CDC - Item 6 - Refinancing Of Tax Allocation BondsIt
11a Rosemead Community Development' Commission
RCDC 8838 East Valley Boulevard, CA 91770 Tel 626.569.2100 Fax 626.307.9218
TO: HONORABLE CHAIRMAN AND MEMBERS R(
COMMUNITY DEVELOPMENT COMMISSION
FROM: ILL CROWE, EXECUTIVE DIRECTOZ)
DATE: NOVEMBER 8, 2005
SUBJECT: SELECTION OF UNDERWRITER FOR THE REFINANCING
-OF TAX ALLOCATION BONDS, SERIES 1993A
(REDEVELOPMENT PROJECT AREA NO. 1); STAFF
REQUEST FOR GUIDANCE ON THE ISSUANCE OF
ADDITIONAL BONDS TO SECURE NEW MONEY BEYOND
THAT NEEDED FOR THE REFINANCING.
At its October 25, 2005 meeting the CDC adopted Resolution 2005-18 authorizing staff to prepare
documents necessary to refinance the CDC's Tax Allocation Bonds, Series 1993A. In accordance
with the Resolution a Request for Qualifications was sent to a number of underwriters and we have
received six responses and proposals. This meeting was set for purposes of reviewing the proposals
and selecting an underwriter.
Staff, our bond counsel and our financial adviser have reviewed the proposals and recommend the
council select from Stone & Youngberg, Piper Jaffray or E.J. De La Rosa and Co.. Inc.
The Council was also advised by staff at the October 25 meeting that it would investigate the
economics and legal avenues available to expand the issue to secure new money by using the annual
savings for additional borrowing. Based on analysis by our financial consultant using current market
conditions, it appears that annual tax increment monies available after the refinancing could secure a
bond issue netting approximately $5.5 million in new money for use on CDC projects.
Bond counsel advises us that to achieve a negotiated sale to the selected underwriter it will be
necessary, due to limitations on authority in the Community Redevelopment Law, to sell the bonds to
a Joint Powers Authority ("JPA") that would be formed by the City and the CDC. The JPA would in
turn sell the bonds to the underwriter on a negotiated basis. This staged transaction is commonly
used to permit negotiated sales of tax allocation bonds. The City's involvement in the transaction as
a member of the JPA would not make it liable for repayment of the bonds.
If the Commission Board wishes to expand the issue to include a new money financing, we will
include the necessary actions, including formation of the .IPA, on the November 22, 2005 agenda.
~C'L_r+?AS~~ara tiGENTI)A
TEPA Pde.-#
•
Attachments:
1. Memorandum from Public Financial Management, Inc.
2. Current Standard and Poors Credit Analysis of 1993 Notes
3. Underwriter RFQ Summary
4. Draft Joint Powers Agreement
0
C1 0
PFM.
The PFM Group
Public Financial fdana0emcnt, Inc.
PFM Asset Management LLC
PFM Advisors
Memorandum
To: City of Rosemead
From: Public Financial Management
Re: Underwriter Selection
0Suite 750
660 Newport Center Dnve
Newport Beach, CA
92660-6408
November 3, 2005
949 721-9422
949 721-9437 fax
www.pfm.com
On November 1, 2005 the City of Rosemead received six proposals to provide underwriting
services related to the refunding of a portion of the 1993 A Tax Allocation Bonds. Additionally,
the underwriters provided recommendations for potential new money to be included as part of
the refunding.
Proposals were received from the following firms:
• Chilton and Associates
• Citigroup
• E.J. De La Rosa and Co., Inc.
• Piper Jaffray
• Stone &Youngberg
• Wulff, Hansen and Co. with Redwood Securities
Each of the proposals included an analysis of the credit and discussion of the issues related to the
refunding and potential new money transaction. As you know, for reasons related to the
financial difficulty of the Southern California Edison Company, the existing bonds were
downgraded by Standard and Poor's in 2002 from A- to BBB. A copy of the current S and P
credit analysis is attached. As noted in all of the proposals, there are significant challenges to
obtaining credit enhancement and a reserve fund surety. Both are essential to maximizing the
value of the refunding. Until we have conclusively determined the availability of bond insurance
and a surety policy, we cannot say with certainty how much can be saved by this transaction.
Nonetheless, we feel confident that a compelling case can be made on behalf of the City to the
bond insurers.
PFM has reviewed the proposals and provided a summary attached to this memorandum. We
offer the following comments to assist the City in its selection:
• • City of Rosemead
PFM' November 3, 2005
Page 2
Wulff Hansen
The Wulff Hansen proposal provided the least analysis of the credit and, although it was not
clearly described, had the highest per bond underwriting fee of $8.77 per $1,000. Wulff Hansen
is the smallest of all the respondents with the least capital to expend on behalf of the City during
the underwriting process. We do not believe this proposal is competitive with the others
received.
Chilton & Associates
The Chilton proposal included a recommendation to undertake a validation action to refund a
portion of the 1993 bonds not currently refundable. Because of the time required to do this, two.
transactions, with at least some of the cost of issuance being duplicative, would likely be
required. Bond Counsel has advised us that they do not believe this legal strategy to be viable
nor one they would support. Accordingly, we would not recommend the Chilton proposal.
Citigroup
Citigroup is by far the largest and best capitalized firm of all the respondents. Their analysis of
the credit was the most negative of all the proposals and their recommended approach would
result in annual savings of less than $50,000 per year or would result in the least amount of new
money ($3.4 million). Given the results of their proposal, we would not recommend the
Citigroup proposal.
Stone and Youngberg
Stone & Youngberg is one of California's leading regional investment bankers with extensive
redevelopment experience. S &Y demonstrated a strong understanding of the credit and
California market. As part of their proposal, S &Y proposed a "purchase in lieu" strategy using
the provisions of the Marks Roos Bond Pooling Act. As detailed in the proposal, this approach
would potentially provide the opportunity to refund the 2033 tern bond, producing up to $8
million in new money proceeds and refunding savings of approximately S2.6 million (8.75%).
However, bond counsel does not concur that the strategy outlined could be legally implemented
in Rosemead. In addition, it would require substantial negotiation with existing bond holders
and significant restructuring of the debt. While we believe that S & Y would be an acceptable
choice to undertake the financing as outlined in the RFQ, we do not recommend the purchase in
lieu approach outlined in their proposal. Their takedown for the financing as outlined in the
RFQ would be $5.47 per thousand.
• 9
EJDe La Rosa and Co.
City of Rosemead
November 3, 2005
Page 3
E J De La Rosa has emerged as one of California's leading regional investment banks. They are
able to cite extensive redevelopment finance experience. De La Rosa followed a logical
examination of the credit and proposed a straight forward approach to the financing consistent
with the RFQ. We believe they showed an excellent understanding of the challenges facing the
City in obtaining credit enhancement and a surety policy. The De La Rosa proposed
compensation was $8.48 per thousand which is the highest of the three finalist firms.
Piper Jaffray
Piper Jaffray is a national firm that has focused on redevelopment agency debt in California.
They also provided a sound and effective analysis of the credit and the potential for credit
enhancement. Piper provided a variety of options in structuring the debt. We believe that
options assuming substantial growth in available revenues, and result in ascending debt service
over time are overly aggressive and we do not recommend these options for this financing.
However, their proposals to refund or provide new money on a level debt service basis are sound
and in accordance with the requirements of the RFQ. Piper provided an aggressive
compensation proposal of $6.74-$7.24 per bond.
In summary, we believe the City has three choices: Stone and Youngberg, E J De La Rosa and
Piper Jaffray who are qualified, appropriately priced and provided sound recommendations for
this transaction. The City may wish to consider underwriter compensation, past experience with
the City, overall experience or size in making a final choice.
Next Steps
Once the City Council has designated the underwriter, we will begin immediately to prepare the
documentation for the transaction and the Preliminary Official Statement. This information will
be used to develop a presentation to Standard and Poor's and for the bond insurance providers.
Once we have received feedback from the bond insurance providers, we will bring final
documents back to the Council for approval of the transaction. Following the rating
reconfirmation, credit enhancement solicitation and council approval, and following the
statutorily required notice period to the other taxing agencies, (45 days), we will be in a position
to price the bonds.
The refunding transaction as proposed meets all Government Finance Officers Association
(GFOA), guidelines for refunding savings and is in the financial interests of the City to execute
at this time. We would note that the level of savings is a function of the new interest rate and the
time remaining on the bonds to achieve savings. To the extent the refunding is delayed, savings
will decrease as the time that the new lower cost bonds would be outstanding is reduced.
q
CPFM'
City of Rosemead
November 3, 2005
Page 4
Working with bond counsel, we have identified the potential for additional new money.
Assuming bond insurance and a surety, approximately $5.5 million in new money proceeds can
be generated. To the extent the City has identified uses of new tax allocation bond proceeds, this
would be the most efficient time borrow so that the debt can be amortized in the most efficient
fashion, and so that cost of issuance can be shared with the refunding bonds. We would note the
historic low levels of current interest rates. To the extent the City does not desire any additional
proceeds; the refunding will achieve cash flow savings. To access new money, the City will
need to form a JPA to conform to state law requirements.
We are seeking direction from the council on the question of including new money at the
meeting on November 8, 2005.
[08-Oct-2004] Summarysemead Community Development Comoon, CA; Tax Sec... Page 1 of 2
STANDARD RATINGS Of R E C T
&POORS
Research:
Relum to Regular Format
Summary: Rosemead Community Development Commision, CA; Tax
Secured, Tax Increment
Publication date: 08-Oct-2004
Primary Credit Analyst: Ben Cutler, New York (1) 212-438-2896;
ben-cutler@standardandpoors.com
Secondary Credit Analyst: David G Hitchcock, New York (1) 212-438-2022;
david_hitchcock@standardandpoors.com
Credit Profile
AFFIRMED
$34.275 mil. Rosemead Cmmnty Dev Comm (Prof Area #1) Tax Alloc BBB
OUTLOOK:
STABLE
® Rationale
The'BBB' rating on Rosemead Community Development Commission (formerly known as Rosemead
Redevelopment Agency), Calif.'s tax allocation bonds reflects the extremely high incremental assessed value (AV)
concentration in its largest taxpayer, Southern California Edison (SCE). Other credit factors include:
An established residential, commercial, and industrial tax base;
Solid maximum annual debt service (MADS) coverage of 1.45x;
A low volatility ratio of 0.09, indicating a mature project area that is less sensitive to fluctuations in the value
of the tax base.
The bonds are secured by incremental tax revenues from Redevelopment Project Area No. 1.
The city of Rosemead is located about 12 miles east of downtown Los Angeles. Median household income levels
for the city are somewhat below average at 87% of the national and 83% of the state levels. Within the 511 acres of
Project Area No. 1, which is almost fully developed, are a variety of commercial and industrial concerns, as well as
a significant residential area. The project area's AV has fluctuated over the past few years, but in 2004 grew to
$304 million from $269 million, an increase of 13%. The maturity of the project area insulates it from annual
fluctuations in property values, because the ratio of base year AV to total AV is a low 0.09.
Taxpayer concentration remains extremely high, with SCE accounting for 73.5% of incremental AV. SCE plans to
sell property valued at $10 million to Wal-Mart Stores Inc., but taxpayer concentration in SCE will remain very high.
After defaulting on its debt during 2001, SCE improved its finances and stabilized its credit, and is now an
investment-grade utility rated'BBB' with a stable outlook. During its default period, SCE did not declare bankruptcy
and remained current on its property tax payments. The agency's debt service reserve enables it to service debt
without payments from SCE for about 15 months, and because SCE is a utility mandated by the California
Legislature to provide power, a lapse of that duration is unlikely. The second-largest taxpayer in the project area
accounts for 3.3% of incremental AV, and the 10 largest combined account for 90.2%.
Coverage of future MADS by fiscal 2004 net tax increment revenues is a solid 1.45x. The project area must pay
prior lien pass-through payments to two underlying taxing agencies equal to a combined 21.1 % of the tax
increment. However, there. is no prior lien of state housing set-aside requirements, as the low and moderate
housing requirement was prefunded from bond proceeds through 2023.
Additional bonds may not be issued on parity with these bonds unless net tax increment revenues cover the new
MADS of 1.25x.
® Outlook
The stable outlook reflects Standard & Poors Ratings Services' expectation that SCE will maintain stable
operations and continue to make timely property tax payments to the agency. Standard & Poors further expects
http://www.ratingsdirect.com/Apps/RD/control ler/Article?id=400054&type=&outputType... I l /l /2005
[08-Oct-2004] Summarysemead Community Development Com*on, CA; Tax Sec... Page 2 of 2
that AV stability will enable the agency to maintain strong coverage levels.
Complete ratings information is available to subscribers of RatingsDirect, Standard & Poors Web-based credit
analysis system, at www.'ratingsdirect.com. All ratings affected by this rating action can be found on Standard &
Poors public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a
Rating, then Credit Ratings Search.
Analytic services provided by Standard & Poor's Ratings Services (Ratings Services) are the result of separate activities
designed to preserve the independence and objectivity of ratings opinions. The credit ratings and observations contained herein
are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make
any other investment decisions. Accordingly, any user of the information contained herein should not rely on any credit rating or
other opinion contained herein in making any investment decision. Ratings are based on information received by Ratings
Services. Other divisions of Standard & Poors may have information that is not available to Ratings Services. Standard & Poor's
has established policies and procedures to maintain the confidentiality of non-public information received during the ratings
process.
Ratings Services receives compensation for its ratings. Such compensation is normally paid either by the issuers of such
securities or third parties participating in marketing the securities. While Standard & Poors reserves the right to disseminate the
rating, it receives no payment for doing so, except for subscriptions to its publications. Additional information about our ratings
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JOINT EXERCISE OF POWERS AGREEMENT
by and between
CITY OF ROSEMEAD
DRAFT and
ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION
DRAFT
Dated as of November 1, 2005
DOCSLA1:509439.1
• i
TABLE OF CONTENTS
DRAFT
Page
ARTICLE I DEFINITIONS
I
Section 1.01
Definitions
1
ARTICLE II GENERAL PROVISIONS
2
Section 2.01
Purpose
2
Section 2.02
Creation of Authority
3
ARTICLE III BOARD OF DIRECTORS
3
Section 3.01
Board of Directors
3
Section 3.02
Powers
3
Section 3.03
Compensation
3
Section 3.04
Meetings of the Board of Directors
3
ARTICLE IV OFFICERS, EMPLOYEES AND AGENTS
4
Section 4.01
Officers
4
Section 4.02
Designation of Officers
4
Section 4.03
Subordinate Officers
5
Section 4.04
Executive Director
5
Section 4.05
Treasurer
..............5
Section 4.06
Secretary
5
Section 4.07
Authority Counsel
5
Section 4.08
Assistant Officers
5
Section 4.09
Employees, Agents and Independent Contractors
6
Section 4.10
Privileges and Immunities; No Employment by City or
Commission
6
ARTICLE V POWERS
6
Section 5.01
General Powers
..............6
Section 5.02
Power to Issue Revenue Bonds
6
Section 5.03
Specific Powers
6
Section 5.04
Manner of Exercising Powers
8
Section 5.05
Non-Liability For Obligations of Authority
8
Section 5.06
Indemnity by Authority for Litigation Expenses of Officer,
Director or Employee
8
Section 5.07
Execution of Contracts
8
-I-
i
•
TABLE OF CONTENTS DRAFT
(continued)
Page
Section 5.08
Fiscal Year
ARTICLE VI CONTRIBUTION; ACCOUNTS AND REPORTS; FUNDS
Section 6.01
Contributions
Section 6.02
Accounts and Reports
Section 6.03
Funds
ARTICLE VII TERM; DISSOLUTION
Section 7.01
Term
Section 7.02
Termination
ARTICLE VIII MIS
CELLANEOUS PROVISIONS
Section 8.01
Notices
Section 8.02
Section Headings
Section 8.03
Law Governing
Section 8.04
Amendments
Section 8.05
Enforcement by Authority
Section 8.06
Counterparts
Section 8.07
Successors
8
9
9
9
9
10
10
10
10
10
10
10
10
11
11
11
ii-
L J
•
DRAFT
JOINT EXERCISE OF POWERS AGREEMENT
THIS JOINT EXERCISE OF POWERS AGREEMENT (this "Agreement"), dated as
of November 1, 2005, is by and between the CITY OF ROSEMEAD, a municipal corporation
organized and existing under and by virtue of the Constitution and laws of the State of California
(the "City"), and the ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION, a public
body, corporate and politic organized and existing under and by virtue of the laws of the State of
California (the "Commission").
WITNESSETH:
WHEREAS, agencies formed under the Joint Exercise of Powers Act, Section 6500 et
seq. of the California Government Code (the "Joint Powers Act"), are permitted to provide
financing for any of their members or other local public agencies in the State of California in
connection with the acquisition, construction and improvement of public capital improvements
or working capital requirements of such members or other local agencies; and
WHEREAS, the City and the Commission desire to form an Authority under the Joint
Powers Act, to be known as the Rosemead Financing Authority, for the purpose of providing an
entity which can assist in providing financing for purposes which are authorized under the Joint
Powers Act;
NOW, THEREFORE, in consideration of the above premises and of the mutual
promises herein contained, the City and the Commission do hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Unless the context otherwise requires, the words and terms
defined in this Article shall, for the purposes hereof, have the meanings herein specified.
"Agreement" means this Joint Exercise of Powers Agreement, as originally executed
and as it may from time to time be amended in accordance with the provisions hereof.
"Authority" means the Rosemead Financing Authority, a joint exercise of powers
agency organized and existing under and by virtue of the laws of the State of California,
established pursuant to Section 2.02 hereof.
"Board of Directors" means the Board of Directors of the Authority.
"Bond Law" means the Marks-Roos Local Bond Pooling Act of 1985 (Article 4 of the
Joint Powers Act), as now in effect or hereafter amended, Article 2 of the Joint Powers Act, as
now in effect or hereafter amended, or any other law available for use by the Authority in the
authorization and issuance of bonds to provide for the financing of Obligations and/or Public
Capital Improvements.
DOCSLA1:509439.1
• •
DRAFT
"Bond Purchase Agreement" means an agreement between the Authority and a Local
Agency, pursuant to which the Authority agrees to purchase Obligations from a Local Agency.
"City" means the City of Rosemead, a municipal corporation organized and existing
under and by virtue of the Constitution and laws of the State of California.
"Commission" means the Rosemead Community Development Commission, a public
body, corporate and politic organized and existing under and by virtue of the laws of the State of
California.
"Fiscal Year" means the period from July 1 in any calendar year to and including June
30 in the succeeding calendar year.
"Joint Powers Act" means the Joint Exercise of Powers Act, Section 6500 et seq. of the
California Government Code.
"Local Agency" means the City, the Commission or any other city, county, city and
county, authority, district or public corporation of the State of California.
"Obligations" has the meaning ascribed to the term "Bonds" in Section 6585(c) of the
Joint Powers Act.
"Public Capital Improvements" has the meaning ascribed to such term in Section
6585(g) of the Joint Powers Act. '
"Revenue Bonds" means bonds, commercial paper, floating rate and variable maturity
securities, and any other evidences of indebtedness of the Authority and also includes certificates
of participation and lease purchase agreements.
"Working Capital Requirements" means the requirements of any Local Agency for
funds to be used by, or on behalf of, such Local Agency for any purpose for which such Local
Agency may borrow money pursuant to Section 53852 of the California Government Code.
ARTICLE II
GENERAL PROVISIONS
Section 2.01 Purpose. This Agreement is made pursuant to the Joint Powers Act
providing for the joint exercise of powers common to the City and the Commission, and for other
purposes as permitted under the Joint Powers Act and the Bond Law. The purpose of this
Agreement is to provide for the financing or refinancing of Public Capital Improvements for, and
Working Capital Requirements of, any Local Agency through the acquisition by the Authority of
such Public Capital Improvements, the purchase by the Authority of Obligations of any Local
Agency pursuant to Bond Purchase Agreements, the lending of funds by the Authority to a Local
Agency or the entering into of contractual arrangements by the Authority with a Local Agency.
Section 2.02 Creation of Authority. Pursuant to the Joint Powers Act, there is hereby
created a public entity to be known as the "Rosemead Financing Authority". The Authority shall
DOCSLA1:509439.1
DRAFT
be a public entity separate and apart from the City and Commission, and shall administer this
Agreement.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01 Board of Directors. The Authority shall be administered by the Board of
Directors, which shall be comprised of five members, unless and until changed by amendment of
this Agreement.
Each member of the City Council shall be a member of the Board of Directors. The
Board of Directors shall always consist of the persons then serving as members of the City
Council, and each person who, currently or in the future, serves as a member of the City Council
shall serve, during the period in which he or she serves in such capacity, as a member of the
Board of Directors.
Each member shall assume membership on the Board of Directors upon his or her
becoming a member of the City Council, without any further act by any person, body or entity.
Each member shall hold membership on the Board of Directors until the expiration of his or her
term as a member of the City Council, or until he or she resigns, is removed or for any other
reason no longer serves as a member of the City Council, without any further act by any person,
body or entity.
The Mayor of the City shall be Chairperson of the Board of Directors and such
Chairperson shall preside at all meetings of the Board of Directors. The Mayor Pro Tempore of
the City shall be the Vice Chairperson of the Board of Directors and such Vice Chairperson shall
preside at meetings of the Board of Directors during the absence or disability of the Chairperson.
Section 3.02 Powers. Subject to the limitations of this Agreement and the laws of the
State of California, the powers of the Authority shall be vested in and exercised by and its
property controlled and its affairs conducted by the Board of Directors of the Authority.
Section 3.03 Compensation. Members of the Board of Directors shall serve without
compensation.
Section 3.04 Meetings of the Board of Directors. (a) Call, Notice and Conduct of
Meetings. All meetings of the Board of Directors, including without limitation, regular,
adjourned regular and special meetings, shall be called, noticed, held and conducted in
accordance with the provisions of the Ralph M. Brown Act, Section 54950 et seq. of the
California Government Code.
(b) Regular Meetings. Regular meetings of the Board of Directors shall be
held at such time as the Board of Directors may fix by resolution from time to time, and if any
day so fixed shall fall upon a legal holiday then, upon the next succeeding business day at the
same hour. No notice of any regular meeting of the Board of Directors need be given to the
members of the Board of Directors.
DOCSLA1:509439.I 3
GRAFT
(c) Special Meetings. Special meetings of the Board of Directors shall be
held whenever called by the Chairperson of the Board of Directors, the Executive Director of the
Authority or by a majority of the members of the Board of Directors.
(d) Quorum. A majority of the members of the Board of Directors shall
constitute a quorum at any meeting of the Board of Directors. Every act or decision done or
made by a majority of the members of the Board of Directors present at any meeting at which a
quorum is present shall be the act of the Board of Directors.
ARTICLE IV
OFFICERS, EMPLOYEES AND AGENTS
Section 4.01 Officers. The officers of the Authority shall be an Executive Director, a
Treasurer, a Secretary and such other officers as the Board of Directors may appoint.
Section 4.02 Designation of Officers. The City Manager of the City shall be the
Executive Director of the Authority. The Executive Director of the Authority shall always be the
person then serving as City Manager of the City, and each person who, currently or in the future,
serves as City Manager of the City shall be, during the period in which he or she serves in such
capacity, Executive Director of the Authority. A person shall become Executive Director of the
Authority upon his or her becoming City Manager of the City, without any further act by any
person, body or entity. A person shall serve as Executive Director of the Authority until he or she
resigns, is removed or for any other reason no longer serves as City Manager of the City, without
any further act by any person, body or entity.
The Finance Director of the City shall be the Treasurer of the Authority. The Treasurer
of the Authority shall always be the person then serving as Finance Director of the City, and each
person who, currently or in the future, serves as Finance Director of the City shall be, during the
period in which he or she serves in such capacity, Treasurer of the Authority. A person shall
become Treasurer of the Authority upon his or her becoming Finance Director of the City,
without any further act by any person, body or entity. A person shall serve as Treasurer of the
Authority until he or she resigns, is removed or for any other reason no longer serves as Finance
Director of the City, without any further act by any person, body or entity.
The City Clerk of the City shall be the Secretary of the Authority. The Secretary of the
Authority shall always be the person then serving as City Clerk of the City, and each person
who, currently or in the future, serves as City Clerk of the City shall be, during the period in
which he or she serves in such capacity, Secretary of the Authority. A person shall become
Secretary of the Authority upon his or her becoming City Clerk of the City, without any further
act by any person, body or entity. A person shall serve as Secretary of the Authority until he or
she resigns, is removed or for any other reason no longer serves as City Clerk of the City,
without any further act by any person, body or entity.
Section 4.03 Subordinate Officers. The Board of Directors appoint such officers
other than those hereinabove mentioned as the business of the Authority may require, each of
whom shall hold office for such period, have such authority and perform such duties as are
DOCSI,AI:509439.1 4
•
nrovided in this Agreement. or as the Board of Directors from tune-to fime_mly authorize or
determine.
Section 4.04 Executive Director. The Executive Director shall be the chief executive
officer of the Authority and shall, subject to the control of the Board of Directors, have general
supervision, direction and control of the business and officers of the Authority. He or she shall be
an ex officio member of all standing committees, and shall have the general powers and duties of
management of the Authority and shall have such other powers and duties as may be prescribed
by the Board of Directors or this Agreement.
Section 4.05 Treasurer. Subject to the applicable provisions of any indenture or
resolution providing for a trustee or other fiscal agent, the Treasurer is designated as the
depository of the Authority to have custody of all the money of the Authority, from whatever
source, and, as such, shall have the powers, duties and responsibilities specified in Section
6505.5 of the Joint Powers Act. The Treasurer is hereby designated as controller of the Authority
and, as such, shall have the powers, duties and responsibilities specified in Section 6505.5 of the
Joint Powers Act. The controller of the Authority shall draw checks to pay demands against the
Authority when the demands have been approved by the Authority. The City shall determine the
charges to be made against the Authority for the services of the Treasurer.
The Treasurer is designated as the public officer or person who has charge of, handles, or
has access to any property of the Authority, and such officer shall file an official bond in the
amount of $5,000, as required by Section 6505.1 of the Joint Powers Act. Such bond may be
maintained as a part of or in conjunction with any other bond maintained on such person by the
City, it being the intent of this Section not to require duplicate or overlapping bonding
requirements from those bonding requirements which are otherwise applicable to the City.
Section 4.06 Secretary. The Secretary shall keep or cause to be kept a book of minutes
at the principal office of the Authority or at such other place as the Board of Directors may order,
of all meetings of the Board of Directors, with the time and place of holding, whether regular or
special, and if special, how authorized, the notice thereof given, the names of those present at
Board of Directors meetings and the proceedings thereof. The Secretary shall give or cause to be
given notice of all meetings of the Board of Directors, shall keep the Authority records in safe
custody and shall have such other powers and perform such other duties as may be prescribed by
the Board of Directors or this Agreement.
Section 4.07 Authority Counsel. The City Attorney of the City shall serve as
Authority Counsel.
Section 4.08 Assistant Officers. The Board of Directors may appoint such assistants
to act in the place of the Treasurer, Secretary or other officers of the Authority as the Board of
Directors shall from time to time deem appropriate.
Section 4.09 Employees, Agents and Independent Contractors. The Board of
Directors shall have the power to engage such employees as may be necessary or appropriate for
the purposes of this Agreement. The Board of Directors shall also have the power to engage
DOCSLA1:509439.1 5
• • DRAFT
such agents and independent contractors as may be necessary or appropriate for purposes of this
Agreement.
Section 4.10 Privileges and Immunities; No Employment by City or Commission.
All of the privileges and immunities from liability, exemption from laws, ordinances and rules,
all pension, relief, disability, workers' compensation and other benefits which apply to the
activities of officers, agents or employees of a public agency when performing their respective
functions shall apply to them to the same degree and extent while engaged in the performance of
any of the functions and other duties under this Agreement.
None of the officers, employees, agents or independent contractors employed or engaged
by the Authority shall be deemed, by reason of his or her employment or engagement by the
Authority to be employed or engaged by the City or the Commission or, by reason of his or her
employment or engagement by the Authority, to be subject to any of the requirements of the City
or the Commission.
ARTICLE V
POWERS
Section 5.01 General Powers. The Authority shall exercise in the manner herein
provided the powers common to the City and the Commission, or as otherwise permitted under
the Joint Powers Act, and necessary to the accomplishment of the purposes of this Agreement,
subject to the restrictions set forth in Section 5.04 hereof.
As provided in the Joint Powers Act, the Authority shall be a public entity separate from
the City and the Commission. The Authority shall have the power to finance or refinance Public
Capital Improvements for, and Working Capital Requirements of, any Local Agency through the
acquisition by the Authority of such Public Capital Improvements, the purchase by the Authority
of Obligations of any Local Agency pursuant to Bond Purchase Agreements, the lending of
funds by the Authority to a Local Agency or the entering into of contractual arrangements by the
Authority with a Local Agency.
Section 5.02 Power to Issue Revenue Bonds. The Authority shall have all of the
powers provided in the Joint Powers Act, including Article 4 of the Joint Powers Act, and
including the power to issue Revenue Bonds under the Bond Law.
Section 5.03 Specific Powers. The Authority is hereby authorized, in its own name, to
do all acts necessary for the exercise of the foregoing powers, including but not limited to, any or
all of the following:
(a) to make and enter into contracts;
(b) to employ agents or employees;
(c) to acquire, construct, manage, maintain or operate any Public Capital
Improvement, including the common power of the City and the Commission to acquire any
Public Capital Improvement by the power of eminent domain;
DOCSLAI:509439.1
0
(d) to sue and be sued in its own name; DRAFT
(e) to issue Revenue Bonds and otherwise to incur debts, liabilities or
obligations, provided that no such Revenue Bond, debt, liability or obligation shall constitute a
debt, liability or obligation of the City or the Commission;
(1) to apply for, accept, receive and disburse grants, loans and other aids from
any agency of the United States of America or of the State of California;
(g) to invest any money in the treasury pursuant to Section 6505.5 of the Joint
Powers Act that is not required for the immediate necessities of the Authority, as the Authority
determines is advisable, in the same manner and upon the same conditions as local agencies,
pursuant to Section 53601 of the California Government Code;
(h) to apply for letters of credit or other form of financial guarantees in order
to secure the repayment of Revenue Bonds and enter into agreements in connection therewith;
(i) to carry out and enforce all the provisions of this Agreement;
0) to make and enter into Bond Purchase Agreements;
(k) to purchase Obligations of any Local Agency;
(1) to engage the services of private consultants to render professional and
technical assistance and advice in carrying out the purposes of this Agreement;
(m) as provided by applicable law, to employ and compensate bond counsel,
financial consultants, and other advisers determined necessary by the Authority in connection
with the issuance and sale of any Revenue Bonds;
(n) to contract for engineering, architectural, accounting, or other services
determined necessary by the Authority for the successful development of a Public Capital
Improvement;
(o) to pay the reasonable costs of consulting engineers, architects,
accountants, and construction, land-use, recreation, and environmental experts employed by any
sponsor or participant if the Authority determines those services are necessary for the successful
development of Public Capital Improvements;
(p) to take title to, and sell by installment sale or otherwise, lands, structures,
real or personal property, rights, rights-of-way, franchises, easements, and other interests in lands
which are located within the State of California which the Authority determines are necessary or
convenient for the financing or refinancing of Public Capital Improvements, or any portion
thereof,
(q) to lease to, and to lease from, a Local Agency lands, structures, real or
personal property, rights, rights-of-way, franchises, easements, and other interests in lands which
are located 'ithin the State of California which the Authority determines are necessary or
DOCSLAI:509439.1
0 0. DRAFT
convenient for the financing or refinancing of Public Capital Improvements, or any portion
thereof, and
(r) to exercise any and all other powers as may be provided in the Joint
Powers Act
Section 5.04 Manner of Exercising Powers. The powers of the Authority shall be
exercised in the manner provided in the Joint Powers Act and shall be subject (in accordance
with Section 6509 of the Joint Powers Act) to the restrictions upon the manner of exercising such
powers of the City.
Section 5.05 Non-Liability For Obligations of Authority. The debts, liabilities and
obligations of the Authority shall not be the debts, liabilities and obligations of the City or the
Commission. No member, officer, agent or employee of the Authority shall be individually or
personally liable for the payment of the principal of or premium or interest on any obligations of
the Authority or be subject to any personal liability or accountability by reason of any
obligations of the Authority; but nothing herein contained shall relieve any such member, officer,
agent or employee from the performance of any official duty provided by law or by the
instruments authorizing the issuance of any obligations of the Authority.
Section 5.06 Indemnity by Authority for Litigation Expenses of Officer, Director
or Employee. Should any director, officer or employee of the Authority be sued, either alone or
with others, because he or she is or was a director, officer or employee of the Authority, in any
proceeding arising out of his or her alleged misfeasance or nonfeasance in the performance of his
or her duties or out of any alleged wrongful act against the Authority or by the Authority,
indemnity for such persons reasonable expenses, including attorneys' fees incurred in the
defense of the proceedings, may be assessed against the Authority or its receiver by the court in
the same or a separate proceeding if the person sued acted in good faith and in a manner such
person reasonably believed to be in the best interests of the Authority and, in the case of a
criminal proceeding, had no reasonable cause to believe the conduct of such person was
unlawful. The amount of such indemnity shall equal the amount of the expenses, including
attorneys' fees, incurred in the defense of the proceeding.
Section 5.07 Execution of Contracts. The Board of Directors may authorize any
officer, employee or agent of the Authority, to enter into any contract or execute any contract or
execute any instrument in the name of and on behalf of the Authority and such authority may be
in general or confined to specific instances and unless so authorized by the Board of Directors,
no such officer, agent or employee shall have any power or authority to bind the Authority by
any contract or engagement or to pledge its credit or to render it liable for any purpose or in any
amount.
Section 5.08 Fiscal Year. The Fiscal Year of the Authority shall, unless and until
changed by the Board of Directors, commence on the 1 st day of July of each year and shall end
on the 30th day of June of the next succeeding year.
DOCSLA1:509439.1 8
ARTICLE VI DRAFT
CONTRIBUTION; ACCOUNTS AND REPORTS; FUNDS
Section 6.01 Contributions. The City and the Commission may in the appropriate
circumstance when required hereunder (a) make contributions from their treasuries for the
purposes set forth herein, (b) make payments of public funds to defray the cost of such purposes,
(c) make advances of public funds for such purposes, such advances to be repaid as provided
herein, or (d) use their personnel, equipment or property in lieu of other contributions or
advances. The provisions of Section 6513 of the California Government Code are hereby
incorporated into this Agreement.
Section 6.02 Accounts and Reports. The Authority shall establish and maintain such
funds and accounts as may be required by good accounting practice. The books and records of
the Authority shall be open to inspection at all reasonable times by the City and the Commission
and their representatives. The Authority shall give an audited written report of all financial
activities for each Fiscal Year to the City and the Commission within 210 days after the close of
each Fiscal Year.
The Treasurer, as controller of the Authority, shall either make or contract with a certified
public accountant or public accountant to make an annual audit of the accounts and records of
the Authority. In each case the minimum requirements of the audit shall be those prescribed by
the State Controller for special districts under Section 26909 of the Government Code of the
State of California and shall conform to generally accepted auditing standards. When such an
audit of an account and record is made by a certified public accountant or public accountant, a
report thereof shall be filed as public records with the City and the Commission and with the
county auditor of Los Angeles County, and shall be sent to any public agency or person in the
State of California that submits a written request to the Authority. Such report shall be filed
within 12 months of the end of the Fiscal Year under examination. By unanimous request of the
Board of Directors, the annual special audit may be replaced with an audit covering a two-year
period.
Any costs of the audit, including contracts with, or employment of, certified public
accountants or public accountants, in making an audit pursuant to this Section shall be borne by
the Authority and shall be a charge against any unencumbered funds of the Authority available
for the purpose.
Section 6.03 Funds. Subject to the applicable provisions of any instrument or
agreement which the Authority may enter into, which may provide for a trustee or other fiscal
agent to receive, have custody of and disburse Authority funds, the Treasurer of the Authority
shall receive, have the custody of and disburse Authority funds as nearly as possible in
accordance with generally accepted accounting practices, shall make the disbursements required
by this Agreement or to carry out any of the provisions or purposes of this Agreement.
DOCSLAL509439.1 9
ARTICLE VII DRAFT
TERM; DISSOLUTION
Section 7.01 Term. This Agreement shall become effective, and the Authority shall
come into existence, on the date of execution and delivery hereof, and this Agreement shall
thereafter continue in full force and effect until terminated pursuant to Section 7.02 hereof.
Section 7.02 Termination. This Agreement may be terminated by agreement of the
City and the Commission; provided, however, that this Agreement shall not be terminated so
long as Revenue Bonds of the Authority are outstanding or so long as the Authority is a party to
any material contract remaining in effect. Upon termination of this Agreement, the Authority
shall be dissolved and, after payment or provision for payment of all debts and liabilities, the
assets of the Authority shall be distributed to the City and the Commission in such manner as
shall be agreed upon by the City and the Commission.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01 Notices. Notices hereunder shall be in writing and shall be sufficient if
delivered to the address of each party hereto set forth below or at such other address as is
provided by a party hereto in writing to the other party hereto.
City of Rosemead
8838 E. Valley Boulevard
Rosemead, California 91770
Attention: City Manager
Rosemead Community Development Commission
8838 E. Valley Boulevard
Rosemead, California 91770
Attention: Executive Director
Section 8.02 Section Headings. All Section headings in this Agreement are for
convenience of reference only and are not to be construed as modifying or governing the
language in the Section referred to or to define or limit the scope of any provision of this
Agreement.
Section 8.03 Law Governing. This Agreement is made in the State of California under
the constitution and laws of the State of California, and is to be so construed.
Section 8.04 Amendments. This Agreement may be amended at any time, or from
time to time, except as limited by contract with the owners of Revenue Bonds issued by the
Authority or the owners of certificates of participation in payments to be made by the Authority,
the City, the Commission or a Local Agency or by applicable regulations or laws of any
jurisdiction having authority, by one or more amendments executed by the City and the
DOCSLAL509439.1 10
• 9
Commission either as required in order to carry out any of the provisions of this Agreement or
for any other purpose.
Section 8.05 Enforcement by Authority. The Authority is hereby authorized to take
any or all legal or equitable actions, including but not limited to injunction and specific
performance, necessary or permitted by law to enforce this Agreement.
Section 8.06 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all together shall constitute but
one and the same Agreement.
Section 8.07 Successors. This Agreement shall be binding upon and shall inure to the
benefit of the successors of the City and the Commission. No party hereto may assign any right
or obligation hereunder without the written consent of the other party hereto.
WAFT
DOCSLAI:509439.1 11
! 0
IN WITNESS WHEREOF, the parties hereto have caused this Joint Exercise of Powers
Agreement to be executed by their respective officers thereunto duly authorized, all as of the day
and year first written above.
CITY OF ROSEMEAD
By:
Authorized Officer
ATTEST:
City Clerk
By:
ATTEST
Secretary
APPROVED AS TO FORM:
By:
City Attorney
ROSEMEAD COMMUNITY DEVELOPMENT
COMMISSION
Authorized Officer
DRAFT
DOCSI AL509439.1 12