative measures could be
adopted, further affecting property tax revenues or the Successor Agency's ability to expend such
revenues.
OTHER INFORMATION
Certain Information Concerning the City
Certain general information concerning the City is included herein as APPENDIX B hereto.
Such information is provided for informational purposes only. The General Fund of the City is not liable
for the payment of the 2016 Bonds or the interest thereon, nor is the taxing power of the City pledged for
the payment of the 2016 Bonds or the interest thereon.
Financial Statements
Selected portions of the Audited Financial Statements of the Successor Agency for the Fiscal
Year ended June 30, 2015, which have been audited by Rogers, Anderson, Malody & Scott, LLP,
certified public accountants, are included in APPENDIX C hereto. The Successor Agency anticipates that
its Audited Financial Statements for the Fiscal Year ended June 30, 2015 will be filed pursuant to the
Continuing Disclosure Certificate with the Municipal Securities Rulemaking Board's Electronic
Municipal Market Access (EMMA) system, or such other electronic system designated by the MSRB, on
or before April 1, 2017. The Successor Agency has not requested, nor has Rogers, Anderson, Malody &
Scott, LLP given, consent to the inclusion in APPENDIX C of its report on such financial statements, nor
have such accountants reviewed or performed any audit procedures in connection with the preparation of
this Official Statement. At the time of the authorization and issuance of the 2016 Bonds, the Successor
Agency will certify that there has been no material adverse change in the Successor Agency's financial
position since June 30, 2015.
49
OHSUSA:765600743.3
Continuing Disclosure
The Successor Agency will covenant pursuant to a Continuing Disclosure Certificate, dated
December _, 2016 (the "Continuing Disclosure Certificate "), to provide with respect to the 2016 Bonds,
or to cause to be provided, to the Municipal Securities Rulemaking Board's Electronic Municipal Market
Access system (the "EMMA System "), for purposes of Rule 15c2- 12(b)(5) (the "Rule ") adopted by the
U.S. Securities and Exchange Commission ( "SEC "), certain annual financial information and operating
data relating to the Successor Agency not later than the first Business Day of the month following the
ninth month after the end of the Successor Agency's fiscal year, which date is on or about April 1 (the
"Annual Report"), commencing with the Annual Report for the fiscal year ending June 30, 2016 and
notice of the occurrence of certain enumerated events ( "Notice Events ") in a timely manner not in excess
of ten (10) business days after the occurrence of such Notice Event. See APPENDIX F — "FORM OF
CONTINUING DISCLOSURE CERTIFICATE." These covenants have been made in order to assist the
Underwriter in complying with S.E.C. Rule 15c2- 12(b)(5).
[Discuss Compliance]
In addition, the Successor Agency has engaged Urban Futures, Inc. to act as Dissemination Agent
under the Continuing Disclosure Certificate. As part of its services as Dissemination Agent, Urban
Futures has agreed to develop and maintain a database to monitor, track and review reporting and filing
requirements as outlined in the Continuing Disclosure Certificate.
Litigation
At the time of delivery of and payment for the 2016 Bonds, the Successor Agency will certify
that, except as disclosed herein, to their respective best knowledge there is no litigation, action, suit,
proceeding or investigation, at law or in equity, before or by any court, governmental agency or body,
pending against or threatened against the Successor Agency in any way affecting the existence of the
Successor Agency or the titles of its officers to their respective offices or seeking to restrain or enjoin the
issuance, sale or delivery of the 2016 Bonds, the application of the proceeds thereof in accordance with
the Indenture, or the collection or application of Tax Revenues to be pledged to pay the principal of and
interest on the 2016 Bonds, or the pledge thereof, or in any way contesting or affecting the validity or
enforceability of the 2016 Bonds, the Indenture, or any action of the Successor Agency contemplated by
any of said documents, or in any way contesting the completeness or accuracy of this Official Statement
or the powers of the Successor Agency or its authority with respect to the Indenture or any action of the
Successor Agency contemplated by said documents, or in any way contesting the completeness or
accuracy of this Official Statement or the powers of the Successor Agency or its authority with respect to
the Indenture or any action of the Successor Agency contemplated by said documents, or which would
adversely affect the exclusion of interest paid on the 2016 Bonds from gross income for Federal income
tax purposes or the exemption of interest paid on the 2016 Bonds from California personal income
taxation, nor, to the knowledge of the Successor Agency, is there any basis therefor.
Tax Matters
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond
Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the
2016 Bonds is excluded from gross income for federal income tax purposes and such interest is not an
item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and
corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed
on corporations (as defined for federal income tax purposes), such interest is taken into account in
determining certain income and earnings.
50
OHSUSA:765600743.3
The opinions set forth in the preceding paragraph are subject to the condition that the Successor
Agency comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Tax
Code ") that must be satisfied subsequent to the issuance of the 2016 Bonds. The Successor Agency has
covenanted to comply with each such requirement. Failure to comply with certain of such requirements
may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive
to the date of issuance of the 2016 Bonds.
If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is
sold is less than the amount payable at maturity thereof, then such difference constitutes `original issue
discount" for purposes of federal income taxes and State of California personal income taxes. If the
initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is greater
than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for
purposes of federal income taxes and State of California personal income taxes. De minimis original
issue discount and original issue premium is disregarded.
Under the Tax Code, original issue discount is treated as interest excluded from federal gross
income and exempt from State of California personal income taxes to the extent properly allocable to
each owner thereof subject to the limitations described in the first paragraph of this section. The original
issue discount accrues over the term to maturity of the 2016 Bond on the basis of a constant interest rate
compounded on each interest or principal payment date (with straight -line interpolations between
compounding dates). The amount of original issue discount accruing during each period is added to the
adjusted basis of such 2016 Bonds to determine taxable gain upon disposition (including sale,
redemption, or payment on maturity) of such 2016 Bond. The Tax Code contains certain provisions
relating to the accrual of original issue discount in the case of purchasers of the 2016 Bonds who purchase
the 2016 Bonds after the initial offering of a substantial amount of such maturity. Owners of such 2016
Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds
with original issue discount, including the treatment of purchasers who do not purchase in the original
offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of
accrued original issue discount on such 2016 Bonds under federal individual and corporate alternative
minimum taxes.
Under the Tax Code, original issue premium is amortized on an annual basis over the term of the
2016 Bond (said term being the shorter of the 2016 Bond's maturity date or its call date). The amount of
original issue premium amortized each year reduces the adjusted basis of the owner of the 2016 Bond for
purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on
a Bond is amortized each year over the term to maturity of the 2016 Bond on the basis of a constant
interest rate compounded on each interest or principal payment date (with straight -line interpolations
between compounding dates). Amortized Bond premium is not deductible for federal income tax
purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering,
should consult their own tax advisors with respect to State of California personal income tax and federal
income tax consequences of owning such 2016 Bonds.
Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court
decisions may cause interest on the 2016 Bonds to be subject, directly or indirectly, to federal income
taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial
owners from realizing the full current benefit of the tax status of such interest. The introduction or
enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also
affect the market price for, or marketability of, the 2016 Bonds. Prospective purchasers of the 2016
Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax
legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
OHSUSA:765600743.3
51
In the further opinion of Bond Counsel, interest on the 2016 Bonds is exempt from California
personal income taxes.
Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court
decisions may cause interest on the 2016 Bonds to be subject, directly or indirectly, to federal income
taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial
owners from realizing the full current benefit of the tax status of such interest. The introduction or
enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also
affect the market price for, or marketability of, the 2016 Bonds. Prospective purchasers of the 2016
Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax
legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
Owners of the 2016 Bonds should also be aware that the ownership or disposition of, or the
accrual or receipt of interest on, the 2016 Bonds may have federal or state tax consequences other than as
described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences
arising with respect to the Bonds other than as expressly described above.
Municipal Advisor
Urban Futures, Inc., Orange, California (the "Municipal Advisor ") has assisted the Successor
Agency in matters relating to the planning, structuring, and sale of the 2016 Bonds and the preparation of
this Official Statement, and has provided general financial advisory services to the Successor Agency
with respect to the sale of the 2016 Bonds. The Municipal Advisor provides financial advisory services
only and does not engage in the underwriting, marketing, or trading of municipal securities or other
negotiable instruments. The payment of fees of the Municipal Advisor is contingent upon the closing of
the 2016 Bonds.
Legal Opinion
Jones Hall, A Professional Law Corporation, San Francisco, California, will render is opinion
with respect to the validity of the 2016 Bonds in substantially the form set forth in APPENDIX E hereto.
Copies of such approving opinion will be available at the time of delivery of the 2016 Bonds.
In addition, Orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel, will deliver to the
Underwriter a letter in customary form concerning the information set forth in this Official Statement.
Verification of Mathematical Accuracy
, certified public accountants, will verify, from the information
provided to them, the mathematical accuracy of the computations contained in schedules to determine that
the amounts to be held in the Refunding Fund pursuant to the Instructions will be sufficient to pay
principal, interest and redemption price due on the Refunded Bonds through and including the redemption
date. will express no opinion on the assumptions provided to them, nor as to
the exemption from taxation of interest on the 2016 Bonds.
Ratings
S &P Global Ratings ( "S &P ") is expected to assign to the Insured 2016 Bonds its municipal bond
rating of "_" with the understanding that the Policy insuring the payment when due of the principal of
and interest on the Insured 2016 Bonds will be issued by the Insurer concurrently with the delivery of the
Insured 2016 Bonds. S &P has assigned to the 2016 Bonds an underlying rating of "_... Such ratings
52
OHSUSA:765600743.3
reflect only the views of S &P, and do not constitute a recommendation to buy, sell or hold any of the
2016 Bonds. Explanation of the significance of such ratings may be obtained only from Standard and
Poor's, 55 Water Street, New York, New York 10041. The ratings issued reflect only the view of such
rating agency, and any explanation of the significance of such ratings should be obtained from such rating
agency. There is no assurance that such ratings will be retained for any given period of time or that they
will not be revised downward or withdrawn entirely by such rating agency if, in the judgment of such
rating agency, circumstances so warrant. Any such downward revision or withdrawal of any rating
obtained may have an adverse effect on the market price of the 2016 Bonds.
Underwriting
Stifel, Nicolaus & Company, Incorporated (the "Underwriter ") has agreed to purchase the 2016
Bonds at a price of $ (being the principal amount of the 2016 Bonds, plus an original issue
premium of $ , less an Underwriter's discount of $ ) under a Bond Purchase Contract
between the Successor Agency and the Underwriter. The Underwriter is committed to purchase all of the
2016 Bonds if any are purchased.
The Underwriter may offer and sell the 2016 Bonds to certain dealers and others at prices lower
the public offering price stated on the inside cover page hereof. The offering prices may be changed from
time to time by the Underwriter.
Miscellaneous
All quotations from and summaries and explanations of the Indenture and other statutes and
documents contained herein do not purport to be complete, and reference is made to such documents,
Indenture and statutes for full and complete statements of their provisions.
OHSUSA:765600743.3
53
This Official Statement is submitted only in connection with the sale of the 2016 Bonds by the
Successor Agency. All estimates, assumptions, statistical information and other statements contained
herein, while taken from sources considered reliable, are not guaranteed by the Successor Agency. The
information contained herein should not be construed as representing all conditions affecting the
Successor Agency or the 2016 Bonds.
SUCCESSOR AGENCY TO THE ROSEMEAD
COMMUNITY DEVELOPMENT COMMISSION
LE
Finance Director
on behalf of the Successor Agency
54
OHSUSA:765600743.3
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OHSUSA:765600743.3
APPENDIX A
FISCAL CONSULTANT REPORT
A -1
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1IS: 1 1 II,Y W1w..9DMA
/:\771IN 13►'o.l
GENERAL INFORMATION CONCERNING THE CITY OF ROSEMEAD
The following information is presented as general background data. The 2016 Bonds are
payable solely from Tax Revenues and other sources as described herein. The taxing power of the City,
the County, the State of California or any political subdivision thereof is not pledged to the payment of
the 2016 Bonds.
INTRODUCTION
Location
The City of Rosemead (the "City "), encompassing approximately 5'/2 square miles, is located in
the central northwestern section of Los Angeles County approximately 12 miles east of the central
business district of Los Angeles. The City shares common boundaries with the municipalities of San
Gabriel, Temple City, El Monte, Montebello, Monterey Park and Alhambra.
Municipal Government
Incorporated in August 4, 1959, the City operates as a general law city. It has a council- manager
form of government, with five council members elected at large for four -year overlapping terms. The
Rosemead City Council (the "City Council ") selects a mayor and mayor pro -tem each year from its
membership.
The Council is responsible for enacting local legislation, establishing general policy for the City
and adopting the annual budget. The Council's duties also include the appointment of a City Manager,
City Attorney, City Clerk and City Treasurer and the selection of citizens to serve of the City's various
advisory commissions.
The City contracts with the Los Angeles County Sheriff's Department for sheriff services. Fire
protection is provided through the Los Angeles County Fire Protection District. Two fire stations are
located in the City.
ECONOMIC AND DEMOGRAPHIC INFORMATION
Data contained under this caption is intended to portray economic, demographic, and business
trends within the City and the County of Los Angeles (the "County "). While not constituting direct
revenue sources as such, these trends help explain changes in revenue sources such as property taxes,
sales taxes, and transient occupancy taxes, which could be affected by changes in economic conditions.
All the information presented in the following tables and other specific data references is the latest
information available from the respective data sources.
IM
OHSUSA:765600743.3
Population
Between 2007 and 2016, the population of the City increased by more than _ %. The table
below displays population changes and other demographic data for the City and the County for the past
five years.
POPULATION DATA FOR
THE CITY OF ROSEMEAD AND THE COUNTY OF LOS ANGELES
City of Rosemead County of Los Angeles
Year Population % Change Population % C hange
2007
54,045
-0.67
9,780,808
- 0.18%
2008
53,849
-0.36
9,785,474
0.05
2009
53,877
0.05
9,801,096
0.16
2010
53,764
-0.21
9,818,605
0.18
2011
54,119
0.66
9,874,887
0.57
2012
54,505
0.71
9,956,722
0.82
2013
54,669
0.30
10,023,753
0.67
2014
54,865
0.36
10,093,053
0.69
2015
54,987
0.22
10,155,069
0.61
2016
55,231
0.44
10,241,335
0.84
Source: State Department of Finance
B -2
OHSUSA:765600743.3
Personal Income
The table below summarizes the total effective buying income and median household effective
buying income for the City, the County, the State of California and the United States for the period 2011
through 2015.
City of Rosemead, County of Los Angeles, State of California, and United States
Total Effective Buying Income
Calendar Years 2011 through 2015
Year and Area
2011
Total Effective Buying Median Household Effective
Income(in thousands) Buying Income
City of Rosemead
$ 653,983
$37,119
County of Los Angeles
197,831,465
43,083
State of California
814,578,458
47,062
United States
6,438,704,663
41,253
2012
City of Rosemead $ 694,890 $39,578
County of Los Angeles 210,048,048 44,384
State of California 864,088,828 47,307
United States 6,737,867,730 41,358
2013
City of Rosemead $ 715,898 $41,090
County of Los Angeles 205,133,995 45,013
State of California 858,676,636 48,340
United States 6,982,757,379 43,715
2014
City of Rosemead $ 730,285 $40,331
County of Los Angeles 214,247,274 46,449
State of California 901,189,699 50,072
United States 7,357,153,421 45,448
2015
City of Rosemead
$ 754,180
$40,323
Los Angeles MSA
231,719,110
48,950
State of California
981,231,666
53,589
United States
7,757,960,399
46,738
Source: The Nielsen Company (US), Inc
Labor Force
The following chart provides information concerning the annual average total labor force,
employment, and unemployment for the City, the County, the State of California and the United States for
the years 2005 through 2016.
B -3
OHSUSA:765600743.3
City of Rosemead, Los Angeles County, State of California and United States
Labor Force, Employment, and Unemployment
Annual Averages from 2005 through 2015
Year and Area
Labor Force Employment Unemployment
Unemployment
Rated
2005
City of Rosemead
t2>
_la
- -(2)
-_ (2)
Los Angeles County
4,781,600
4,525,200
256,400
5.4%
State of California
17,530,100
16,582,700
947,400
5.4
United States
149,320,000
141,730,000
7,591,000
5.1
2006
City of Rosemead
24,900
(2)
— (2)
— 121
Los Angeles County
4,807,900
4,577,600
230,300
4.8%
State of California
17,654,100
16,789,400
864,700
4.9
United States
151,428,000
144,427,000
7,001,000
4.6
2007
City of Rosemead -« — ( 2) —« -«
Los Angeles County 4,864,200 4,614,800 249,400 5.1%
State of California 17,893,100 16,931,600 961,500 5.4
United States 153,124,000 146,047,000 7,078,000 4.6
►AIIN
City of Rosemead
25,100
23,500
1,600
6.5%
Los Angeles County
4,929,000
4,555,100
373,900
7.6
State of California
18,178,100
16,854,500
1,323,600
7.3
United States
154,287,000
145,362,000
8,924,000
5.8
2009
City of Rosemead
24,900
22,300
2,500
10.2%
Los Angeles County
4,914,700
4,345,200
569,500
11.6
State of California
18,215,100
16,182,600
2,032,600
11.2
United States
154,142,000
139,877,000
14,265,000
9.3
2010
City of Rosemead
25,400
21,700
3,600
14.3%
Los Angeles County
4,917,400
4,302,300
615,100
12.5
State of California
18,336,300
16,091,900
2,244,300
12.2
United States
153,889,000
139,064,000
14,825,000
9.6
(1) Unemployment rate is based on unrounded data.
<a) Data not available.
Source: California State Employment Development Department, Labor Market Information Division; U.S. Department of Labor, Bureau of
Labor Statistics.
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OHSUSA:765600743.3
Unemployment
Year and Area Labor Force Employment Unemployment Rate
2011
City of Rosemead
25,400
21,900
3,500
13.9%
Los Angeles County
4,928,500
4,327,900
600,500
12.2
State of California
18,415,100
16,258,100
2,157,000
11.7
United States
153,617,000
139,869,000
13,747,000
8.9
2012
City of Rosemead
25,200
22,100
3,200
12.5%
Los Angeles County
4,921,800
4,385,300
536,500
10.9
State of California
18,551,400
16,627,800
1,923,600
10.4
United States
154,975,000
142,469,000
12,506,000
8.1
2013
City of Rosemead
25,400
22,600
2,800
11.2%
Los Angeles County
4,979,000
4,494,400
484,600
9.7
State of California
18,670,100
17,001,000
1,669,000
8.9
United States
155,389,000
143,929,000
11,460,000
7.4
2014
City of Rosemead
25,500
23,100
2,400 9.5%
7.7%
Los Angeles County
5,025,900
4,611,500
414,300 8.2
6.7
State of California
18,827,900
17,418,000
1,409,900 7.5
6.2
United States
155,922,000
146,305,000
9,617,000 6.2
5.3
2015
City of Rosemead
25,400
23,400
2,000
7.7%
Los Angeles County
5,011,700
4,674,800
336,900
6.7
State of California
18,981,800
17,798,600
1,183,200
6.2
United States
157,130,000
148,834,000
8,296,000
5.3
2016
City of Rosemead
Los Angeles
Countyl
State of California (3)
United States (3)
2)
5,109,700
19,357,900 18,281,600 1,076,300
159,800,000 151,804,000 7,996,000
2)
4,839,800
(
269,900
2)
5.3%
5.6
5.0
(0 Unemployment rate is based on unrounded data.
(2) Data not available.
(3) Data not seasonally adjusted, as of August 2016.
Source: California State Employment Development Department, Labor Market Information Division; U.S. Department of Labor, Bureau of
Labor Statistics.
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Business and Industry
A sample of the major employers in the City are shown below, together with the approximate
number of persons employed by each.
CITY OF ROSEMEAD
Major Employers
Employer
Edison International
Garvey School District
Wal -Mart
Panda Restaurant Group
Rosemead School District
Target
Hermetic Seal Corp.
Olive Garden
Double Tree
Don Bosco Technical Institute
of Business
Utility — Regional headquarters
Education
Retail and Grocery
Restaurant management
Education
Retail and Grocery
Hermetic seal manufacturing
Restaurant
Hotel
Education
Number of Employees
4,100
804
400
400
337
225
187
112
110
90
Source: City of Rosemead.
Commercial Activity
Taxable transactions in the City totaled $397,902,000 in 2014, a 17% increase over 2010. The
following table details taxable permits and transactions in the City of Rosemead for the years 2010
through 2014.
CITY OF ROSEMEAD
Taxable Transactions
Calendar Years 2004 through 2008
(Taxable Transactions in $000's)
2010 2011 2012 2013 2014
Retail Stores
Permits
650
651
689
695
723
Taxable Transactions
$307,565
$324,335
$334,394
$350,493
$358,786
Total Outlets
Permits
948
954
1,006
1,009
1,049
Taxable Transactions
$340,797
$356,686
$368,379
$389,088
$397,902
Source: California State Board of Equalization,
Construction Activity
In the past five years for which complete information is available, the City issued building
permits totaling approximately $145,951,361. Approximately 43% of this total consisted of permits for
non - residential construction. Permits for new housing included 278 units, of which 46 were for multi
OHSUSA:765600743.3
family occupancy. The following table details building permit activity in the City for the years 2005
through 2009:
New Housing Units
Single Units 50 72 58 22 30
Multiple Units 0 15 16 8 7
Total 50 87 74 330 37
Source: Construction Industry Research Board.
Utilities
Electricity is provided by Southern California Edison Company and gas is supplied by the
Southern California Gas Company. Telephone services are provided by AT &T (successor to SBC and
Pacific Bell). Water is supplied by six water companies: Adams Ranch Mutual Water, Amarillo Mutual
Water, California- American Water, Golden State Water, San Gabriel Valley Water and San Gabriel
County Water District. The majority of these organizations obtain water from the Metropolitan Water
District of Southern California, while the San Gabriel County Water District and locally drilled wells
provide the balance. Sewage treatment services are provided by the County of Los Angeles Sanitation
District.
Transportation
The City's location near several interstate freeways affords residents immediate access to the
extensive Southern California freeway network. This network links Rosemead to a number of diverse
commercial and recreation activities located throughout Orange, Los Angeles and San Bernardino
Counties.
Two main east -west thoroughfares pass through the City. The San Bernardino Freeway
(Interstate 10) traverse the central portion of the City and the Pomona Freeway (State Route 60) crosses
the southern extremity of the City. Rosemead Boulevard (State Route 19) intersects these major routes
and continues north to Pasadena, and south to Orange County.
Major airports in the Los Angeles Basin are easily accessible by means of the highly developed
freeway network in the West San Gabriel Valley. Air cargo and passenger facilities include those at the
Los Angeles International Airport, Burbank- Glendale - Pasadena Airport, Long Beach International
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CITY OF ROSEMEAD
Building Permit Valuations
Calendar
Years 2005 through 2009
2005
2006 2007
2008
2009
Valuation ($000's)
Residential
$18,162,780
24,590,153 $23,195,904
$10,207,454
$12,530,293
Non - Residential
8,813,761
20,506,250 9,817,849
10,557,492
7,569,425
Total
$26,976,541
$45,096,403 $33,013,753
$20,764,946
$20,099,718
New Housing Units
Single Units 50 72 58 22 30
Multiple Units 0 15 16 8 7
Total 50 87 74 330 37
Source: Construction Industry Research Board.
Utilities
Electricity is provided by Southern California Edison Company and gas is supplied by the
Southern California Gas Company. Telephone services are provided by AT &T (successor to SBC and
Pacific Bell). Water is supplied by six water companies: Adams Ranch Mutual Water, Amarillo Mutual
Water, California- American Water, Golden State Water, San Gabriel Valley Water and San Gabriel
County Water District. The majority of these organizations obtain water from the Metropolitan Water
District of Southern California, while the San Gabriel County Water District and locally drilled wells
provide the balance. Sewage treatment services are provided by the County of Los Angeles Sanitation
District.
Transportation
The City's location near several interstate freeways affords residents immediate access to the
extensive Southern California freeway network. This network links Rosemead to a number of diverse
commercial and recreation activities located throughout Orange, Los Angeles and San Bernardino
Counties.
Two main east -west thoroughfares pass through the City. The San Bernardino Freeway
(Interstate 10) traverse the central portion of the City and the Pomona Freeway (State Route 60) crosses
the southern extremity of the City. Rosemead Boulevard (State Route 19) intersects these major routes
and continues north to Pasadena, and south to Orange County.
Major airports in the Los Angeles Basin are easily accessible by means of the highly developed
freeway network in the West San Gabriel Valley. Air cargo and passenger facilities include those at the
Los Angeles International Airport, Burbank- Glendale - Pasadena Airport, Long Beach International
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Airport and Ontario International Airport. All are less than 35 miles from the City. El Monte Airport,
located two miles to the east, has facilities to service private aircraft.
Education
Most of the City is located in the Garvey School District and the Rosemead School District.
Rosemead has 9 elementary schools, 3 junior high schools and 1 high school. Continuing education is
available through the Los Angeles City Community College District. Los Angeles County is the location
of many colleges and universities, both public and private, including such well known institutions as the
University of California at Los Angeles, the University of Southern California, Occidental College,
Claremont College and the California Institute of Technology. State University campuses are located in
Los Angeles, Long Beach, Northridge, Pomona and Dominguez Hills. The City is also home to the Don
Bosco Technical Institute (a private high school) and University of the West (formerly known as Hsi Lai
University, a private, nonprofit, university).
Community Facilities
Health care services are provided by medical centers in Alhambra, San Gabriel and other
neighboring communities. Located within the City are 2 fully - equipped mental health centers and a
convalescent center.
Religious and cultural facilities include 22 churches of various denominations and one library.
Financial institutions include 10 banks and two savings and loan institutions. Recreational facilities for
area residents include the City's own community parks and outdoor recreation offered in the surrounding
areas. City facilities include 4 major public parks, 10 playgrounds, two municipal swimming pools,
tennis courts, several baseball diamonds and 2 community centers. Southeast of the City is the Whittier
Narrows Regional Park which includes the Whittier Narrows Golf Course. The San Gabriel Mountains
and the Angeles National Forest, both located north of the City, provide additional outdoor recreation
opportunities. Rosemead's proximity to the San Bernardino and Pomona Freeways bring the cultural and
recreational advantages of Los Angeles and Orange Counties within convenient driving distance.
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MC
APPENDIX C
CITY OF ROSEMEAD COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2015
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APPENDIX D
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
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APPENDIX E
FORM OF OPINION OF BOND COUNSEL
Upon issuance of the 2016 Bonds, Jones Hall, A Professional Law Corporation, Bond Counsel,
proposes to render its final approving opinion with respect to the 2016 Bonds in substantially the
following form:
[Closing Date]
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APPENDIX F
FORM OF CONTINUING DISCLOSURE CERTIFICATE
THIS CONTINUING DISCLOSURE CERTIFICATE, dated December 2016, (this
"Disclosure Certificate "), is executed and delivered by the SUCCESSOR AGENCY TO THE
ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic,
duly organized and existing pursuant to the Community Redevelopment Law of the State of California (as
successor agency to the Rosemead Community Development Commission, the "Successor Agency "), in
connection with the issuance of the Successor Agency to the Rosemead Community Development
Commission 2016 Subordinate Tax Allocation Refunding Bonds (the "Bonds ") pursuant to an Indenture
of Trust, dated as of December 1, 2016 (the "Indenture "), by and between the Successor Agency and U.S.
Bank National Association, as trustee (the "Trustee ").
WITNESSETH:
WHEREAS, successor agencies to former community redevelopment agencies are permitted to
refund tax increment obligations pursuant to California Assembly Bill 1484 ( Stats 2012 c. 26) ( "AB
1484 ") in order to provide debt service savings to successor agencies and to increase property tax
revenues available for distribution to affected taxing entities; and
WHEREAS, the Successor Agency is empowered under the provisions of Section 34177.5(b) of
the California Health and Safety Code authorizes a successor agency to issue refunding bonds pursuant to
Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the
California Government Code, including tax allocation refunding bonds issued by said successor agencies,
as described in Section 34177.5(a)(1) of the California Health and Safety Code; and
WHEREAS, the Successor Agency has determined to issue the Bonds in order to provide funds to
acquire bonds issued by the Successor Agency, in order to assist the Successor Agency in refunding
certain of its outstanding bonds pursuant to AB 1484; and
WHEREAS, such Refunding Bonds will be secured by a pledge of, and lien on, and shall be
repaid from Tax Revenues (as defined in the Indenture) deposited from time to time in the
Redevelopment Property Tax Trust Fund established pursuant to subdivision (c) of Section 34172 of the
California Health and Safety Code; and
WHEREAS, this Disclosure Certificate is being executed and delivered by the Successor Agency
for the benefit of the holders and beneficial owners of the Bonds and in order to assist the underwriters of
the Bonds in complying with Securities and Exchange Commission Rule 15c2- 12(b)(5);
NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein
contained, the parties hereto agree as follows:
Section 1. Definitions Unless the context otherwise requires, the terms defined in this Section
shall for all purposes of this Disclosure Certificate have the meanings herein specified. Capitalized
undefined terms used herein shall have the meanings ascribed thereto in the Indenture.
"Annual Report" means any Annual Report provided by the Successor Agency pursuant to, and
as described in, Sections 2 and 3 hereof.
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"Annual Report Date" means not later than the first Business Day of the month following the
ninth month after the end of the Successor Agency's fiscal year, which date, as of the date of this
Disclosure Certificate, is April 1.
"Successor Agency" means the Successor Agency to the Rosemead Community Development
Commission, a public body, corporate and politic, duly organized and existing under and pursuant to the
Law.
"City" means the City of Rosemead, California.
"County Auditor - Controller" means the Auditor - Controller of the County of Los Angeles.
"Disclosure Representative" means or other agent as the Successor Agency and
the Dissemination Agent (if other than the Successor Agency) may designate in writing from time to time.
"Dissemination Agent" means the Successor Agency, acting in its capacity as Dissemination
Agent hereunder, or any successor dissemination agent designated in writing by the Successor Agency
and which has filed with the Successor Agency a written acceptance of such designation.
hereof.
"Listed Events" means any of the events listed in subsection (a) or subsection (b) of Section 4
"MSRB" means the Municipal Securities Rulemaking Board or any other entity designated or
authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until
otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB
are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB,
currently located at http: / /emma.msrb.org.
Bonds.
"Official Statement" means the Official Statement, dated November , 2016, relating to the
"Participating Underwriter" means any of the original underwriters of the Bonds required to
comply with the Rule in connection with the offering of the Bonds.
"Project Area" shall have the meaning specified in the Official Statement.
"Rule" means Rule 15c2- 12(b)(5) adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as the same may be amended from time to time.
"Trustee" means U.S. Bank National Association, as trustee under the Indenture, or any successor
thereto as trustee thereunder, substituted in its place as provided therein.
Section 2. Provision of Annual Reports (a) The Successor Agency shall, or shall cause the
Dissemination Agent to, provide to the MSRB an Annual Report which is consistent with the
requirements of Section 3 hereof, not later than the Annual Report Date, commencing with the report for
the 2015 -16 Fiscal Year. The Annual Report may include by reference other information as provided in
Section 3 hereof, provided, however, that the audited financial statements of the Successor Agency, if
any, may be submitted separately from the balance of the Annual Report, and later than the date required
above for the filing of the Annual Report if they are not available by that date. If the Successor Agency's
fiscal year changes, it shall, or it shall instruct the Dissemination Agent to, give notice of such change in a
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OHSUSA:765600743.3
filing with the MSRB. The Annual Report shall be submitted on a standard form in use by industry
participants or other appropriate form and shall identify the Bonds by name and CUSIP number.
(b) Not later than 15 business days prior to the date specified in subsection (a) of this Section
for the providing of the Annual Report to the MSRB, the Successor Agency shall provide the Annual
Report to the Dissemination Agent. If by such date, the Dissemination Agent has not received a copy of
the Annual Report, the Dissemination Agent shall contact the Successor Agency and the Dissemination
Agent to determine if the Successor Agency is in compliance with the first sentence of this subsection (b).
(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided
to the MSRB by the date required in subsection (a) of this Section, the Dissemination Agent shall, in a
timely manner, send a notice to the MSRB in substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) provide any Annual Report received by it to the MSRB, as provided herein; and
(ii) file a report with the Successor Agency certifying that the Annual Report has been
provided pursuant to this Disclosure Certificate, stating the date it was provided to the MSRB.
Section 3. Content of Annual Reports The Annual Report shall be prepared by the Successor
Agency and shall contain or include by reference the following:
(a) The Successor Agency's separate audited financial statements, or the City's audited
financial statements including Successor Agency operations as a trust fund, prepared in accordance with
generally accepted accounting principles as promulgated to apply to governmental entities from time to
time by the Governmental Accounting Standards Board. If such audited financial statements are not
available by the time the Annual Report is required to be filed pursuant to subsection (a) of Section 2
hereof, the Annual Report shall contain unaudited financial statements in a format similar to that used for
the audited financial statements, and the audited financial statements, if any, shall be filed in the same
manner as the Annual Report when they become available.
(b) Unless otherwise provided in the audited financial statements filed on or before the
Annual Report Date, financial information and operating data with respect to the Successor Agency,
substantially similar to that provided in the corresponding tables relating to the Successor Agency and the
Project Area in the Official Statement (and where not specified by date or period for the preceding fiscal
year):
(i) A summary description of the tax levy, percentage of current year levy collected,
percentage of current levy delinquent, total collections and total collections as a percentage of the most
recent year's tax levy;
(ii) An update of the information contained in Table 1 of the Official Statement for the most
recently completed fiscal year;
(iii) An update of the information contained in Table 2 of the Official Statement for the most
recently completed fiscal year;
(iv) An update of the information contained in Table 3 of the Official Statement for the most
recently completed fiscal year; and
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(v) An update of the information contained in Table 4 of the Official Statement for the most
recently completed fiscal year.
(c) In addition to any of the information expressly required to be provided under subsections
(a) and (b) of this Section, the Successor Agency shall provide such further information, if any, as may be
necessary to make the specifically required statements, in light of the circumstances under which they are
made, not misleading.
Any or all of the items described above may be included by specific reference to other
documents, including official statements of debt issues of the Successor Agency or related public entities,
which have been submitted to the Securities and Exchange Commission. If the document included by
reference is a final official statement, it must be available from the MSRB. The Successor Agency shall
clearly identify each such other document so included by reference.
Section 4. Reporting of Significant Events (a) Pursuant to the provisions of this Section, the
Successor Agency shall give, or cause to be given with respect to the Refunding Bonds, and hereby
authorizes the Successor Agency to give, or cause to be given, with respect to the Bonds, notice of the
occurrence of any of the following events with respect to the Bonds in a timely manner not later than ten
business days after the occurrence of the event:
(i) Principal and interest payment delinquencies.
(ii) Unscheduled draws on debt service reserves reflecting financial difficulties.
(iii) Unscheduled draws on credit enhancements reflecting financial difficulties.
(iv) Substitution of credit or liquidity providers, or their failure to perform.
(v) Adverse tax opinions or issuance by the Internal Revenue Service of proposed or final
determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB).
(vi) Tender offers.
(vii) Redemptions and Defeasances.
(viii) Rating changes.
(ix) Bankruptcy, insolvency, receivership or similar event of the obligated person.
For purposes of the event identified in paragraph (ix), the event is considered to occur when any
of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated
person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal
law in which a court or governmental authority has assumed jurisdiction over substantially all of the
assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing
governmental body and officials or officers in possession but subject to the supervision and orders of a
court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement
or liquidation by a court or governmental authority having supervision or jurisdiction over substantially
all of the assets or business of the obligated person.
(b) Pursuant to the provisions of this Section, the Successor Agency shall give, or cause to be
given with respect to the Refunding Bonds, and hereby authorizes the Successor Agency to give, or cause
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to be given, with respect to the Bonds, notice of the occurrence of any of the following events with
respect to the Bonds, if material, in a timely manner not later than ten business days after the occurrence
of the event:
(i) Unless described in paragraph (v) of subsection (a) of this Section, other material notices
or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other
material events affecting the tax status of the Bonds.
(ii) Modifications to rights of holders of the Bonds.
(iii) Optional, unscheduled or contingent Bond calls.
(iv) Release, substitution, or sale of property securing repayment of the Bonds.
(v) Non - payment related defaults.
(vi) The consummation of a merger, consolidation, or acquisition involving an obligated
person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary
course of business, the entry into a definitive agreement to undertake such an action or the termination of
a definitive agreement relating to any such actions, other than pursuant to its terms.
(vii) Appointment of a successor or additional trustee or the change of name of a trustee.
(c) The Successor Agency shall, within one business day of obtaining actual knowledge of
the occurrence of any of the Listed Events, contact the Disclosure Representative and the Dissemination
Agent and inform such persons of the event.
(d) Whenever the Successor Agency obtains knowledge of the occurrence of a Listed Event
described in subsection (b) of this Section, the Successor Agency, as applicable shall determine if such
event would be material under applicable Federal securities law.
(e) Whenever the Successor Agency obtains knowledge of the occurrence of a Listed Event
described in subsection (a) of this Section, or determines that the occurrence of a Listed Event described
in subsection (b) of this Section is material under subsection (d) of this Section, the Successor Agency
shall, or shall cause the Dissemination Agent (if the Successor Agency is not the Dissemination Agent)
to, file a notice of the occurrence of such Listed Event with the MSRB within ten business days of such
occurrence.
(f) Notwithstanding the foregoing, notice of Listed Events described in paragraph (iii) of
subsection (a) of this Section and in paragraph (vii) of subsection (a) of this Section need not be given
under this subsection any earlier than the notice (if any) of the underlying event is given to holders of
affected Bonds pursuant to the Indenture.
Section 5. Format for Filings with MSRB Any report or filing with the MSRB pursuant to this
Disclosure Certificate must be submitted in electronic format, accompanied by such identifying
information as is prescribed by the MSRB.
Section 6. Termination of Reporting Obligation The obligations of the Successor Agency and
the Dissemination Agent under this Disclosure Certificate shall terminate upon the legal defeasance, prior
prepayment or payment in full of all of the Bonds or the legal defeasance, prior prepayment or payment in
full of all of the Refunding Bonds, if earlier. If such termination occurs prior to the final principal
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OHSUSA:765600743.3
payment date of the Bonds, the Successor Agency shall give notice of such termination in a filing with the
MSRB.
Section 7. Dissemination Agent The Successor Agency may, from time to time, appoint or
engage a Dissemination Agent (if the Successor Agency is not the Dissemination Agent) to assist it in
carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination
Agent (if other than the Successor Agency or the Trustee), with or without appointing a successor
Dissemination Agent. The Dissemination Agent may resign by providing thirty days written notice to the
Successor Agency.
Section 8. Amendment; Waiver Notwithstanding any other provision of this Disclosure
Certificate, the Successor Agency may amend this Disclosure Certificate and any provision of this
Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of subsection (a) of Section 2 hereof,
Section 3 hereof or subsections (a) or (b) of Section 4 hereof, it may only be made in connection with a
change in circumstances that arises from a change in legal requirements, change in law, or change in the
identity, nature or status of an obligated person with respect to the Bonds, or the type of business
conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of
nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the
primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as
well as any change in circumstances; and
(c) the proposed amendment or waiver (i) is approved by holders of the Bonds in the manner
provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in
the opinion of nationally recognized bond counsel, materially impair the interests of holders or beneficial
owners of the Bonds.
hi the event of any amendment or waiver of a provision of this Disclosure Certificate, the
Successor Agency shall describe such amendment or waiver in the next Annual Report, and shall include,
as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the
type (or in the case of a change of accounting principles, on the presentation) of financial information or
operating data being presented by the Successor Agency. In addition, if the amendment relates to the
accounting principles to be followed in preparing financial statements (i) notice of such change shall be
given in a filing with the MSRB, and (ii) the Annual Report for the year in which the change is made
shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the
financial statements as prepared on the basis of the new accounting principles and those prepared on the
basis of the former accounting principles.
Section 9. Additional Information Nothing in this Disclosure Certificate shall be deemed to
prevent the Successor Agency from disseminating any other information, using the means of
dissemination set forth in this Disclosure Certificate or any other reasonable means of communication, or
including any other information in any Annual Report or notice required to be filed pursuant to this
Disclosure Certificate, in addition to that which is required by this Disclosure Certificate. If the Successor
Agency chooses to include any information in any Annual Report or notice in addition to that which is
specifically required by this Disclosure Certificate, the Successor Agency shall have no obligation under
this Disclosure Certificate to update such information or include it in any future Annual Report or notice
of occurrence of a Listed Event or any other event required to be reported.
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Section 10. Default The parties hereto acknowledge that in the event of a failure of the
Successor Agency or the Dissemination Agent to comply with any provision of this Disclosure
Certificate, the Trustee may (and, at the written direction of any Participating Underwriter or the holders
of at least 25% of the aggregate amount of principal evidenced by Outstanding Bonds, shall, upon receipt
of indemnification reasonably satisfactory to the Trustee), or any holder or beneficial owner of the Bonds
may, take such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the Successor Agency or the Dissemination Agent, as the case may
be, to comply with its obligations under this Disclosure Certificate. A default under this Disclosure
Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this
Disclosure Certificate in the event of any failure of the Successor Agency or the Dissemination Agent to
comply with this Disclosure Certificate shall be an action to compel performance.
Section 11. Duties Immunities and Liabilities of Dissemination Agent. The Dissemination Agent
shall (so long as the Successor Agency is the Dissemination Agent) be entitled to the protections and
limitations from liability afforded to the Successor Agency under the Indenture. The Dissemination Agent
shall be not responsible for the form or content of financial statements made part of any Annual Report or
notice of Listed Event or for information sourced to the Successor Agency. The Dissemination Agent
shall receive reasonable compensation for its services provided under this Disclosure Certificate. The
Dissemination Agent (if other than the Successor Agency or the Successor Agency acting in its capacity
as Dissemination Agent) shall have only such duties as are specifically set forth in this Disclosure
Certificate. To the extent permitted by law, the Successor Agency shall indemnify and save the
Dissemination Agent (if other than the Successor Agency) and the Successor Agency harmless against
any liabilities which it may incur in the exercise and performance of its powers and duties hereunder, and
which are not due to its negligence or its willful misconduct. The obligations of the Successor Agency
under this Section shall survive resignation or removal of the Dissemination Agent and payment of the
Bonds.
Section 12. Beneficiaries This Disclosure Certificate shall inure solely to the benefit of the
Successor Agency, the Dissemination Agent, the Participating Underwriter and the holder and beneficial
owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 13. Counterparts This Disclosure Certificate may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and the same instrument.
OHSUSA:765600743.3
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IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Certificate as of the
date first above written.
SUCCESSOR AGENCY TO THE
ROSEMEAD COMMUNITY
DEVELOPMENT COMMISSION
Lm
Finance Director
ACCEPTED AND AGREED TO:
URBAN FUTURES, INC., as
Dissemination Agent
m
Authorized Signatory
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SUCCESSOR AGENCY TO THE ROSEMEAD
COMMUNITY DEVELOPMENT COMMISSION
W
[]
on behalf of the Successor Agency
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OHSUSA:765600743.3
EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Successor Agency to the Rosemead Community Development Commission
Name of Issue: Successor Agency to the Rosemead Community Development Commission
2016 Subordinate Tax Allocation Refunding Bonds
Date of Issuance: , 2016
NOTICE IS HEREBY GIVEN that the Successor Agency to the Rosemead Community
Development Commission (the "Successor Agency ") has not provided an Annual Report with respect to
the above -named bonds as required by the Continuing Disclosure Certificate, dated December _, 2016,
by the Successor Agency. The Successor Agency anticipates that the Annual Report will be filed by
Dated:
SUCCESSOR AGENCY TO THE
ROSEMEAD COMMUNITY
DEVELOPMENT COMMISSION
go
[]
on behalf of the Successor Agency
cc: [Successor Agency to the Rosemead Community Development Commission]
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APPENDIX G
DTC AND BOOK -ENTRY ONLY SYSTEM
The information in this APPENDIX G concerning the procedures and recordlceeping with respect
to beneficial ownership interests in the 2016 Bowls, payment of principal of and interest on the 2016
Bonds to Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests
in the 2016 Bonds, and other 2016 Bonds- related transactions by and between DTC, Participants and
Beneficial Owners, is based on information furnished by DTC which the Successor Agency believes to be
reliable, but the Successor Agency does not take responsibility for the completeness or accuracy thereof.
The Depository Trust Company ( "DTC "), New York, NY, will act as securities depository for the
2016 Bonds, The 2016 Bonds will be issued as fully- registered securities registered in the name of Cede
& Co. (DTC's partnership nominee) or such other name as may be requested by an authorized
representative of DTC. One fully- registered bond certificate for each maturity of the 2016 Bonds will be
issued for the 2016 Bonds in the aggregate principal amount of such maturity, and will be deposited with
DTC.
DTC, the world's largest securities depository, is a limited - purpose trust company organized
under the New York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over
3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money
market instruments (from over 100 countries) that DTC's participants ( "Direct Participants ") deposit with
DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other
securities transactions in deposited securities, through electronic computerized book -entry transfers and
pledges between Direct Participants' accounts. This eliminates the need for physical movement of
securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned
subsidiary of The Depository Trust & Clearing Corporation ( "DTCC "). DTCC is the holding company for
DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are
registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC
system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks,
trust companies, and clearing corporations that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ( "Indirect Participants "). DTC has a Standard & Poor's
rating of AA +. The DTC Rules applicable to its Participants are on file with the Securities and Exchange
Commission. More information about DTC can be found at www.dtec.com. The information on such
website is not incorporated herein by such reference or otherwise.
Purchases of 2016 Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the 2016 Bonds on DTC's records. The ownership interest of each actual
purchaser of each 2016 Bond ( "Beneficial Owner ") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
2016 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their
ownership interests in 2016 Bonds, except in the event that use of the book -entry system for the 2016
Bonds is discontinued.
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OHSUSA:765600743.3
To facilitate subsequent transfers, all 2016 Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of 2016 Bonds with DTC and their
registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the 2016 Bonds; DTC's records
reflect only the identity of the Direct Participants to whose accounts such 2016 Bonds are credited, which
may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of 2016 Bonds may wish to take
certain steps to augment the transmission to them of notices of significant events with respect to the 2016
Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Indenture. For example,
Beneficial Owners of 2016 Bonds may wish to ascertain that the nominee holding the 2016 Bonds for
their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial
Owners may wish to provide their names and addresses to the registrar and request that copies of notices
be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the 2016 Bonds within an issue are
being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
2016 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under
its usual procedures, DTC mails an Omnibus Proxy to the Successor Agency as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts 2016 Bonds are credited on the record date (identified in a listing attached
to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the 2016 Bonds will be made to
Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's
practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail
information from the Successor Agency or the Trustee, on payable date in accordance with their
respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case with securities held for the
accounts of customers in bearer form or registered in "street name" and will be the responsibility of such
Participant and not of DTC, the Trustee, or the Successor Agency, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and
dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized
representative of DTC) is the responsibility of the Successor Agency or the Trustee, disbursement of such
payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the 2016 Bonds at any
time by giving reasonable notice to the Successor Agency or the Trustee. Under such circumstances, in
the event that a successor depository is not obtained, 2016 Bond certificates are required to be printed and
delivered.
OHSUSA:765600743.3
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APPENDIX H
FORM OF DEBT SERVICE RESERVE FUND SURETY BOND
H -1
OHSUSA:7656007433
APPENDIX
SPECIMEN MUNICIPAL BOND INSURANCE POLICY
I -I
OHSUSA:765600743.3
Attachment C
Bond Purchase Agreement
SUCCESSOR AGENCY TO THE
ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION
ROSEMEAD MERGED PROJECT AREA
2016 SUBORDINATE TAX ALLOCATION REFUNDING BONDS
PURCHASE CONTRACT
, 2016
Successor Agency to the Rosemead Community Development Commission
8838 East Valley Boulevard
Rosemead, California 91770
Ladies and Gentlemen:
Stifel, Nicolaus & Company, Incorporated (the "Underwriter ") offers to enter into this Purchase
Contract with the Successor Agency to the Rosemead Community Development Commission (the
"Successor Agency ") with regard to the purchase and sale of the Bonds described herein which will be
binding upon the Successor Agency the Underwriter upon the Successor Agency's acceptance hereof. All
capitalized terms not otherwise defined herein shall have the meanings given them in the Indenture
(defined below).
1. Purchase and Sale. Upon the terms and conditions and upon the basis of the
representations herein set forth, the Underwriter agrees to purchase from the Successor Agency, and the
Successor Agency agrees to sell to the Underwriter, all (but not less than all) of the Successor Agency's
$ aggregate principal amount of Rosemead Merged project Area 2016 Subordinate Tax
Allocation Refunding Bonds (the "Bonds "). The purchase price of the Bonds shall be $
(being the principal amount of the Bonds, less an Underwriter's discount in the amount of $
and plus /less original issue premium/discount of $ J . The Bonds will have the maturities and
bear interest at the rates set forth on Exhibit A hereto. The Bonds will be subject to redemption as set
forth in the Official Statement herein described. The Bonds will be dated as described in the Official
Statement. The Bonds will be issued in book -entry form only.
The net proceeds of the Bonds will be applied to refund outstanding indebtedness of the
Rosemead Community Development Commission (the "Former Agency ") including the Former Agency's
Redevelopment Project No. 1 Tax Allocation Bonds, Series 2006A, and the Former Agency's Project
Area No. 1 Tax Allocation Refunding Bonds, Series 200613, and to purchase a municipal bond debt
service reserve insurance policy (the "Reserve Policy "), and pay costs of issuance of the Bonds.
2. Authorizing Instruments and Law. The Bonds shall be issued pursuant to the
Constitution and the laws of the State of California (the "State "), including Article 11 (commencing with
Section 53580 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code and Parts 1.8 and
1.85 of Division 24 of the Health and Safety Code of the State of California (the "Law "), a resolution of
the Successor Agency approving the issuance of the Bonds (the "Approving Resolution ") and a resolution
of the Oversight Board (the "Oversight Board ") approving the action of the Successor Agency set forth in
the Agency Resolution (the "Oversight Board Resolution "), and an Indenture of Trust, dated as of
1, 2016 (the "Indenture "), between the Successor Agency and U.S. Bank National
Association, as trustee (the "Trustee "). The Bonds shall be as described in the hrdenture and the Official
22304696.1
Statement (defined below). The Successor Agency approved the execution and delivery of the Official
Statement pursuant to a resolution of the Successor Agency (the "Disclosure Resolution" and, together
with the Approving Resolution, the "Agency Resolution "). The Bonds are payable exclusively from Tax
Revenues and from amounts on deposit in the Reserve Account for the Bonds and other accounts pledged
under the Indenture.
3. Offering the Bonds. The Underwriter agrees to offer all the Bonds to the public initially
at the prices (or yields) set forth on the inside cover page of the Official Statement of the Successor
Agency pertaining to the Bonds, dated , 2016 (such Official Statement, together with all
appendices thereto, and with such changes therein and supplements thereto as are consented to in writing
by the Underwriter, are collectively called the "Official Statement "). Subsequent to the initial public
offering of the Bonds, the Underwriter reserves the right to change the public offering prices (or yields) as
it deems necessary in connection with the marketing of the Bonds. The Bonds may be offered and sold to
certain dealers at prices lower than such initial public offering prices. "Public Offering" shall include an
offering to a representative number of institutional investors or registered investment companies,
regardless of the number of such investors to which the Bonds are sold.
The Successor Agency acknowledges and agrees that (i) the purchase and sale of the Bonds
pursuant to this Purchase Contract is an arm's - length commercial transaction between the Successor
Agency and the Underwriter, (ii) in connection with such transaction the Underwriter has not assumed a
fiduciary responsibility in favor of the Successor Agency with respect to (x) the offering of the Bonds or
the process leading thereto (whether or not the Underwriter has advised or is currently advising the
Successor Agency on other matters) or (y) any other obligation to the Successor Agency except the
obligations expressly set forth in this Purchase Contract, and (iii) the Successor Agency has consulted
with its own legal and other professional advisors to the extent it deemed appropriate in connection with
the offering of the Bonds, including but not limited to matters relating to the timing of the sale of the
Bonds, the size of the Bonds, and the potential impacts of the sale of the Bonds on the Successor
Agency's financial condition.
4. Delivery of Official Statement on the Date Hereof. The Successor Agency shall
deliver to the Underwriter two (2) copies of the Official Statement manually executed on behalf of the
Successor Agency by the Executive Director of the Successor Agency. The Successor Agency shall also
deliver a sufficient number of copies of the Official Statement to enable the Underwriter to distribute a
single copy of the Official Statement to any potential customer of the Underwriter requesting an Official
Statement during the time period beginning when the Official Statement become available and ending on
the End Date (defined below). The Successor Agency shall deliver these copies to the Underwriter within
seven (7) business days after the execution of this Purchase Contract and in sufficient time to accompany
or precede any sales confirmation that requests payment from any customer of the Underwriter. The
Underwriter shall inform the Successor Agency in writing of the End Date, and covenants to file the
Official Statement with the Municipal Securities Rulemaking Board (the "MSRB ") on a timely basis.
"End Date" as used herein is that date which is the earlier of:
(a) ninety (90) days after the end of the underwriting period, as defined in SEC Rule
15c2 -12 adopted by the Securities and Exchange Commission on June 28, 1989 ( "Rule 15c2 -12 "); or
(b) the time when the Official Statement become available from the MSRB, but in no
event less than twenty -five (25) days after the underwriting period (as defined in Rule 15c2 -12) ends.
Pursuant to the Agency Resolution, the Successor Agency has authorized the use of the Official
Statement in connection with the public offering of the Bonds. The Successor Agency also has consented
22304696.1
to the use by the Underwriter prior to the date hereof of the Preliminary Official Statement of the
Successor Agency, dated , 2016, in connection with the public offering of the Bonds (which,
together with all appendices thereto, are herein called the "Preliminary Official Statement'). An
authorized officer of the Successor Agency has certified to the Underwriter on behalf of the Successor
Agency that such Preliminary Official Statement were deemed to be final as of their date for purposes of
Rule 150-12, with the exception of certain final pricing and related information referred to in Rule 15c2-
12. The Underwriter has distributed a copy of the Preliminary Official Statement to potential customers
on request.
5. The Closing. At 8:00 A.M., California time, on , 2016, or at such other
time or on such earlier or later business day as shall have been mutually agreed upon by the Successor
Agency and the Underwriter, the Successor Agency will deliver (i) the Bonds in book -entry form through
or otherwise in care of the facilities of The Depository Trust Company ( "DTC "), and (ii) the closing
documents hereinafter mentioned at the offices of Orrick, Herrington & Sutcliffe LLP, Los Angeles,
California, or another place to be mutually agreed upon by the Successor Agency and the Underwriter.
The Underwriter will pay the purchase price of the Bonds as set forth in Section 1 hereof by wire transfer
of immediately available funds to the Trustee. This payment and delivery, together with the delivery of
the aforementioned documents, is herein called the "Closing."
6. Successor Agency Representations, Warranties and Covenants. The Successor
Agency represents, warrants and covenants to the Underwriter that:
(a) Due Organization Existence and Authority. The Successor Agency is a public
body corporate and politic, organized and existing under the Constitution and laws of the State, including
the Law, with full right, power and authority to adopt the Agency Resolution, to issue the Bonds, and to
execute, deliver and perform its obligations under the Bonds, this Purchase Contract, the Indenture, the
Continuing Disclosure Certificates, the Official Statement and the Agency Resolution (the Bonds, the
Purchase Contract, the Indenture, the Official Statement, the Continuing Disclosure Certificates and the
Agency Resolution are collectively referred to herein as the "Successor Agency Documents ").
(b) Due Authorization and Approval. By all necessary official action of the
Successor Agency, the Successor Agency has duly authorized and approved the adoption or execution
and delivery of, and the performance by the Successor Agency of the obligations on its part contained in,
the Successor Agency Documents, and has approved the use by the Underwriter of the Preliminary
Official Statement and the Official Statement and, as of the date hereof, such authorizations and approvals
are in full force and effect and have not been amended, modified or rescinded. When executed and
delivered by the parties thereto the Successor Agency Documents will constitute the legally valid and
binding obligations of the Successor Agency enforceable upon the Successor Agency in accordance with
their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or affecting creditors rights generally. The
Successor Agency has complied, and will at the Closing be in compliance in all respects, with the terms
of the Successor Agency Documents.
(c) Official Statement Accurate. The Official Statement are, and at all times
subsequent to the date of each Official Statement up to and including the Closing will be, true and correct
in all material respects, and the Official Statement contain, and up to and including the Closing will
contain, no misstatement of any material fact and do not, and up to and including the Closing will not,
omit any statement necessary to make the statements contained therein, in the light of the circumstances
in which such statements were made, not misleading.
22304696.1
(d) Underwriter's Consent to Amendments and Supplements to Official Statement.
The Successor Agency will advise the Underwriter promptly of any proposal to amend or supplement an
Official Statement from the date of delivery of such Official Statement to the End Date, and will not
effect or consent to any such amendment or supplement without the consent of the Underwriter, which
consent will not be unreasonably withheld. The Successor Agency will advise the Underwriter promptly
of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise
affecting the use of the Official Statement in connection with the offering, sale or distribution of the
Bonds.
(e) Successor Agency Agreement to Amend or Supplement Official Statement. For
a period beginning on the date hereof and continuing until the End Date, (a) the Successor Agency will
not adopt any amendment of, or supplement to, the Official Statement to which the Underwriter shall
object in writing and (b) if any event relating to or affecting the Merged Project Area or the Successor
Agency shall occur as a result of which it is necessary, in the opinion of Disclosure Counsel or the
Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not
misleading in the light of the circumstances existing at the time they are delivered to a purchaser of the
Bonds, the Successor Agency will forthwith prepare and furnish to the Underwriter a reasonable number
of copies of an amendment of, or supplement to, the Official Statement (in form and substance
satisfactory to Disclosure Counsel and the Underwriter) which will amend or supplement the Official
Statement so that they will not contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the circumstances existing at the
time the Official Statement are delivered to a purchaser of the Bonds, not misleading.
(f) No Material Change in Finances; Tax Sharing Agreements. At the time of the
Closing, there shall not have been any material adverse change in the financial condition of the Successor
Agency or any material adverse change in the valuation of taxable property in the Merged Project Area
(as described in the Official Statement) since June 30, 2015. Except as disclosed in the Official
Statement, the Successor Agency has not entered into any tax sharing agreements with regards to tax
increment generated within the Merged Project Area, and the Successor Agency is not subject to any
resolution of taxing entities adopted pursuant to former Section 33676 of the Law pursuant to which Tax
Revenues attributable to growth in assessed value as a result of lawful inflationary adjustments are
captured by such taxing entity.
(g) No Breach or Default. As of the time of acceptance hereof and as of the Closing,
except as otherwise disclosed in the Official Statement, the Successor Agency is not and will not be in
breach of or in default under any applicable constitutional provision, law or administrative rule or
regulation of the State or the United States, or any applicable judgment or decree or any trust agreement,
loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Successor
Agency is a party or is otherwise subject, and no event has occurred and is continuing which, with the
passage of time or the giving of notice, or both, would constitute a default or event of default under any
such instrument which breach, default or event could have an adverse effect on the Successor Agency's
ability to perform its obligations under the Successor Agency Documents; and, as of such times, except as
disclosed in the Official Statement, the authorization, execution and delivery of the Successor Agency
Documents and compliance by the Successor Agency with the provisions of each of such agreements or
instruments do not and will not conflict with or constitute a breach of or default under any applicable
constitutional provision, law or administrative rule or regulation of the State or the United States, or any
applicable judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution,
ordinance, agreement or other instrument to which the Successor Agency (or any of its officers in their
respective capacities as such) is subject, or by which it or any of its properties is bound, nor will any such
authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or
other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or
22304696.1
under the terms of any such law, regulation or instrument, except as may be provided by the Successor
Agency Documents.
(h) No Litigation. As of the time of acceptance hereof and as of the Closing, except
as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law
or in equity, before or by any court, government agency, public board or body, pending or to the best
knowledge of the Successor Agency threatened against the Successor Agency:
(i) in any way questioning the corporate existence of the Successor Agency
or the titles of the officers of the Successor Agency to their respective offices;
(ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance
or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to
pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the
Successor Agency Documents or the consummation of the transactions on the part of the Successor
Agency contemplated thereby, or contesting the exclusion of the interest on the Bonds from taxation or
contesting the powers of the Successor Agency;
(iii) which may result in any material adverse change relating to the financial
condition of the Successor Agency; or
(iv) contesting the completeness or accuracy of the Preliminary Official
Statement or the Official Statement or any supplement or amendment thereto or asserting that the
Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
(i) Prior Liens on Tax Revenues. As of the time of acceptance hereof and as of the
Closing the Successor Agency does not and will not have outstanding any indebtedness which is secured
by a lien on the Tax Revenues superior to or on a parity with the lien of the Bonds on such Tax Revenues,
subject to the (a) amounts, if any, payable pursuant to the Senior Bonds and (b) amounts, if any, payable
pursuant to Section 33607.5 of the Law, but only to the extent such amounts described in clauses (b) are
not subordinated to the payment of debt service on the Bonds, and (c) [the Pass - Through Agreements],
except as disclosed in the Official Statement.
0) Further Cooperation; Blue Sky. The Successor Agency will furnish such
information, execute such instruments and take such other action in cooperation with the Underwriter as
the Underwriter may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue
Sky or other securities laws and regulations of such states and other jurisdictions of the United States as
the Underwriter may designate and (ii) to determine the eligibility of the Bonds for investment under the
laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in
effect so long as required for the distribution of the Bonds; provided, however, that the Successor Agency
will not be required to execute a special or general consent to service of process or qualify as a foreign
corporation in connection with any such qualification in any jurisdiction.
(k) Bonds Issued Per Indenture; Pledge. The Bonds, when issued, executed and
delivered in accordance with the Indenture and sold to the Underwriter as provided herein, will be legally
valid and binding limited obligations of the Successor Agency, entitled to the benefits of the Indenture
and enforceable in accordance with their terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting
creditors rights generally, and upon execution and delivery of the Bonds, the Indenture will provide, for
22304696.1 5
the benefit of the owners from time to time of the Bonds, a legally valid and binding pledge of and lien on
Tax Revenues and on the funds and accounts pledged to such Bonds under the Indenture as provided in
and contemplated by the hndenture.
(1) Consents and Approvals. All authorizations, approvals, licenses, permits,
consents and orders of or filings with any governmental authority, legislative body, board, agency or
commission having jurisdiction in the matters which are required for the due authorization of, which
would constitute a condition precedent to or the absence of which would adversely affect the due
performance by the Successor Agency of, its obligations in connection with the Successor Agency
Documents have been duly obtained or made.
(m) No Other Bonds: Compliance with Redevelopment Plan Limits. Between the
date of this Purchase Contract and the date of Closing, the Successor Agency will not, without the prior
written consent of the Underwriter, and except as disclosed in the Official Statement, offer or issue any
bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or
contingent, secured by tax increment generated in the Merged Project Area. The total obligations of the
Successor Agency heretofore incurred and all payments thereon over the life of the Redevelopment Plan
have been computed by the Successor Agency and will not exceed any applicable limit on tax increment
revenues received by the Successor Agency over the life of the Redevelopment Plan or any constituent
component as set forth therein, (b) the total bonded indebtedness of the Successor Agency outstanding
and secured by the Tax Revenues as of the date hereof does not exceed any applicable limit thereon set
forth in the Redevelopment Plan, and (c) except as disclosed in the Official Statement, the Successor
Agency is entitled to receive Tax Revenues under the Redevelopment Plan for a term longer than the final
maturity of the Bonds.
(n) Certificates. Any certificate signed by any authorized officer of the Successor
Agency and delivered to the Underwriter in connection with the issuance of the Bonds shall be deemed to
be a representation and warranty by the Successor Agency to the Underwriter as to the statements made
therein.
(o) Compliance With the Redevelopment Law As of the time of acceptance hereof
and as of the date of the Closing, except as otherwise disclosed in the Official Statement, the Successor
Agency has complied with all material provisions of the Law.
(p) Compliance With Continuing Disclosure Except as described in the Official
Statement, the Successor Agency has not defaulted under any prior continuing disclosure undertaking
pursuant to Rule 15c2 -12 over the past five years.
(q) Oversight Board Approval The Oversight Board has duly adopted the Oversight
Board Resolution approving the issuance of the Bonds and no further Oversight Board approval or
consent is required for the issuing of the Bonds or the consummation of the transactions described in the
Preliminary Official Statement.
(r) Department of Finance of the State Final and Conclusive Determination Letter
The Department of Finance of the State (the "Department of Finance ") has issued a Final and Conclusive
Determination Letter (the "Final and Conclusive Determination Letter ") approving the issuance of the
Bonds and the payment of debt service on the Bonds and no further Department of Finance approval or
consent is required for the issuance of the Bonds or the consummation of the transactions described in the
Preliminary Official Statement, and except as disclosed in the Preliminary Official Statement, the
Successor Agency is not aware of the Department of Finance directing or having any basis to direct the
County Auditor - Controller to deduct unpaid unencumbered funds from future allocations of property tax
22304696.1
to the Successor Agency pursuant to Section 34183 of the Health and Safety Code of the State of
California.
7. Closing Conditions. The Underwriter has entered into this Purchase Contract in reliance
upon the representations, warranties and covenants herein and the performance by the Successor Agency
of its obligations hereunder, both as of the date hereof and as of the date of the Closing. The
Underwriter's obligations under this Purchase Contract are and shall be subject to the following additional
conditions:
(a) Bring-Down Representation. The representations, warranties and covenants of
the Successor Agency contained herein shall be true and correct at the date hereof and at the time of the
Closing, as if made on the date of the Closing.
(b) Executed Agreements and Performance Thereunder At the time of the Closing:
(i) the Successor Agency Documents shall be in full force and effect, and
shall not have been amended, modified or supplemented except with the consent of the Underwriter;
(ii) there shall be in full force and effect such resolutions as, in the opinion
of Jones Hall, A Professional Law Corporation (`Bond Counsel "), shall be necessary in connection with
the transactions on the part of the Successor Agency contemplated by this Purchase Contract, the Official
Statement, and the other Successor Agency Documents;
(iii) the Successor Agency shall perform or have performed its obligations
required or specified in the Successor Agency Documents to be performed at or prior to Closing; and
(iv) the Official Statement shall not have been supplemented or amended,
except pursuant to Paragraph 7(e) or as otherwise may have been agreed to in writing by the Underwriter.
(c) No Default. At the time of the Closing, no default shall have occurred or be
existing under this Purchase Contract, the Agency Resolution, or the other Successor Agency Documents
and the Successor Agency shall not be in default in the payment of principal or interest on any of its
bonded indebtedness which default shall adversely impact the ability of the Successor Agency to make
payments on the Bonds.
(d) Termination Events. The Underwriter shall have the right to terminate this
Purchase Contract, without liability therefor, by written notification to the Successor Agency if at any
time at or prior to the Closing:
(i) any event shall occur which causes any statement contained in the
Official Statement to be materially misleading or results in a failure of the Official Statement to state a
material fact necessary to make the statements in the Official Statement, in the light of the circumstances
under which they were made, not misleading; or
(ii) the marketability of the Bonds or the market price thereof, in the opinion
of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the
United States or by any legislation in or by the Congress of the United States or by the State, or the
amendment of legislation pending as of the date of this Purchase Contract in the Congress of the United
States, or the recommendation to Congress or endorsement for passage (by press release, other form of
notice or otherwise) of legislation by the President of the United States, the Treasury Department of the
United States, the Internal Revenue Service or the Chairman or ranking minority member of the
22304696.1 7
Committee on Finance of the United States Senate or the Committee on Ways and Means of the United
States House of Representatives, or the proposal for consideration of legislation by either such
Committee, or the presentment of legislation for consideration as an option by either such Committee, or
by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable
reporting for passage of legislation to either House of the Congress of the United States by a Committee
of such House to which such legislation has been referred for consideration, or any decision of any
Federal or state court or any ruling or regulation (final, temporary or proposed) or official statement on
behalf of the United States Treasury Department, the Internal Revenue Service or other Federal or State
authority materially adversely affecting the Federal or State tax status of the Successor Agency, or the
interest on bonds or notes or obligations of the general character of the Bonds; or
(iii) any legislation, ordinance, rule or regulation shall be introduced in, or be
enacted by any governmental body, department or agency of the State or a decision by any court of
competent jurisdiction within the State or any court of the United States shall be rendered which, in the
reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds; or
(iv) legislation shall be enacted by the Congress of the United States, or a
decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official
statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency
having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or
sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds,
including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation
or would be in violation of, or that obligations of the general character of the Bonds, or the Bonds, are not
exempt from registration under, any provision of the federal securities laws, including the Securities Act
of 1933, as amended and as then in effect, or that the Indenture need to be qualified under the Trust
Indenture Act of 1939, as amended and as then in effect; or
(v) additional material restrictions not in force as of the date hereof shall
have been imposed upon trading in securities generally by any governmental authority or by any national
securities exchange which restrictions materially adversely affect the Underwriter's ability to market the
Bonds; or
(vi) a general banking moratorium shall have been established by federal or
State authorities; or
(vii) the United States has become engaged in hostilities which have resulted
in a declaration of war or a national emergency or there has occurred any other outbreak of hostilities or a
national or international calamity or crisis, financial or otherwise, the effect of such outbreak, calamity or
crisis on the financial markets of the United States, being such as, in the reasonable opinion of the
Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds; or
(viii) the commencement of any action, suit or proceeding described in
Paragraph 7(h) hereof which, in the judgment of the Underwriter, materially adversely affects the market
price of the Bonds; or
(ix) there shall be in force a general suspension of trading on the New York
Stock Exchange; or
(x) as a result of actions by the Successor Agency or the State of California
the market for the Bonds or the market prices of the Bonds or the ability of the Underwriter to enforce
22304696.1
contracts for the sale of the Bonds shall have been materially and adversely affected, in the reasonable
professional judgment of the Underwriter; or
(xi) an event described in paragraph (e) of Section 7 hereof shall have
occurred which, in the reasonable professional judgment of the Underwriter, requires the preparation and
publication of a supplement or amendment to either of the Official Statement; or
(xii) any rating or credit outlook of the Bonds or other obligations of the
Successor Agency by a national rating agency shall have been withdrawn or downgraded.
(e) Closing_ Documents. At or prior to the Closing, the Underwriter shall receive
with respect to the Bonds (unless the context otherwise indicates) the following documents:
(1) Bond Opinion. The approving opinions of Bond Counsel dated the date
of the Closing and substantially in the forms included as APPENDIX F to the Official Statement,
together with a letter from such counsel, dated the date of the Closing and addressed to the
Underwriter, to the effect that the foregoing opinions may be relied upon by the Underwriter to
the same extent as if such opinions were addressed to them.
(2) Supplemental Opinion. A supplemental opinion or opinions of Bond
Counsel addressed to the Underwriter, substantially to the following effect:
(a) the statements and information contained in the Official
Statement on the cover page and under the captions "THE BONDS" (except for the
information under the captions "Book Entry System "), "SECURITY FOR THE BONDS"
and "OTHER INFORMATION — Tax Matters," excluding any material that may be
treated as included under such captions by cross - reference, insofar as such statements
expressly summarize certain provisions of the Indenture, and the form and content of the
Bond Opinion, are accurate in all material respects;
(b) the Bonds are exempt from registration under the Securities Act
of 1933, as amended (the "1933 Act "), and the Indenture is exempt from qualification as
an indenture pursuant to the Trust Indenture Act of 1939, as amended; and
(c) the Purchase Contract has been duly authorized, executed and
delivered by the Successor Agency and constitutes a valid and binding agreement of the
Successor Agency (subject to customary exceptions).
(3) Successor Agency Counsel Opinion. An opinion of Burke, Williams &
Sorenson, LLP, counsel to the Successor Agency, dated as of the Closing and addressed to the
Underwriter, in form and substance acceptable to Bond Counsel and the Underwriter, to the
following effect:
(a) The Successor Agency is a public body, corporate and politic,
duly organized and validly existing under the laws of the State;
(b) The Successor Agency Documents have been duly authorized,
executed and delivered by the Successor Agency and, assuming due authorization,
execution and delivery by the other parties thereto, constitute the valid, legal and binding
obligations of the Successor Agency enforceable in accordance with their respective
terms;
22304696.1
(c) The Agency Resolution has been duly adopted at meetings of the
governing body of the Successor Agency, each of which was called and held pursuant to
law and with all public notice required by law and at which a quorum was present and
acting throughout, and the Agency Resolution is in full force and effect and has not been
modified, amended or rescinded;
(d) To the best of such counsel's current actual knowledge, the
execution and delivery of the Successor Agency Documents and the Official Statement
and compliance with the provisions of the Successor Agency Documents, under the
circumstances contemplated thereby, does not and will not in any material respect
conflict with or constitute on the part of the Successor Agency a breach of or default
(with due notice or the passage of time or both) under (a) any material agreement or other
instrument to which the Successor Agency is a party or by which it is bound, (b) any
applicable California or federal statutory law or administrative rule or regulation known
to such counsel, or (c) any applicable court order or consent decree to which the
Successor Agency is subject;
(e) The Official Statement have been duly approved by the
governing body of the Successor Agency and executed on its behalf by an authorized
officer of the Successor Agency;
(f) To the best of such counsel's actual knowledge, no additional
authorization, approval, consent, waiver or any other action by any person, board or
body, public or private, not previously obtained is required as of the date of the Closing
for the Successor Agency to enter into the Successor Agency Documents or to perform its
obligations under the Successor Agency Documents except as have been obtained or
made and as are in full force and effect;
(g) Except as otherwise disclosed in the Official Statement, to the
best of such counsel's knowledge, there is no litigation, proceeding, action, suit, or
investigation at law or in equity before or by any court, governmental agency or body,
pending against the Successor Agency, challenging the creation, organization or
existence of the Successor Agency, or the validity of the Bonds or the Successor Agency
Documents or seeking to restrain or enjoin the repayment of the Bonds or in any way
contesting or affecting the validity of the Bonds or the Successor Agency Documents or
any of the transactions referred to therein or contemplated thereby or contesting the
authority of the Successor Agency to enter into or perform its obligations under any of
the Bonds or the Successor Agency Documents, or which, in any manner, questions the
right of the Successor Agency to issue the Bonds or to use the Tax Revenues for
repayment of the Bonds or affects in any manner the right or ability of the Successor
Agency to enter into the Bonds or to collect or pledge the Tax Revenues for repayment of
the Bonds, which, if determined adversely to the Successor Agency, would have a
material and adverse effect upon the consummation of the transactions contemplated by
or the validity of the Bonds, the Official Statement or the Successor Agency Documents
(in rendering such opinion counsel may rely solely upon the representations made to us in
Officer's Certificates and on information provided by the Successor Agency as to the
existence or non- existence of any pending or threatened litigation, proceeding, action,
suit, or investigation, which it has no reason to believe are incorrect).; and
(h) Based upon the information made available to such counsel in
the course of its participation in the preparation of the Official Statement, and without
22304696.1 10
having undertaken to determine independently or assuming any responsibility for the
accuracy, completeness or fairness of the statements contained in the Official Statement,
nothing has come to the attention of the lawyers in such firm rendering professional
services in connection with the issuance of the Bonds that would lead them to believe that
the statements and information contained in the Official Statement relating to the
Successor Agency and the Merged Project Area contained under the following headings:
"INTRODUCTION," "THE SUCCESSOR AGENCY" and "THE PROJECT AREA"
(excluding therefrom: (a) the financial statements or information (including pro forma
information), or any financial, statistical, economic, engineering or demographic data or
forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or
expressions of opinion contained in the Official Statement; and (b) any statements and
information relating to The Depository Trust Company and Appendices, as to which we
express no opinion) as of the date of the Official Statement or as of the date hereof,
contained or contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading.
(4) Trustee Counsel Opinion. The opinion of counsel to the Trustee, dated
the date of the Closing, addressed to the Successor Agency and the Underwriter, in form and
substance acceptable to the Underwriter substantially to the following effect:
(a) The Trustee is a national banking association duly organized and
validly existing under the laws of the United States.
(b) The Trustee has duly authorized the execution and delivery of
the Indenture and the Continuing Disclosure Certificate.
(c) The Indenture and the Continuing Disclosure Certificate have
been duly entered into and delivered by the Trustee and assuming due, valid and binding
authorization, execution and delivery by the other parties thereto, constitute the legal,
valid and binding obligations of the Trustee enforceable against the Trustee in accordance
with their respective terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally, or by general principles of equity.
(5) Disclosure Counsel Opinion. An opinion, dated the date of the Closing
addressed to the Successor Agency and the Underwriter, of Orrick, Herrington & Sutcliff LLP,
disclosure counsel, to the effect that based upon their participation in the preparation of the
Official Statement as Disclosure Counsel to the Successor Agency and without having undertaken
to determine independently the accuracy or completeness of the contents in the Official
Statement, such counsel has no reason to believe that the Official Statement, as of their date and
as of the Closing Date (except for the financial statements and the other financial and statistical
data included therein and the information included therein relating to The Depository Trust
Company and the book -entry system (as such terms are defined in the Official Statement), and in
the Appendices thereto as to all of which no opinion or belief need be expressed) contained or
contains any untrue statement of a material fact or omitted or omits to state any material fact
necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading.
22304696.1 11
(6) Successor Agency Certificate. A certificate of the Successor Agency,
dated the date of the Closing, signed on behalf of the Successor Agency by the Executive
Director or Chairman or other duly authorized officer of the Successor Agency to the effect that:
(a) The representations, warranties and covenants of the Successor
Agency contained herein and in the Successor Agency Documents are true and correct in
all material respects on and as of the date of the Closing as if made on the date of the
Closing and the Successor Agency has complied with all of the terms and conditions of
this Purchase Contract required to be complied with by the Successor Agency at or prior
to the date of the Closing;
(b) No event affecting the Successor Agency has occurred since the
date of the Official Statement which has not been disclosed therein or in any supplement
or amendment thereto which event should be disclosed in the Official Statement in order
to make the statements therein, in the light of the circumstances under which they were
made, not misleading; and
(c) No further consent is required to be obtained for the inclusion of
the Successor Agency's audited financial statements, including the accompanying
accountant's letter, for Fiscal Year 2014 -15 in the Official Statement.
(7) Trustee's Certificate. A Certificate of the Trustee, dated the date of
Closing, addressed to the Successor Agency and the Underwriter, in form and substance
acceptable to Bond Counsel and the Underwriter to the following effect:
(a) The Trustee is duly organized and existing as a national banking
association in good standing under the laws of the United States, having the full power
and authority to accept and perform its duties under the Indenture and the Continuing
Disclosure Certificate;
(b) Subject to the provisions of the Indenture, the Trustee will apply
the proceeds from the Bonds to the purposes specified in the Indenture; and
(c) The Trustee has duly authorized and executed the Indenture and
the Continuing Disclosure Certificate.
(8) Transcripts. Two transcripts of all proceedings relating to the
authorization and issuance of the Bonds.
(9) Official Statement. The Official Statement and each supplement or
amendment, if any, thereto, executed on behalf of the Successor Agency by a duly authorized
officer of the Successor Agency.
(10) Documents. An original executed copy of each of the Successor Agency
Documents.
(11) Successor Agency Resolution A copy, certified by the Clerk of the
Commission of the Successor Agency, of the Agency Resolution, approving the issuance of the
Bonds by the Successor Agency.
22304696.1 12
(12) Oversight Board Resolution A copy, certified by the Clerk to the
Oversight Board, of Oversight Board Resolution approving the issuance of the Bonds by the
Successor Agency;
(13) IRS Form 8038 -G. Evidence that the federal tax information form 8038-
( for the Bonds has been prepared for filing.
(14) Nonarbitrage Certificate. An arbitrage certificate in form satisfactory to
Bond Counsel.
(15) Ratings. Evidence of ratings on the Bonds.
(16) Bond Insurance/Reserve Policy. The municipal bond insurance policy
insuring the payment of principal and interest with respect to certain of the Bonds (the "Insurance
Policy "), issued by (the "Insurer "); the Reserve Policy issued by the Insurer; an
opinion of counsel to the Insurer, dated the date of Closing, addressed to the Successor Agency,
the Trustee and the Underwriter, regarding the Insurer's valid existence, power and authority, the
Insurer's due authorization and issuance of the Insurance Policy and the Reserve Policy and the
enforceability of the Insurance Policy and the Reserve Policy against the Insurer; and a certificate
of the Insurer or an opinion of counsel to the Bond Insurer, dated the date of Closing, regarding
the accuracy of the information in the Official Statement describing the Insurer, the Insurance
Policy, and the Reserve Policy.
(17) CDIAC Statement. A copy of the Notices of Sale required to be
delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583
of the Government Code and Section 8855(g) of the Government Code.
(18) Closing Certificate of Fiscal Consultant A certificate of Urban Futures,
Inc., dated the Closing, certifying that as of the date of the Official Statement and as of the
Closing Date, the statements contained in the Official Statement insofar as such statements
purport to summarize their report included in the Official Statement are true and correct in all
material respects, and did not and do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and consenting to the use of their report as
APPENDIX A to the Preliminary Official Statement and the Official Statement and all references
to their report in the Preliminary Official Statement and the Official Statement.
(19) Additional Documents. Such additional certificates, instruments and
other documents as the Underwriter may reasonably deem necessary.
If the Successor Agency shall be unable to satisfy the conditions contained in this Purchase
Contract, or if the obligations of the Underwriter shall be terminated for any reason permitted by this
Purchase Contract, this Purchase Contract may be terminated by the Underwriter by written notice to the
Successor Agency, and neither the Underwriter or the Successor Agency shall be under further obligation
hereunder.
8. Expenses. The Underwriter shall be under no obligation to pay, and the Successor
Agency shall pay or cause to be paid, the expenses incident to the performance of the obligations of the
Successor Agency hereunder including but not limited to:
22304696.1 13
(a) the costs of the preparation and printing, or other reproduction (for distribution
on or prior to the date hereof) of the Successor Agency Documents and the cost of preparing, printing,
issuing and delivering the Bonds;
(b) the fees and disbursements of any counsel, financial advisors, accountants or
other experts or consultants retained by the Successor Agency;
(c) the fees and disbursements of Bond Counsel and Disclosure Counsel;
(d) the cost of preparation and printing the Preliminary Official Statement and any
supplements and amendments thereto and the cost of preparation and printing of the Official Statement,
including a reasonable number of copies thereof for distribution by the Underwriter;
(e) charges of rating agencies for the rating of the Bonds;
(f) the cost of preparation of this Purchase Contract; and
(g) any out -of- pocket disbursements of the Successor Agency incurred in connection
with the public offering and distribution of the Bonds.
Whether or not the Bonds are delivered to the Underwriter as set forth herein, the Successor
Agency shall be under no obligation to pay, and the Underwriter shall pay, all expenses incurred by the
Underwriter in connection with its public offering and distribution of the Bonds (except those specifically
enumerated in paragraphs (a) through (g) above), including the fees and disbursements of its counsel and
any advertising expenses.
9. Notice. Any notice or other communication to be given to the Underwriter may be given
by delivering the same to Stifel, Nicolaus & Company, Incorporated, 515 S. Figueroa Street, Suite 1800,
Los Angeles, California 90071, Attention: John Kim. Any notice or other communication to be given to
the Successor Agency pursuant to this Purchase Contract may be given by delivering the same in writing
to such entity, at the addresses set forth on the cover page hereof; provided, however, that all such notices,
requests or other communications may be made by telephone and promptly confirmed by writing. The
Successor Agency and Underwriter may, by notice given as aforesaid, specify a different address for any
such notices, requests or other communications.
10. Entire Agreement. This Purchase Contract, when accepted by the Successor Agency,
shall constitute the entire agreement among the Successor Agency and the Underwriter and is made solely
for the benefit of the Successor Agency and the Underwriter (including the successors or assigns of any
Underwriter, subject to Section 14 below). No other person shall acquire or have any right hereunder by
virtue hereof, except as provided herein. All the Successor Agency's representations, warranties and
agreements in this Purchase Contract shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter, until the earlier of (a) delivery of and payment for
the Bonds hereunder, and (b) any termination of this Purchase Contract.
11. Counterparts. This Purchase Contract may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
12. Severability. In case any one or more of the provisions contained herein shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
22304696.1 14
13. State of California Law Governs. The validity, interpretation and performance of this
Purchase Contract shall be governed by the laws of the State applicable to contracts made and performed
in the State.
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22304696.1 15
14. No Assignment. The rights and obligations created by this Purchase Contract shall not
be subject to assignment by the Underwriter or the Successor Agency without the prior written consent of
the other parties hereto.
STIFEL, NICOLAUS & COMPANY,
INCORPORATED, as Underwriter
Title: Authorized Signatory
Accepted as of the date first stated above:
SUCCESSOR AGENCY TO THE ROSEMEAD
COMMUNITY DEVELOPMENT COMMISSION
Executive Director
Time of Execution:
22304696.1
EXHIBIT A
Maturity Date Principal Interest
(December 1) Amount Rate Yield
22304696.1
A -1