Lakeport City Council Special Meeting

AGENDA
NOTICE AND CALL OF SPECIAL MEETING OF THE LAKEPORT CITY COUNCIL
Tuesday, June 23, 2013, 5:30 p.m. City Council Chambers, 225 Park Street, Lakeport, California 95453
TO THE MEMBERS OF THE CITY COUNCIL OF THE CITY OF LAKEPORT:

NOTICE IS HEREBY GIVEN that a Special Meeting of the Lakeport City Council is hereby called to be held on Tuesday, June 23, 2013, at 5:30 p.m. in the Council Chambers located at 225 Park Street, Lakeport, California, for the purpose of discussing and acting on the following: CLOSED SESSION: 5:30 p.m. - CLOSED SESSION ITEM: Pursuant to Government Code 54956.8 (Conference with Real Property Negotiator): Negotiator: City Manager; regarding property at 1025 Martin Street, Space 6, Lakeport, specifically, price and payment terms. 1. APPLICATION 2013-003 ADDENDUM: 6:00 p.m. OPEN SESSION ITEMS Approve addendum to Application No. 2013-003 for the LMSAs Shipwreck Days Event. 2. REJECTION OF CLAIM: 3. OFFICER COMMENDATION: 4. PROPERTY TRANSFER: Reject claim of Jessica King upon advice of REMIF and Interim City Attorney. Adopt a Proclamation honoring Police Officer Stephanie Green. Adopt a resolution ratifying and approving the transfer of the mobile home located at 1400 South Main Street, Unit 12B, in Lakeport, California to an income-qualified disabled individual. Consider options for bridge financing for USDA loan as presented by Independent Bond Counsel Cameron Weist.
5. INDEPENDENT BOND COUNSEL:
Dated: July 22, 2013
____________________________________ Hilary Britton, Acting Deputy City Clerk
From: To: Cc: Subject: Date:
Andrew Britton Janel Chapman Hilary Britton RE: Addendum to Application 2013-003 - Shipwreck Days Wednesday, July 17, 2013 5:15:47 PM
Hi Hilary Standard comments/conditions regarding the relocation of the vendors to Library Park. : Commercial vendors must have a City business license prior to the event. Vendors selling merchandise are required to collect sales tax and submit the collected taxes to the State. The current sales tax rate in Lakeport is 8.0% Thanks for the opportunity to comment. Andrew Britton CDD/Planning
From: Janel Chapman Sent: Friday, July 12, 2013 3:43 PM To: Andrew Britton (abritton@cityoflakeport.com); Brad Rasmussen (policechief@cityoflakeport.com); Dan Buffalo (dbuffalo@cityoflakeport.com); Kelly Buendia (kbuenda@cityoflakeport.com); Margaret Silveira; Mark Brannigan; Scott Harter (sharter@cityoflakeport.com) Subject: Addendum to Application 2013-003 - Shipwreck Days
Please find attached an addendum to Application 2013-003 for the LMSA Shipwreck Days in September. I would like to get this on the first Council meeting after July 16,2013, so please have your comments back to me by July 18, 2013. Thanks, Hilary Britton, On behalf of:
Janel Chapman, City Clerk City of Lakeport 225 Park Street Lakeport, CA 95453 Phone: (707) 263-5615, Ext. 12 Fax: (707) 263-8584 jchapman@cityoflakeport.com
From: To: Cc: Subject: Date:
Police Chief Janel Chapman LPD Sworn Re: Addendum to Application 2013-003 - Shipwreck Days Wednesday, July 17, 2013 8:22:16 PM
Police Concerns: Vendor needs to apply for Lakeport Police Department and California Alcoholic Beverage Control alcohol sales permit. No known additional fiscal impact for Police Department. Brad Rasmussen Chief of Police City of Lakeport Sent from my iPad On Jul 12, 2013, at 3:42 PM, "Janel Chapman" <jchapman@cityoflakeport.com> wrote: <image001.gif> Please find attached an addendum to Application 2013-003 for the LMSA Shipwreck Days in September. I would like to get this on the first Council meeting after July 16,2013, so please have your comments back to me by July 18, 2013. Thanks, Hilary Britton, On behalf of:
Janel Chapman, City Clerk City of Lakeport 225 Park Street Lakeport, CA 95453 Phone: (707) 263-5615, Ext. 12 Fax: (707) 263-8584 jchapman@cityoflakeport.com
<App 2013-003 - Addend 3.pdf>
Proclamation
OF THE CITY COUNCIL OF THE CITY OF LAKEPORT
WHEREAS, Officer Stephanie Green began her career in law enforcement in 1993 as a reserve officer for the Stanislaus County Sheriffs office. Continuing her career as police officer in the Cities of Ripon and Pleasanton, before arriving as an officer for the Lakeport Police Department in 2009; and WHEREAS, during her tenure in Lakeport Police Department, Officer Green has worked in patrol, investigations, and as a school resource officer. She also taught several D.A.R.E. courses and became involved in other programs in the community; and WHEREAS, on July 9, 2013 Officer Green while working on street patrol was dispatched to a possible drowning at the Regency Inn Motel swimming pool. Officer Green was the first to arrive on the scene, as she was approaching the pool, she saw a male subject lying at the bottom of the pool in 8 ft. of water. Without hesitation, Officer Green jumped into the pool with full duty gear and grabbed the male subject to pull him to safety, where Lakeport Fire personnel continued the lifesaving efforts; and WHEREAS, Officer Greens act of heroism in putting anothers life before her own is a continuum of her everyday actions to protect and serve this community. NOW, THEREFORE, BE IT RESOLVED on July 23, 2013, the City of Lakeport City Council acknowledges and thanks Officer Stephanie Green for her commitment to the City of Lakeport and the residents of this City and recognize her for her act of bravery in her attempt of saving the life of Shaun Rudd, on July 9, 2013. I have hereunto set my hand and caused the Seal of the City of Lakeport to be affixed this 23rd day of July, 2013.
______________________________ THOMAS ENGSTROM, Mayor
RESOLUTION NO. ____ (2013)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKEPORT IN ITS ROLE AS HOUSING SUCCESSOR AGENCY RATIFYING AND APPROVING THE TRANSFER OF THE MOBILE HOME LOCATED AT 1400 SOUTH MAIN STREET, UNIT 12B, IN LAKEPORT, CALIFORNIA TO AN INCOME-QUALIFIED DISABLED INDIVIDUAL
WHEREAS , in 2010, the City of Lakeport Redevelopment Agency, acting through the Housing Rehabilitation Loan Committee (Loan Committee), approved Redevelopment Agency financing for the purchase and rehabilitation of Unit 12B at the Clear Lake Marina Mobile Home Park, 1400 South Main Street, Lakeport, California (Unit 12B) for a low-income, disabled individual using monies from the lowand moderate- income housing (LMIH) fund; WHEREAS , the Loan Committee approved $17,564 in financing for the purchase of Unit 12B, a 1976 manufactured home valued in 2010 at $10,500, and improvement to Unit 12B; WHEREAS , the financing agreement was in practical effect a grant to the low-income, disabled borrower because the Loan Committee did not require the borrower to make any payments for thirty (30) years and the City had no intention of receiving repayment for the loan; WHEREAS , in May 2013, the borrower abandoned the mobile home and defaulted on the loan from the Loan Committee; WHEREAS , because of the intervening dissolution of the Redevelopment Agency, and under the terms of the financing agreement, the City of Lakeport, in its capacity as the Housing Successor Agency under Health and Safety Code section 34176, was entitled to enter the premises, take possession and re-sell Unit 12B upon the borrowers default; WHEREAS , because of the dissolution of redevelopment agencies under AB 1484 and AB 1x26, the State of California has no additional LMIH funds to finance new loans or fund the cost to the City to administer them; WHEREAS , the City included the loan related to Unit 12B on its approved Housing Asset Transfer form submitted to the Department of Finance and the County Auditor-Controller and received a finding of completion related to its housing due diligence review under the Redevelopment Dissolution Law, which also disclosed the loan regarding Unit 12B; WHEREAS , based on the sale of comparable mobile homes in the area, the value of the Unit 12B upon the borrowers default was approximately $2,000 to $3,000; WHEREAS , the City Council wishes to dispose of Unit 12B for a public purpose and in furtherance of the purposes for which LMIH fund monies were intended under Health and Safety Code sections 34201 and 33334.2; WHEREAS , consistent with the past practices of the Loan Committee, the City undertook to identify another low-income and disabled individual who could benefit from housing in Unit 12B;
119392.1
WHEREAS , though the assistance of People Services, Inc., a local non-profit organization serving individuals with developmental disabilities, the City identified a qualifying individual in need of housing, who intends to permanently reside in Unit 12B; WHEREAS , unlike real property, mobile homes, including Unit 12B, have limited life spans and require the on-going payment of rent and other carrying costs; WHEREAS , the City desires to grant or donate Unit 12B to a qualifying low-income, disabled individual who intends to reside in the unit, as it originally intended with the original 2010 loan, and avoid current or future payments of rent and other carrying costs for Unit 12B in light of the lack of future LMIH fund monies; WHEREAS , pursuant to article 4, chapter 4 of the Community Redevelopment Law (Health & Saf. Code, 33330 et seq.), the City Council of the City of Lakeport, acting as the Governing Board of the Housing Successor Agency, may use low and moderate income housing fund monies to maintain the communitys supply of mobile home and to donate monies to qualifying individuals; and WHEREAS , pursuant to Government Code section 37350, the City may control and dispose of real or personal property for the common benefit. NOW, THEREFORE, BE IT RESOLVED THAT: The City Council of the City of Lakeport, sitting as the governing body of the Housing Successor Agency, hereby ratifies and approves the sale and transfer of the personal property of a manufactured home located at 1400 South Main Street, Sp. 12B, Lakeport CA 95453, Decal AAT8578, Serial No. S4849; Hud Label/ Insignia No. 233256, to Paul Louden, a qualifying low-income individual, for one dollar ($1.00) in consideration, and hereby directs City staff to perfect this sale and transfer. The City Councils approval of this sale and transfer is exempt from the requirements of the California Environmental Quality Act under title 14 of the California Code of Regulations sections 15312, for the sale of surplus government property, and 15061(b)(3), because there is no potential for causing a significant effect on the environment. AYES: NOES: ABSTAINING: ABSENT: _________________________________ TOM ENGSTROM, Mayor/Chairman
ATTEST:
APPROVED AS TO FORM:
____________________________________ KELLY BUENDIA Deputy City Clerk/Acting Secretary
_________________________________ DAVID J. RUDERMAN Interim City Attorney
Resolution No. ____ (2013)

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CITY OF LAKEPORT
City Council City of Lakeport Municipal Sewer District
STAFF REPORT
RE: Consider a Resolution Authorizing Two Separate Loan Agreements and Providing for the Issuance of Series 2013 Water Revenue Notes SUBMITTED BY: Margaret Silveira PURPOSE OF REPORT: Information only Discussion Action Item MEETING DATE: 7/23/2013
WHAT IS BEING ASKED OF THE CITY COUNCIL/BOARD: Staff recommends that the City Council adopt Resolution No. ____ (2013) authorizing and directing the execution of Series 2013B Water Revenue Notes in a principal amount not to exceed $7,675,000; appointing certain financial consultants in connection therewith; and providing for other matters properly related thereto. BACKGROUND: Certain capital projects associated with the Citys Water Enterprise need to be completed in a timely manner in order to keep the Water System functioning and meet mandated water regulatory requirements. A number of presentations have been made to the public and the Council regarding the needs of the Water Enterprise related to water supply, infrastructure maintenance, and the mandatory implementation of water meters. A brief description of each of these projects is as follows: Acquisition and Installation of Water Meters
Acquisition and Installation of a Supervisory Control and Data Acquisition System (SCADA) radio communication system Well Relocation and protection for Existing City Wells Located in Scotts Creek Extension, Construction and Looping the Existing 14-inch Water Mains on Parallel Drive and South Main Street (the Loop Line Project) The City has been approved for long-term take-out financing by United Sates Department of Agriculture (the USDA), which is anticipated to take place within the next three years; however, short-term cash flow requirements necessary to ready these projects for USDA financing creates the necessity for the issuance of the subject Series 2013 Water Revenue Notes in a principal amount not to exceed $7,675,000 (the Notes). The Water Enterprise has two outstanding long-term debt obligations for which it is presently responsible, being: (i) the 2000 USDA Bonds, originally issued on August 15, 2000 at a rate of 4.75%, in the initial amount of $3,050,000, which are paid semiannually each February and August, with a final maturity on August 1, 2039 (the USDA Loan), and (ii) the West America Bank, Series 2002 Water Loan, originally issued on May 30, 2002 at a rate of 5.10%, in the initial amount of $873,577.18, which is scheduled to mature on November 1, 2017 (the 2002 West America Loan). The 2002 West America Loan is being
Meeting Date: 7/23/2013 Page 1 Agenda Item #5.
refinanced with proceeds of the Notes (and will be fully paid off within three years), and the 2000 USDA Bonds will remain outstanding on parity with the Notes and the Bonds. DISCUSSION: As part of the budget process (and to ensure compliance with certain outstanding bond covenants and additional parity bonds tests), staff, in conjunction with the financing team, has prepared a projection of the Citys water net revenue cash flow analysis, a copy of which has been included with this report (the Cash Flow Analysis). The Cash Flow Analysis demonstrates that there will be sufficient existing and future net revenues (i.e., water revenues remaining after deducting all water maintenance and operation costs) to: (i) meet current obligations, (ii) pay for the annual costs of the Notes (which includes the refinancing of the 2002 West America Loan). Expenses of issuing the Loan will be paid from Note proceeds and are contingent on the Notes being issued. As mentioned above, the financing proposal includes a refinancing and complete pay-off of the Citys 2002 West America Loan, which is presently outstanding in the principal amount of approximately $325,000. This refinancing is being recommended in order to (i) eliminate certain restrictive covenants contained in the 2002 West America Loan documents that limit the Citys ability to issue short-term obligations with a balloon payment, and (ii) provide additional cash flow savings to the Water Enterprise to offset some of the costs of issuance associated with the issuance of the Notes. The parameters established for the sale of the Notes are as follows: 1. 2. 3. The principal amount of the Notes will not exceed $7.675 million. The interest rate on the Notes will not exceed 2.25%. The total costs of issuance for both the Notes will not exceed $45 thousand.
The Weist Law Firm has been appointed Bond Counsel for this refinancing and will be available to review with the Council the solicitation and selection process, the documents included with this Agenda item, provide a report on other necessary Council actions and the anticipated sequence of events should the Council decide to move ahead with this Refunding. The resolution being recommended for adoption essentially authorizes and approves the form of Loan Agreements necessary to provide for the successful delivery of the proposed Notes, as well as the full prepayment and defeasance of the 2002 West America Loan. The general description of the Loan Agreements is as follows: Note Loan Agreement: this agreement provides for all of the terms and conditions of the proposed Loan to the City from Bank of Nevada, secured by the Notes, including, but not limited to, closing conditions, prepayment provisions, insurance requirements, and the pledge of net revenues of the Water Enterprise commensurate with the scheduled debt service on the Notes. OPTIONS:
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Use the Line of Credit (i.e., the Notes), which would have a lower rate of interest and would not accrue interest until needed, but would be required to either be paid off or refinanced at the end of the three year term of the Notes to the extent of any remaining balance at maturity. FISCAL IMPACT: None $ Account Number: Comments: The Notes will bear interest at a rate that is presently expected to be less than 2%, but will not begin to accrue interest unless and until draws have been made thereon. The total costs of issuance are fully contingent, and are not expected to exceed $45k. The Loan Agreements pledge water net revenues sufficient to pay debt service and meet all coverage requirements--and the Cash Flow Analysis demonstrates compliance with these requirements. SUGGESTED MOTIONS: Move to adopt Resolution No. ____ (2013) authorizing and directing the execution of Series 2013B Water Revenue Notes in a principal amount not to exceed $7,675,000; appointing certain financial consultants in connection therewith; and providing for other matters properly related thereto. Attachments: 1. 2. 3. Note Loan Agreement Cash Flow Analysis Resolution ____ (2013) (proposed)
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Agenda Item #5.
NOTE LOAN AGREEMENT
Dated as of August 1, 2013
By and between the
BANK OF NEVADA
And the
CITY OF LAKEPORT
Providing for the
$________ (Not to Exceed) CITY OF LAKEPORT SERIES 2013B WATER REVENUE NOTES (SERIES 2013B WATER ENTERPRISE PROJECT)
TABLE OF CONTENTS ARTICLE I DEFINITIONS; RULES OF INTERPRETATION Section 1.1. Definitions....................................................................................................................2 Section 1.2. Interpretation ................................................................................................................7 Section 1.3. Liability of City Limited to Net Revenues ..................................................................7 Section 1.4. Benefits of Note Loan Agreement Limited to Parties .................................................8 Section 1.5. Successor Is Deemed Included in all References to Predecessor ................................8 Section 1.6. Waiver of Personal Liability ........................................................................................8 Section 1.7. Partial Invalidity...........................................................................................................8 ARTICLE II: THE LOAN; ISSUANCE OF THE NOTES Section 2.1. Section 2.2. Section 2.3. Section 2.4. Section 2.5. Principal Amount; Designation.................................................................................10 Terms of Loan and Note; Advances .........................................................................10 Issuance of Note; Form of Note. ...............................................................................11 Issuance and Delivery of Note ..................................................................................11 Transfer or Exchange of Lenders Rights .................................................................11 ARTICLE III APPLICATION OF LOAN PROCEEDS; CREATION OF FUNDS Section 3.1. Deposit of and Application of Funds .........................................................................11 Section 3.2. Payment of Note. ......................................................................................................12 Section 3.03. Project Fund ............................................................................................................12 Section 3.4. Assignment Agreement by the Lender ......................................................................13 ARTICLE IV SECURITY FOR THE LOAN Section 4.1. Section 4.1. Section 4.3. Section 4.4. Section 4.5. Section 4.6. Payment of the Loan Payments.................................................................................14 Pledge of Net Revenues and Other Funds; Revenue Fund .......................................14 Receipt and Deposit of Revenues .............................................................................14 Rates, Fees, and Charges ..........................................................................................15 Additional Parity Obligations ...................................................................................16 Covenant to Obtain Take-Out Financing ..................................................................17 ARTICLE V REPRESENTATIONS, COVENANTS AND WARRANTIES Section 5.1. Compliance with Loan ...............................................................................................18 Section 5.2. Against Encumbrances...............................................................................................18 Section 5.3. Against Sale or Other Disposition of Property ..........................................................18
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Section 5.4. Against Competitive Facilities...................................................................................18 Section 5.5. Tax Covenants ...........................................................................................................19 Section 5.6. Prompt Acquisition ....................................................................................................19 Section 5.7. Maintenance and Operation of the Enterprise ...........................................................19 Section 5.8. Payment of Claims .....................................................................................................19 Section 5.9. Insurance ....................................................................................................................19 Section 5.10. Books and Accounts; Financial Statements .............................................................20 Section 5.11. Protection of Security and Rights of Lender............................................................21 Section 5.12. Payment of Taxes and Compliance with Governmental Regulations .....................21 Section 5.13. Operation of Enterprise; Collection of Rates and Charges ......................................21 Section 5.14. Eminent Domain Proceeds .......................................................................................21 Section 5.15. Further Assurances...................................................................................................22 Section 5.16. Release and Indemnification Covenants ..................................................................22 Section 5.17. Notices .....................................................................................................................23 Section 5.18. Amendment of Note Loan Agreement .....................................................................23 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES Section 6.1. Events of Default Defined .........................................................................................23 Section 6.2. Remedies on Default ..................................................................................................24 Section 6.3. Other Remedies of the Lender ...................................................................................24 Section 6.4. No Remedy Exclusive................................................................................................25 Section 6.5. Agreement to Pay Attorneys Fees and Expenses .....................................................25 Section 6.6. No Additional Waiver Implied by One Waiver .........................................................25 ARTICLE VII PREPAYMENT OF LEASE PAYMENTS Section 7.1. Optional Prepayment .................................................................................................25 Section 7.2. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain ........26 ARTICLE VIII COVENANTS, REPRESENTATIONS AND WARRANTIES Section 8.1. Covenants, Representations and Warranties of the City ............................................26 Section 8.2. Covenants, Representations and Warranties of the Lender .......................................28 Section 8.3. Closing Conditions ....................................................................................................28 ARTICLE IX MISCELLANEOUS Section 9.1. Notices .......................................................................................................................31 Section 9.2. Binding Effect ............................................................................................................31 Section 9.3. Severability ................................................................................................................31 Section 9.4. Net-Net-Net contract ..................................................................................................31
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Section 9.5. Further Assurances and Corrective Instruments ........................................................31 Section 9.6. Waiver of Personal Liability ......................................................................................32 Section 9.7. Execution in Counterparts..........................................................................................32 Section 9.8. Applicable Law ..........................................................................................................32 Section 9.9. Captions .....................................................................................................................32 EXHIBIT A EXHIBIT B FORM OF NOTE COMPONENTS OF THE PROJECT
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NOTE LOAN AGREEMENT THIS NOTE LOAN AGREEMENT (this Note Loan Agreement), dated as of August 1, 2013, is between the BANK OF NEVADA, a Nevada corporation, as lender (the Lender), and the CITY OF LAKEPORT, a municipal corporation and general law city organized and existing under and by virtue of the laws of the State of California, as lessee (the City); WITNESSETH: WHEREAS, the City presently owns and operates certain facilities and property for its domestic water system (the Enterprise), and in order to finance the acquisition and construction of various capital improvements to the Enterprise (the Project), the City proposes to accept from the Lender a tax-exempt loan (the Loan), secured by this Note Loan Agreement and a note, with an aggregate principal component in the amount of not-to-exceed $__________, hereby designated the City of Lakeport, Series 2013 Water Revenue Notes (Series 2013B Water Enterprise Project) (the Note); and WHEREAS, the principal of and interest and redemption premium (if any) on the Note, and any bonds or other obligations issued on a parity therewith as provided herein, will be payable from and secured by a pledge of and lien on the Net Revenues derived from the Enterprise, as expressly set forth in this Note Loan Agreement; and WHEREAS, in order to provide for the execution and delivery of this Note Loan Agreement, to establish and declare the terms and conditions upon which the Loan is to be made and secured, and to secure the payment of the principal thereof, premium (if any) and interest thereon, the City has authorized the execution and delivery of this Note Loan Agreement; and WHEREAS, all things necessary to make the Note when issued, executed and delivered, the valid and binding obligation of the City, and to constitute this Note Loan Agreement as a valid pledge of the revenues herein pledged to the payment of the principal of, prepayment premium, if any, and interest on the Note have been done and performed, as required by law, and the City is now fully authorized to enter into this Note Loan Agreement, subject to the terms hereof; AGREEMENT: NOW, THEREFORE, in order to secure the payment of the principal of and the interest and premium (if any) on the Loan at any time outstanding under this Note Loan Agreement, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Loan is premised, and in consideration of the premises and of the mutual covenants herein contained and of the making of the Loan by the Lender, and for other good and valuable consideration, the receipt whereof is hereby acknowledged, the parties hereto hereby formally covenant, agree and bind themselves as follows:
LAKEPORT_WATER_NOTE_LOAN_AGREEMENT_[DRAFT_07-18-13]
ARTICLE I DEFINITIONS; RULES OF INTERPRETATION Section 1.1. Definitions. Unless the context otherwise requires, the terms defined in this section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein. Acquisition, Acquire or Acquisition and Construction means, with respect to any portion of the Project, the acquisition, construction, improvement, equipping, renovation, remodeling or reconstruction thereof. Additional Revenues means, with respect to the issuance of any Parity Obligations, an allowance for Net Revenues (i) arising from any increase in the charges made for service from the Enterprise, adopted prior to the incurring of such Parity Obligations and effective within eighteen (18) months following the date of incurring such Parity Obligations, in an amount equal to the total amount by which the Net Revenues for the Enterprise would have been increased if such increase in charges had been in effect during the whole of the most recent completed Fiscal Year or during any more recent twelve (12) month period selected by the City, and (ii) arising from any increase in service connections to the Enterprise, prior to the incurring of such Parity Obligations, in an amount equal to the total amount by which the Net Revenues for the Enterprise would have been increased if such connections had been in existence during the whole of the most recent complete Fiscal Year or during any more recent twelve (12) month period selected by the City, all as shown by the certificate or opinion of an Independent Financial Consultant. Advance means any advance of the proceeds Loan made by the Lender to the City under the terms of Section 2.2. Alternate Project means an alternate project designated by the City pursuant to Section 3.3 hereof. Bond Counsel means (a) The Weist Law Firm, or (b) any other attorney or firm of attorneys of nationally recognized expertise with respect to legal matters relating to obligations the interest on which is excludable from gross income under Section 103 of the Tax Code. Business Day means a day other than a Saturday, Sunday or legal holiday, on which banking institutions are not closed in the State. Certificate, Request and Requisition of the City means a written certificate, request or requisition signed in the name of the City by its Authorized Representative. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.
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City means the City of Lakeport, a municipal corporation and general law city organized and existing under the laws of the State. City Manager means the City Manager of the City, or any other person designated by the City Manager to act on behalf of the City Manager. City Representative means the Mayor, Mayor Pro Tem, City Manager, Finance Director or the designee of any such official, or any other person authorized by resolution delivered to the Lender to act on behalf of the City under or with respect to this Note Loan Agreement. Closing Date means the date on which the Loan is funded by the Lender. Council means the City Council of the City. Debt Service means, for any Fiscal Year, the sum of (l) the interest falling due during such Fiscal Year on all Parity Obligations (that are outstanding under the documents or agreements pursuant to which they were issued), assuming that all outstanding serial Parity Obligations are retired as scheduled and that all outstanding term Parity Obligations are redeemed from sinking fund payments as scheduled (except to the extent that such interest has been fully capitalized and is invested in Federal Securities that mature at times and in such amounts as are necessary to pay the interest to which such amounts are pledged), (2) the principal amount of all serial Parity Obligations (that are outstanding under the documents or agreements pursuant to which they were issued) falling due by their terms during such Fiscal Year, and (3) the minimum amount of term Parity Obligations (that are outstanding under the documents or agreements pursuant to which they were issued) required to be paid or called and redeemed during such Fiscal Year, together with the redemption premiums, if any, thereon; provided that (A) whenever any Parity Obligation (as is the case for the Notes) is scheduled to not fully amortize and therefor matures with a balloon payment, such principal and interest shall be imputed at a rate of six percent (6%), fully amortized over a twenty (20) year period, beginning from the date upon which such balloon payment is due, (B) whenever interest as described herein accrues at other than a fixed rate, such interest shall be assumed to be a rate equal to the greater of (i) the actual rate on the date of calculation, or if the Parity Obligations are not yet outstanding, the initial rate (if established and binding), (ii) if the Parity Obligations have been outstanding for at least twelve months, the average rate over the twelve months immediately preceding the date of calculation, and (iii) (x) if interest on the Parity Obligations is excludable from gross income under the applicable provisions of the Code, the most recently published The Bond Buyer Bond Revenue Index (or comparable index if no longer published) plus one hundred fifty (150) basis points, or (y) if interest is not so excludable, the interest rate on direct U.S. Treasury Obligations with comparable maturities, plus one hundred fifty (150) basis points. Default Rate means 6.00% plus the interest rate equal to the interest component of Loan Payments.
Enterprise means, collectively, the entire water collection, storage, treatment, transmission and distribution system now owned or operated by the City, and all other properties, structures or works hereafter acquired and constructed by the City and determined to be a part of the water Enterprise, including all facilities, works, properties, structures and assets, real and personal, tangible and intangible, of the City, now or hereafter existing, used or pertaining to the collection, storage, treatment, transmission and distribution of potable and non-potable water, including all contractual rights to water supplies, transmission capacity supply, easements, rights-of-way and other works, property or structures necessary or convenient for such facilities, together with all additions, betterments, extension and improvements to such facilities or any part thereof hereafter acquired or constructed. Event of Default means any of the events of default as defined in Section 8.1. Federal Securities means any direct general non-callable obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), or obligations the timely payment of principal of and interest on which are fully and unconditionally guaranteed by the United States of America. Fiscal Year means each twelve-month period during the Term of this Note Loan Agreement commencing on July 1 in any calendar year and ending on June 30 in the next succeeding calendar year, or any other twelve-month period selected by the City as its fiscal year period. Generally Accepted Accounting Principles means the generally accepted accounting principles as presented and recommended by the American Institute of Certified Public Accountants or its successor, or by any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Governmental Accounting Standards Board or its successor. Governmental Authority means any governmental or quasi-governmental entity, including any court, department, commission, board, bureau, agency, administration, central bank, service, district or other instrumentality of any governmental entity or other entity exercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or functions of or pertaining to government, or any arbitrator, mediator or other person with authority to bind a party at law. Insurance Consultant means any nationally recognized independent actuary, insurance company or broker that has actuarial personnel knowledgeable with respect to insurance carried, by, required for and available to special districts operating facilities similar to the Enterprise, including a pooled self-insurance program in which premiums are established on the basis of the recommendation of an actuary of national reputation. Interest Component means the portion of each Loan Payment designated as Interest Component.
Lender means (a) initially, the Bank of Nevada, a Nevada corporation, as owner of the Note, and (b) any other entity to whom the rights of the Lender hereunder are assigned, including subsequent assignees of the Lender, as provided in Section 3.4. Loan means the loan made hereunder by the Lender to the City in the aggregate principal amount of not-to-exceed $__________, for the purpose of providing funds to deposit in the Project Fund. Loan Payment Date means February 1 and August 1 in each year, commencing February 1, 2014, and continuing to and including the date on which the Loan Payments are paid in full. Loan Payments means the payments of principal and interest to be paid by the City on the Note, as set forth herein. Maintenance and Operation Costs of the Enterprise means the reasonable and necessary costs and expenses paid by the City for maintaining and operating the Enterprise, as determined in accordance with Generally Accepted Accounting Principles, including but not limited to (a) costs of acquisition of water, including all associated treatment and delivery costs, to be used by the Enterprise, (b) costs of electricity and other forms of energy supplied to the Enterprise, (c) the reasonable expenses of management and repair and other costs and expenses necessary to maintain and preserve the Enterprise in good repair and working order, (d) the reasonable administrative costs of the City attributable to the operation and maintenance of the Enterprise, such as salaries and wages of employees, overhead, taxes (if any) and insurance premiums, and (e) all other reasonable and necessary costs of the City or charges required to be paid by it to comply with the terms hereof or of any resolution authorizing the issuance of any Parity Obligations or of such Parity Obligations, such as compensation, reimbursement and indemnification of the trustee for any such Parity Obligations and fees and expenses of Independent Certified Public Accountants and independent engineers, but in all cases excluding (i) debt service payable on obligations incurred by the City with respect to the Enterprise, (ii) depreciation, replacement and obsolescence charges or reserves therefor, and (iii) amortization of intangibles or other bookkeeping entries of a similar nature. Maximum Annual Debt Service means the greatest amount of Debt Service with respect to the Parity Obligations to which reference is made coming due in any Fiscal Year including the Fiscal Year in which the calculation is made or any subsequent Fiscal Year. Material Adverse Effect means an event or occurrence which adversely affects in a material manner (a) the assets, liabilities, condition (financial or otherwise), business, facilities or operations of the City, (b) the ability of the City to carry out its business in the manner conducted as of the date of this Note Loan Agreement or to meet or perform its obligations under this Note Loan Agreement on a timely basis, (c) the validity or enforceability of this Note Loan Agreement, or (d) the exclusion of the interest component of the Loan Payments from gross income for federal income tax purposes or the exemption of such interest for state income tax purposes.
Material Litigation means any action, suit, proceeding, inquiry or investigation against the City in any court or before any arbitrator of any kind or before or by any Governmental Authority, (i) if determined adversely to the City, may have a Material Adverse Effect, (ii) seek to restrain or enjoin any of the transactions contemplated by this Note Loan Agreement, or (iii) may adversely affect (A) the exclusion of the interest component of the Loan Payments from gross income for federal income tax purposes or the exemption of such interest for state income tax purposes or (B) the ability of the City to perform its obligations under this Note Loan Agreement. Maximum Annual Debt Service means the greatest amount of Debt Service with respect to the Parity Obligations to which reference is made coming due in any Fiscal Year including the Fiscal Year in which the calculation is made or any subsequent Fiscal Year. Net Proceeds means any insurance or eminent domain award (including any proceeds of sale to a governmental entity under threat of the exercise of eminent domain powers), paid with respect to the Property, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof. Net Revenues means, for any period, all of the Revenues during such period less all of the Maintenance and Operation Costs during such period. For purposes of securing repayment of the Loan only, Net Revenues shall also include proceeds from a State Safe Drinking Water Revolving Fund Loan from the State Department of Public Health received by the City to provide funds to refund all or a portion of the Loan. Note or Notes means the tax-exempt note executed and delivered by the City hereunder evidencing the obligations of the City under this Note Loan Agreement, in the form attached hereto as Exhibit A. Note Loan Agreement means this Note Loan Agreement, dated as of August 1, 2013, between the Lender and the City. Parity Obligations means the 2000 USDA Bonds, the Notes, the Bonds and all other bonds, notes, loan agreements, installment sale agreements, leases or other obligations of the City, payable from and secured by a pledge of and lien upon any of the Net Revenues incurred on parity with the payment of the Loan Payments pursuant to Section 4.5. Parity Payments means all Debt Service payments scheduled to be paid by the City under Parity Obligations. Principal Amount means the aggregate principal amount of the Loan, in an amount notto-exceed $___________. Principal Component means the portion of each Loan Payment designated as Principal Component.
Project means those certain water system improvements described in Exhibit B hereto, including any Alternate Project. Project Costs with respect to the Project means the contract price paid or to be paid to the contractors therefor upon acquisition, construction, refinancing, improvement, repair, modification or delivery of any portion of the Project and related equipment, in accordance with the purchase order or contract therefor. Project Costs include the costs of site preparation necessary for the installation of any improvements to the Project. Project Costs also include costs incurred by the City, the Lender and the contractors in connection with the acquisition, delivery and installation of the Project. Project Fund means the fund by that name established and held by the City pursuant to Section 3.3. Resolution means the Resolution No. _____, adopted by the City Council of the City on July 23, 2013, authorizing the execution and delivery of this Note Loan Agreement, and otherwise providing for the execution and delivery of the Note. Revenue Fund means the fund maintained by the City into which it deposits Revenues. Revenues means all gross income and revenue received or receivable by the City from the ownership and operation of the Enterprise, calculated in accordance with Generally Accepted Accounting Principles, including all rates, fees and charges (including transfer and exchange fees, any water stand-by or water availability charges and assessments) received by the City for Water Service and all other income and revenue howsoever derived by the City from the Enterprise or arising from the Enterprise; provided, however, that (i) any specific charges levied for the express purpose of reimbursing others for all or a portion of the cost of the acquisition or construction of specific water facilities, (ii) grants that are designated by the grantor for a specific water purpose and are therefore not available for other purposes, (iii) customers water related deposits or any other water related deposits subject to refund until such deposits have become the property of the City, (iv) the proceeds of any ad valorem property taxes, and (v) the proceeds of any special assessments or special taxes levied upon real property within any improvement City served by the City for the purpose of paying special assessment bonds or special tax obligations of the City relating to the Enterprise, are not Revenues and are not subject to the lien hereof. Revenues shall include amounts on deposit in the Revenue Fund which have been previously released from the pledge and lien of this Note Loan Agreement. Notwithstanding the foregoing, there shall be deducted from Revenues any amounts (of Revenues) transferred into the Rate Stabilization Fund as contemplated by Section 4.4(d) hereof, and there shall be added to Revenues any amounts transferred out of the Rate Stabilization Fund and into the Revenue Fund, as contemplated by Section 4.4(d) hereof. State means the State of California. Take-Out Financing means obligations incurred by the City as described in Section 4.6, all or a portion of the proceeds which will be used to prepay or pay outstanding Loan Payments or otherwise cause a refunding of all or a portion of the Note.
Take-Out Financing Proceeds means the proceeds of a Take-Out Financing used for the prepayment or payment of outstanding Loan Payments or applied to the refunding of all or a portion of the Note. Tax Code means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Tax Code. Term of this Note Loan Agreement or Term means the time during which this Note Loan Agreement is in effect, as provided in Section 2.2. Treasurer means the Finance Director or City Manager of the City. 2000 USDA Bonds means the $3,050,000 Certificates of Participation (1998 Water Project-Series 2000) originally sold to USDA on August 15, 2000 at a rate of 4.75%, in the initial amount of $3,050,000, which are paid semiannually each February and August, with a final maturity on August 1, 2039. Water Service means the water service made available or provided by the Enterprise. 2000 West America Loan means the West America Bank, Series 2002 Water Loan, originally issued on May 30, 2002 at a rate of 5.10%, in the initial amount of $873,577.18, which is scheduled to mature on November 1, 2017. Section 1.2. Interpretation. (a) Unless the context otherwise indicates, words expressed in the singular include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and include the neuter, masculine or feminine gender, as appropriate. (b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof. (c) All references herein to Articles, Sections and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Note Loan Agreement; the words herein, hereof, hereby, hereunder and other words of similar import refer to this Note Loan Agreement as a whole and not to any particular Article, Section or subdivision hereof. Section 1.3. Liability of City Limited to Net Revenues. Notwithstanding anything to the contrary contained in this Note Loan Agreement, the City shall not be required to advance any money derived from the proceeds of any taxes collected for the use and benefit of the City, or from any source of income other than the Net
Revenues, for the payment of the principal of or interest or prepayment premiums, if any, on the Loan or for the performance of any covenants herein contained, nor for the maintenance and operation of the Enterprise from any source of income other than the Revenues. The City may, however, advance funds for any such purpose so long as such funds are derived from a source legally available for such purpose without incurring any indebtedness. The Loan shall be payable exclusively from the Net Revenues as in this Note Loan Agreement provided. The credit or taxing power of the City is not pledged for the payment of the Loan or its interest. The Lender shall never have the right to compel the exercise of the taxing power of the City. The principal of and interest on the Loan and any prepayment premiums upon the prepayment thereof shall not be a debt of the City, nor a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the City or any of its income, receipts, or revenues, except the Net Revenues pledged to the payment thereof as provided in this Note Loan Agreement. Section 1.4. Benefits of Note Loan Agreement Limited to Parties. Nothing contained herein, expressed or implied, is intended to give to any person other than the City and the Lender any right, remedy or claim under or pursuant hereto. Any agreement or covenant required herein to be performed by or on behalf of the City shall be for the sole and exclusive benefit of the Lender. Section 1.5. Successor Is Deemed Included in all References to Predecessor. Whenever the City is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the City, and all agreements and covenants required hereby to be performed by or on behalf of the City shall bind and inure to the benefit of the successors thereof whether so expressed or not. Section 1.6. Waiver of Personal Liability. No member of the Council and no officer, agent, or employee of the City, or of any department or agency thereof, shall be individually or personally liable for the payment of the principal of or interest on the Loan, but nothing contained herein shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law or hereby. Section 1.7. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the City shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof or the Loan; but the Lender shall retain all the rights and benefits accorded to it under any applicable provisions of law. The City hereby declares that it would have adopted this Note Loan Agreement and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.
ARTICLE II THE LOAN; ISSUANCE OF THE NOTES Section 2.1. Principal Amount; Designation. The Lender hereby agrees to make the Loan to the City in the aggregate principal amount not-to-exceed $__________, and the City hereby agrees to borrow such amount from the Lender. The Loan shall be evidenced by the Note, the form of which is set forth in Exhibit A hereto, in the aggregate principal amount not-toexceed $_________. Notwithstanding the provisions hereof, the principal amount of the Loan shall equal the sum of the Advances (less any prepayments of principal amount of the Loan). The Loan and the Note are authorized to be entered into and issued by the City under and subject to the terms of this Note Loan Agreement and other applicable laws of the State. The Loan shall be funded by the Lender subject to the terms and conditions of this Note Loan Agreement on the Closing Date in funds which are immediately available to the City. Section 2.2. Terms of Loan and Note; Advances. The Note shall be dated as of the Closing Date. Principal of the Loan and the Note shall mature and become payable on February 1, 2016. Interest on the unpaid principal balance of the Note shall accrue from the Closing Date with respect to the initial Advance described below, and shall accrue from the date of each subsequent Advance, at the rate of _______% per annum. The Note is subject to prepayment as set forth in Article VII hereof. Interest on the unpaid principal balance of the Loan and the Note shall be payable on each of the Loan Payment Dates. Interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months. The principal of and interest and premium (if any) on the Loan shall be payable to the Lender in lawful money of the United States of America. Advances on the Loan, to the total amount of the principal sum set forth in Section 2.1 above, may be made by Lender upon the written or telephonic request of a City Representative, promptly confirmed in writing to the Lender. Except for the initial Advance on the Closing Date, the City shall not request an Advance in an amount less than $100,000, and such requests shall not occur more frequently than [bi-monthly, quarterly]. The City covenants to inform the Lender in writing promptly following any change in the City Representatives. The final date for an Advance shall be ____________ 1, 201__. An Advance may be made on the day the request for Advance is received by the Lender; provided, however, that if the Lender shall not have received the request at or before 2:00 p.m. on the day such Advance is requested to be made, such Advance may, at the Lenders option, be made on the next Business Day. The books and records of the Lender shall be the best evidence of the principal and unpaid interest components of the Loan Payments owing at any time under this Note Loan Agreement. The obligation of the Lender to make each Advance requested by City hereunder shall be subject to the fulfillment, to the Lender's satisfaction, of each of the following conditions: (a) Compliance. The representations and warranties contained herein shall be true on the date of each Advance by the Lender pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date, and on each
such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist. (b) Documentation. The Lender shall have received all additional documents which may be required in connection with such Advance. Section 2.3. Issuance of Note; Form of Note. The Loan shall be evidenced by the Note, all of the terms and provisions of which shall reflect the terms and provisions of the Loan. The Note and the Citys certificate of authentication to appear thereon shall be substantially in the form set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Note Loan Agreement. The Note shall be executed on behalf of the City by the manual signature of an City Representative who is in office on the date of execution of this Note Loan Agreement or at any time thereafter, including the City Manager. If any officer whose signature appears on the Note ceases to be such officer before delivery of the Note to the Lender, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Note to the Lender. The Note may be signed on behalf of the City by such persons as of the date of the execution of the Note shall be the proper officers of the City although at the nominal date of the Note any such person shall not have been such officer of the City. Section 2.4. Issuance and Delivery of Note. The City shall issue the Note on the Closing Date and thereupon deliver the Note to the Lender. The City Representatives of the City are hereby authorized and directed to execute and deliver any and all documents and instruments necessary to cause the issuance of the Note in accordance with the provisions of the Resolution and this Note Loan Agreement, and to do and cause to be done any and all acts and things necessary or convenient for the timely delivery of the Note to the Lender. Section 2.5. Transfer or Exchange of Lenders Rights. The Lender may assign its rights hereunder, and may transfer the Note, subject to the requirements of Section 3.4 herein, but only upon surrender of the Note to the City for cancellation, accompanied by delivery of a duly written instrument of transfer in a form acceptable to the City. Whenever the Note shall be surrendered for transfer, the City shall execute, authenticate and deliver a new Note to the transferee. ARTICLE III APPLICATION OF LOAN PROCEEDS; CREATION OF FUNDS Section 3.1. Deposit of and Application of Funds. The proceeds of the Loan payable by the Lender in an amount not-to-exceed $____________ shall be transferred to the City, upon receipt of each Advance, for deposit in the Project Fund. The initial Advance on the Closing Date shall be $__________, of which $________ is to be deposited in the Project Fund. From such initial Advance a portion of the proceeds of the Loan (including amounts retained by the
Lender for its fees) shall be applied by the Lender, at the request of the City, to pay financing costs of the transaction in the amount of $_________. To the extent any portion of such retained amount remains unpaid as of October 1, 2013, the Lender shall apply such amount as a credit to the Loan Payment of the City due February 1, 2014. Any financing costs in excess of $___________ shall be paid by the City. Section 3.2. Payment of Note. No later than each Loan Payment Date, the City shall transfer to the Lender, from Net Revenues and any other available funds of the City (including amounts on deposit in the Project Fund), the principal of and interest coming due on the Loan on such Loan Payment Date. If at any time it appears to the Lender that the City may be unable to pay such payment on the Loan in a timely manner, the Lender shall report such fact in writing to the City. The City covenants to use all available funds to cure any deficiencies in payment of principal of and interest on the Note. Overdue principal and, to the extent permitted by law, overdue interest on the Loan shall bear interest at the Default Rate. The Lender hereby directs the City, and the City hereby agrees, to pay to the Lender (or to its assignees as directed pursuant to Section 3.4 hereof) all payments payable by the City with respect to the Note. Payments shall be paid to the Lender as follows: Payments by check (by overnight delivery only to this address): _____________ _____________ ___________, ________ _____ Re: City of Lakeport Loan No. ____________ Payments by wire: ___________________ ABA No.: ________________ Account Name: _______________ Account Number: _______________ For Further Credit to: City of Lakeport Loan No. ____________ Attn: _______________ Section 3.3. Project Fund. (a) Establishment of Project Fund. The Project Fund is hereby established as a separate fund to be held by the City. Amounts in the Project Fund shall be held in trust by the City for the benefit of the City and the Lender. (b) Amount on Deposit in Project Fund; Disbursements. The City hereby agrees to establish and maintain the Project Fund until the completion of the Project. All money in the Project Fund shall be held by the City in trust and shall be applied by the City, along with certain
other funds of the City, for the payment of Project Costs and the expenses incidental thereto (including reimbursement to the City for any such costs or expenses theretofore paid by it for the account of the City whether or not paid prior to the date hereof). The City shall not make any payment of Project Costs if it has received a stop notice or any other notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the money to be so paid which has not been released or will not be released simultaneously with such payment, other than materialmens or mechanics liens accruing by mere operation of law. The City may change the specifications of the Project, so long as such change does not substantially alter the nature of the Project; provided, however, that the City, in its sole discretion, may designate an Alternate Project. In the event an Alternate Project is designated, the City shall certify in writing to the Lender that Project Costs shall not materially increase as a result from such change. In the event Project Costs shall materially increase as a result of the designation of an Alternate Project, prior to designating such Alternate Project, the City shall either deposit in the Project Fund an amount sufficient to pay such increase, or shall certify in writing to the Lender that funds sufficient to pay such increase in Project Costs are otherwise available to the City. When the Project has been completed to the satisfaction of the City or when the City determines that a portion of the Project will not be completed, the City shall notify the Lender in writing stating the fact and date of the completion of such improvements, and stating that all the Project Costs being funded with the Loan and the expenses incidental thereto have been determined and paid (or that such claims and expenses have been paid less specified claims which are subject to dispute and for which a retention in the Project Fund is to be maintained in the full amount of such claims until such dispute is resolved). Thereafter all remaining moneys in the Project Fund shall be used by the City for the payment of principal of and interest on the Note as provided herein. In the event the Project Fund has not been depleted by the date which is three years after the Closing Date, the City shall provide the Lender with an opinion of nationally recognized bond counsel to the effect that the investment of such remaining funds shall not adversely affect the tax-exempt status of the Note. Section 3.4. Assignment by the Lender. The Lender may make additional assignments of its rights, title and interests herein; provided such assignment is to (i) an accredited investor within the meaning of Regulation D promulgated under the Securities Act of 1933, or (ii) a qualified institutional buyer within the meaning of Rule 144A promulgated under the Securities Act of 1933, as amended, and is in compliance with all applicable securities laws, but no such assignment will be effective as against the City unless and until the Lender has filed with the City at least five (5) Business Days prior written notice thereof and an executed copy of an investors letter addressed to the City substantially in the form of the letter delivered by the Lender on the Closing Date. The City shall pay all Loan Payments hereunder to the Lender, as provided in Section 3.2 hereof, or under the written direction of the assignee named in the most recent assignment or notice of assignment filed with the City. During the Term of this Note Loan Agreement, the City will keep a complete and accurate record of all such notices of assignment.
ARTICLE IV SECURITY FOR THE LOAN Section 4.1. Payment of the Loan Payments. The total principal amount of the Loan Payments owed and to be paid by the City to the Lender hereunder is not-to-exceed $___________, plus interest thereon. The Loan Payments shall, subject to any rights of prepayment of the City provided in Article VII, be due in installments in the amounts and on the dates described in Exhibit A attached hereto. Each Loan Payment shall be payable to the Lender in accordance with the terms hereof and at the times required by Section 3.21 hereof in lawful money of the United States of America. In the event the City fails to make any of the payments required to be made by it under this Section 4.1, such payment shall continue as an obligation of the City until such amount shall have been fully paid and the City agrees to pay the same with the stated interest thereon at the rate set forth in Exhibit A hereto. In the event a Loan Payment is insufficient to make the payments of principal and interest on the next succeeding Loan Payment Date, for any reason, the City shall immediately pay to the Lender upon notice therefrom additional amounts to cure such insufficiency. The obligation of the City to make the Loan Payments is absolute and unconditional, whether or not the Project shall be completed, and until such time as all Loan Payments shall have been fully paid and the Note is no longer Outstanding, the City will not, under any circumstances, discontinue, abate or suspend any Loan Payments required to be made by it under this Section 4.1 when due, whether or not the Enterprise or any part thereof is operating or operable or has been completed, or whether or not the Enterprise is condemned, damaged, destroyed or seized or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such payments shall not be subject to reduction whether by offset, counterclaim, defense, recoupment, abatement, suspension, deferment or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement or covenant contained herein for any cause whatsoever. Section 4.2. Pledge of Net Revenues and Other Funds; Revenue Fund. The City hereby irrevocably pledges all of the Net Revenues to the punctual payment of the Loan Payments and such Net Revenues, except as otherwise permitted herein, shall not be used for any other purpose while the Note remains outstanding. This pledge shall constitute a first lien on the Net Revenues for the payment of the Loan Payments. Section 4.3. Receipt and Deposit of Revenues. The City covenants and agrees that all Revenues, when and as received, will be received and held by the City in trust hereunder and will be deposited by the City with the Treasurer in the Revenue Fund, which the City hereby agrees to establish and maintain, and will be accounted for through and held in trust in the Revenue Fund; provided, that the City may withdraw such amounts in the Revenue Fund as may be necessary to make refunds for amounts paid in advance for services provided by the Enterprise, which such service was not thereafter made available or provided. All Net Revenues, whether held by the City or deposited with the Treasurer, shall nevertheless be disbursed,
allocated and applied solely to the uses and purposes hereinafter in this Article IV set forth, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the City. Section 4.4. Rates, Fees, and Charges. (a) The City will, at all times while the Loan remains outstanding, fix, prescribe and collect rates, fees and charges in connection with the Enterprise so as to yield Revenues at least sufficient, after making reasonable allowances for contingencies and errors in the estimates, to pay the following amounts in the order set forth below: (1) All Maintenance and Operation Costs of the Enterprise (including amounts reasonably required to be set aside in contingency reserves for Maintenance and Operation Costs of the Enterprise, the payment of which is not then immediately required); (2) The Debt Service payments and all other payments (including payments under reimbursement agreements) with respect to all Parity Obligations as they become due and payable; (3) All amounts, if any, required to restore the balance in any reserve accounts established for Parity Obligations in accordance with the terms of such Parity Obligations, without preference or priority; and (4) All payments required to meet any other obligations of the City that are charges, liens, encumbrances upon, or which are otherwise payable from the Revenues during such Fiscal Year. (b) Furthermore, the City shall fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Enterprise during each Fiscal Year which are sufficient to yield estimated Net Revenues which are at least equal to one hundred twenty percent (120%) of the aggregate amount of Debt Service on all Parity Obligations payable from Net Revenues coming due and payable during such Fiscal Year. The City may make adjustments, from time to time, in its rates, fees and charges as it deems necessary, but shall not reduce its rates, fees and charges below those in effect unless the Net Revenues resulting from such reduced rates, fees and charges shall at all times be sufficient to meet the requirements set forth in this paragraph. (c) If the City violates the covenants set forth in subsections (a) or (b) hereof, such violation shall not, in and of itself, be a default under this Loan Agreement and shall not give rise to a declaration of an Event of Default so long as (i) Net Revenues (calculated without taking into account any amounts transferred into the Revenue Fund from the Rate Stabilization Fund pursuant to subsection (d) below), are at least equal to the Maximum Annual Debt Service coming due and payable during such Fiscal Year, and (ii) within 120 days after the date such violation is discovered, the City either (y) transfers enough moneys from the Rate Stabilization Fund sufficient to yield estimated Net Revenues which are at least equal to one hundred twenty
percent (120%) of the aggregate amount of Debt Service on all Parity Obligations payable from Net Revenues coming due and payable during such Fiscal Year in compliance with subsection (b) hereof, or (z) hires an Independent Financial Consultant to review the revenues and expenses of the Enterprise, and abides by such consultants recommendations to revise the schedule of rates, fees, expenses and charges, and to revise any Maintenance and Operation Costs insofar as practicable, and to take such other actions as are necessary so as to produce Net Revenues to cure such violation for future compliance; provided, however, that, if the City does not, or can not, transfer from the Rate Stabilization Fund the amount necessary to comply with subsection (b) hereof, or otherwise cure such violation within twelve (12) months after the date such violation is discovered, an Event of Default shall be deemed to have occurred under Section 6.1(b) hereof. (d) There is hereby created a separate fund to be known as the Rate Stabilization Fund, to be held and maintained by the City. The Rate Stabilization Fund is not pledged to secure payment of the Loan Payments. Amounts in the Rate Stabilization Fund shall be applied solely for the uses and purposes set forth in this subsection (d). The City shall have the right to deposit into the Rate Stabilization Fund from time to time any amount of funds which are legally available therefor; provided that deposits for each Fiscal Year may be made until (but not after) one hundred twenty (120) days following the end of such Fiscal Year. For the purpose of computing the amount of Revenues for any Fiscal Year for purposes of the preceding subsection (a), or the amount of Net Revenues for any Fiscal Year for purposes of the preceding subsection (b), the City shall be permitted to transfer amounts on deposit in the Rate Stabilization Fund to the Revenue Fund, such transfers to be made until (but not after) one hundred twenty (120) days after the end of such Fiscal Year. In addition, the City shall be permitted to withdraw amounts on deposit in the Rate Stabilization Fund for any other lawful purpose. The Rate Stabilization Fund is not pledged to secure payment of the Loan Payments. (e) All Net Revenues remaining after paying all of the sums required to be paid hereunder by the Treasurer by the provisions of Sections 4.4 (a) through (d) hereof, or in connection with any Parity Obligation, may be withdrawn by the Treasurer for expenditure for any lawful purpose of the City. Section 4.5. Additional Parity Obligations. (a) So long as the Loan is outstanding, the City shall not issue or incur any obligations payable from Revenues or Net Revenues senior or superior to the payment of Debt Service on the Note. The City may, with the prior consent of the Lender (which will not unreasonably be withheld), at any time issue Parity Obligations payable from Net Revenues on a parity with Debt Service on the Note to provide financing or refinancing for the Enterprise in such principal amount as shall be determined by the City. The City may issue or incur any such Parity Obligations subject to the following specific conditions, which are hereby made conditions precedent to the issuance and delivery of such Parity Obligations: (1) No Event of Default shall have occurred and be continuing;
(2) The Net Revenues (calculated without taking into account any amounts transferred into the Revenue Fund from the Rate Stabilization Fund pursuant to Section 4.4(d) hereof), calculated in accordance with Generally Accepted Accounting Principles, either (i) as shown by the books of the City for the latest Fiscal Year, as verified by a certificate of an Authorized Representative of the City, or (ii) as shown by the books of the City for any more recent twelve (12) month period selected by the City, as verified by a certificate or opinion of an Independent Certified Public Accountant employed by the City, plus in either case (at the option of the City) the Additional Revenues, shall be at least equal to one hundred twenty percent (120%) of the amount of Maximum Annual Debt Service on all outstanding Parity Obligations and the Parity Obligations to be issued; and (3) Except with respect to the Loan, and at the Citys sole discretion, there shall be established from the proceeds of such Parity Obligations a reserve fund for the security of such Parity Obligations, in an amount equal to the lesser of (i) the maximum amount of debt service required to be paid by the City with respect to such Parity Obligations during any Fiscal Year and (ii) the maximum amount then permitted under the Code, in either event as certified in writing by the City. The provisions of subsection (2) of this Section shall not apply to any Parity Obligations if, and to the extent that (i) all of the proceeds of such Parity Obligations (other than proceeds applied to pay costs of issuing such Parity Obligations and to make the reserve fund deposit required pursuant to subsection (3) of this Section) shall be deposited in an irrevocable escrow held in cash or invested in Federal Securities for the purpose of paying the principal of and interest and premium (if any) on such outstanding Parity Obligations, and (ii) at the time of the incurring of such Parity Obligations, the City certifies in writing that maximum annual debt service on such Parity Obligations will not exceed Maximum Annual Debt Service on the outstanding Parity Obligations being refunded, and (iii) the final maturity of such Parity Obligations is not later than the final maturity of the Parity Obligations being refunded. (b) In order to maintain the parity relationship of debt service payments on all Parity Obligations permitted hereunder, the City covenants that all payments in the nature of principal and interest or reserve account replenishment with respect to any Parity Obligations, will be structured to occur on the Loan Payment Dates, in each year as such payments are due with respect to the Debt Service payments, and reserve account replenishment, if any, with respect to any Parity Obligations will be structured to occur within one year, and to otherwise structure the terms of such Parity Obligations to ensure that they are in all respects payable on a parity with the Debt Service payments on the Loan and all Parity Obligations, and not prior thereto. (c) The City may at any time execute contracts or issue bonds or other indebtedness payable from Net Revenues or the Revenue Fund payable on a subordinated basis to the payment of the Debt Service payments on Parity Obligations. Section 4.6. Covenant to Obtain Take-Out Financing. The City covenants to take all actions required to obtain financing from the United States Department of Agriculture and/or any other available financing source, to provide funds to refund all or a portion of the Loan prior to maturity; and further covenants that, to the extent that any portion of the Loan remains
Outstanding hereunder on February 1, 2016, the City will use its best efforts initiate proceedings for Take-Out Financings, as necessary to authorize, sell, and issue, on or before August 1, 2016, obligations in an aggregate principal amount which is sufficient to pay the principal and interest on the Note coming due and payable at maturity, to the extent not otherwise paid from Net Revenues. ARTICLE V REPRESENTATIONS, COVENANTS AND WARRANTIES Section 5.1. Compliance with Note Loan Agreement. The City will punctually pay the Loan Payments in strict conformity with the terms hereof, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it, and will not terminate this Note Loan Agreement for any cause whatsoever, including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project, condemnation of the Project by any governmental entity, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of California or any political subdivision of either or any failure of the Lender to observe or perform any agreement, condition, covenant or term required to be observed and performed by it contained herein, whether express or implied, or any duty, liability or obligation arising out of or connected with this Note Loan Agreement. Section 5.2. Against Encumbrances. The City hereby covenants that there is no pledge of or lien on Net Revenues senior to the pledge and lien securing the Loan Payments. The City will not make any further pledge of or place any lien on the Net Revenues, provided that the City may at any time, or from time to time, pledge or encumber the Net Revenues in connection with the issuance or execution of Parity Obligations or other obligations permitted by Section 4.5 hereof, or subordinate to the pledge of Net Revenues herein. Section 5.3. Against Sale or Other Disposition of Property. The City will not sell, lease, encumber or otherwise dispose of the Enterprise or any part thereof in excess of one-half of one percent of the book value of the Enterprise in any Fiscal Year, unless a Treasurer certifies that such sale, lease, encumbrance or disposition will not materially adversely affect the operation of the Enterprise or the Net Revenues; provided however, any real or personal property which has become nonoperative or which is not needed for the efficient and proper operation of the Enterprise, or any material or equipment which has become worn out, may be sold or exchanged at not less than the fair market value thereof and the proceeds (if any) of such sale or exchange shall be deposited in the Revenue Fund. The City will not enter into any agreement or lease which would impair the ability of the City to pay Loan Payments or which would otherwise materially impair the rights of the Lender or the operation of the Enterprise. Section 5.4. Against Competitive Facilities. The City will not, to the extent permitted by law, acquire, maintain or operate and will not, to the extent permitted by law and its current
contractual rights and obligations and within the reasonable scope of its powers, permit any other public or private agency, corporation, district or political subdivision or any person whomsoever to acquire, maintain or operate within the City any utility system competitive with the Enterprise. Section 5.5. Tax Covenants. The City shall not take any action or permit to be taken any action within its control which would cause or which, with the passage of time if not cured would cause, the interest on the Note to become includable in gross income for federal income tax purposes. To that end, the City hereby makes the following specific covenants: (a) The City hereby covenants that it shall not make or permit any use of the proceeds of the Note that may cause the Note to be arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. (b) The City covenants that the proceeds of the Note will not be used as to cause the proceeds on the Note to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code. (c) The City covenants not to take any action or permit or suffer any action to be taken if the result of the same would be to cause the Note to be federally guaranteed within the meaning of Section 149(b) of the Code. Section 5.6. Prompt Acquisition. The City will complete the Project with all practicable dispatch and in an expeditious manner and in conformity with law so as to complete the same as soon as possible. Section 5.7. Maintenance and Operation of the Enterprise. The City will maintain and preserve the Enterprise in good repair and working order at all times and will operate the Enterprise in an efficient and economical manner and will pay all Maintenance and Operation Costs of the Enterprise as they become due and payable. Section 5.8. Payment of Claims. The City will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien on the Net Revenues or any part thereof or on any funds in the control of the City prior or superior to the lien of the Loan Payments or which might impair the security of the Loan Payments. Section 5.9. Insurance. (a) The City will procure and maintain insurance on the Enterprise with commercial insurers or through participation in a joint powers insurance authority, in such amounts, with such deductibles and against such risks (including accident to or destruction of the Enterprise) as are usually insurable in connection with similar enterprises. In the event of any damage to or destruction of the Enterprise caused by the perils covered by such insurance, the proceeds of such insurance shall be applied either (i) to the repair, reconstruction or replacement of the damaged or destroyed portion of the Enterprise or, (ii) if the repair, reconstruction or replacement of the damaged or destroyed portion of the Enterprise is not essential to the efficient operation of the Enterprise and the maintenance of Net Revenues, to prepay the Note and any outstanding Parity Obligations. The City shall cause such repair,
reconstruction or replacement to begin promptly after such damage or destruction shall occur and to continue and to be properly completed as expeditiously as possible, and shall pay out of the proceeds of such insurance all costs and expenses in connection with such repair, reconstruction or replacement so that the same shall be completed and the Enterprise shall be free and clear of all liens and claims. If the proceeds received by reason of any such loss shall exceed the costs of such repair, reconstruction or replacement, the excess shall be applied to the prepayment of Loan Payments as provided in Article VII. Alternatively, if the proceeds of such insurance are sufficient to enable the City to retire all outstanding Parity Obligations and the Note and all other amounts due hereunder, the City may elect not to repair, reconstruct or replace the damaged or destroyed portion of the Enterprise, and thereupon such proceeds shall be applied to the prepayment of the Loan Payments as provided in Article VII and to the payment of all other amounts due hereunder, and as otherwise required by the documents pursuant to which such Parity Obligations were issued. (b) The City will procure and maintain public liability insurance covering claims against the City for bodily injury or death, or damage to property, occasioned by reason of the ownership or operation of the Enterprise, such insurance to afford protection in such amounts and against such risks as are usually covered in connection with similar enterprises. (c) The City will procure and maintain workers compensation insurance against liability for compensation under the Workers Compensation Insurance and Safety Act of California, or any act hereafter enacted as an amendment or supplement or in lieu thereof, such insurance to cover all persons employed in connection with the Enterprise. (d) All policies of insurance required to be maintained herein shall provide that the Lender shall be given thirty (30) days written notice of any intended cancellation thereof or reduction of coverage provided thereby, provided, however, the Lender shall not be responsible for the sufficiency of any insurance herein required. (e) The City shall pay or cause to be paid when due the premiums for all insurance policies required hereby. Section 5.10. Books and Accounts; Financial Statements. (a) The City will keep proper books of record and accounts of the Enterprise, separate from all other records and accounts of the City, in which complete and correct entries shall be made of all transactions relating to the Enterprise. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Lender or its representatives authorized in writing. (b) The City will prepare and file with the Lender annually within two hundred seventy (270) days after the close of each Fiscal Year an audited financial statement for the City (prepared in accordance with Generally Accepted Accounting Principles) for the preceding Fiscal Year, together with an accountants report thereon and along with a certificate of the City to the effect that no Event of Default has occurred, or if an Event of Default has occurred, specifying the nature thereof and, if the City has a right to cure pursuant to Article VI hereof,
stating in reasonable detail the measures, if any, being undertaken by the City to cure such Event of Default. (c) Within thirty (30) days of the end of each Fiscal Year, the City will provide the Lender with a copy of its annual budget and any interim updates or modifications to such budget, and within ninety (90) days following the end of each Fiscal Year, the City will provide the Lender with a copy of its unaudited financial results for such Fiscal Year. The City hereby agrees to provide the Lender with such other information as may be reasonably requested by the Lender. Section 5.11. Protection of Security and Rights of Lender. The City will preserve and protect the security and the rights of the Lender to the Loan Payments hereunder and will warrant and defend such rights against all claims and demands of all persons. Section 5.12. Payment of Taxes and Compliance with Governmental Regulations. The City will pay and discharge all taxes, assessments and other governmental charges, if any, which may hereafter be lawfully imposed upon the Enterprise or any part thereof or upon the Revenues when the same shall become due. The City will duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the Enterprise or any part thereof, but the City shall not be required to comply with any regulations or requirements so long as the validity or application thereof shall be contested in good faith. Section 5.13. Operation of Enterprise; Collection of Rates and Charges. The City will continue to operate the Enterprise and shall have in effect at all times, except as otherwise provided by law, rules and regulations requiring all users of the Enterprise provided by the City that is provided or made available to pay the rates, fees and charges applicable to the Enterprise provided or made available to such users, and providing for the billing thereof and for a due date and a delinquency date for each bill. In each case where such bill remains unpaid in whole or in part after such bill becomes delinquent, the City, in accordance with law, may refuse to provide or make available the services provided by the Enterprise to such premises until all delinquent rates, fees and charges and penalties have been paid in full. Except in connection with the receipt of federal or State funding, or as required by law or as a condition to the acquisition or operation of the Project or Enterprise, the City will not permit any part of the Enterprise, or any facility thereof, to be used, or taken advantage of, free of charge by any person, firm or corporation, or by any public agency (including the United States of America, the State of California and any public corporation, political subdivision, city, county, district or agency of any thereof), excepting only that the City may without charge use the services and facilities of the Enterprise. Section 5.14. Eminent Domain Proceeds. If all or any part of the Enterprise shall be taken by eminent domain proceedings, the Net Proceeds thereof shall be applied as follows: (a) If (1) the City prepares a report showing (i) the estimated loss of annual Net Revenues, if any, suffered or to be suffered by the City by reason of such eminent domain proceedings, (ii) a general description of the additions, betterments, extensions or improvements
to the Enterprise proposed to be acquired by the City from any Net Proceeds, and (iii) an estimate of the additional annual Net Revenues to be derived from such additions, betterments, extensions or improvements, and (2) on the basis of such certificate, the City determines that the estimated additional annual Net Revenues will sufficiently offset the estimated loss of annual Net Revenues resulting from such eminent domain proceedings so that the ability of the City to meet its obligations hereunder will not be substantially impaired (which determination shall be final and conclusive); then the City shall promptly proceed with the acquisition of such additions, betterments, extensions or improvements substantially in accordance with such report and such Net Proceeds shall be applied for the payment of the costs of such acquisition, and any balance of such Net Proceeds not required by the City for such purpose shall be applied to prepay the Loan Payments pursuant to Article VII hereof, and any Parity Obligations, on a pro rata basis in the manner provided herein and in the instruments authorizing such Parity Obligations. (b) If the foregoing conditions are not met, then such Net Proceeds shall be applied to the prepayment of Loan Payments as provided in Article VII hereof. Section 5.15. Further Assurances. The City will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Lender of the rights and benefits provided to it herein. Section 5.16. Release and Indemnification Covenants. The City shall and hereby agrees to indemnify and save the Lender, its officers, directors, agents, employees, successors or assigns harmless from and against all claims, losses and damages, including legal fees and expenses, arising out of (i) the use, maintenance, condition or management of, or from any work or thing done on, the Project by the City, (ii) any breach or default on the part of the City in the performance of any of the Citys obligations under the Note Loan Agreement, (iii) any act of negligence of the City or of any of its contractors, servants, employees or licensees with respect to the Project, (iv) any act of negligence of any assignee or sublessee of the City, or of any agents, contractors, servants, employees or licensees of the assignee or sublessee of the City with respect to the Project, or (v) the construction of the Project or authorization of payment of the Project Costs, to the extent permitted by law. The City further covenants and agrees to indemnify and save the Lender harmless against any claim, loss, expense, advance, and liabilities which they may incur arising out of or in the exercise and performance of their powers and duties hereunder, including the costs and expenses (including attorneys fees and disbursements) of defending against any claim of liability or enforcing any remedies, and which are not due to its negligence or willful misconduct. The City further covenants and agrees to advance to the Lender the amounts requested as the costs and expenses of such defense. Any and all special obligations of the City under this Section shall be and remain valid and binding special obligations of the City notwithstanding the payment in full of the Loan Payments and the termination of this Note Loan Agreement.
Section 5.17. Notices. During the Term of this Note Loan Agreement, the City shall provide to the Lender: (a) immediate notice by telephone, promptly confirmed in writing, of any event, action or failure to take any action which constitutes an Event of Default under this Note Loan Agreement, together with a detailed statement by a City Representative of the steps being taken by the City to cure the effect of such Event of Default. (b) within ten (10) days of knowledge by the City written notice of any Material Litigation or Material Adverse Effect, or any investigation, inquiry or similar proceeding by any Governmental Authority. (c) with reasonable promptness, such other information respecting the City, and the operations, affairs and financial condition of the City as the Lender may from time to time reasonably request. Section 5.18. Amendment of Note Loan Agreement. This Note Loan Agreement may be amended with the prior written consent of the Lender (at the Lenders sole discretion) provided such amendment does not, in the Lenders sole judgment, materially adversely affect the Lender. ARTICLE VI EVENTS OF DEFAULT AND REMEDIES Section 6.1. Events of Default Defined. Any one or more of the following events constitutes an Event of Default hereunder: (a) Failure by the City to pay any Loan Payment or other payment required to be paid hereunder at the time specified herein, which failure is not cured within three (3) Business Days of such time. (b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed hereunder, other than as referred to in the preceding clause (a) of this Section, and other than the covenant of the City to provide the Lender with a copy of its annual budget and any interim updates or modifications to such budget as required by Section 5.10 hereof, for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Lender. However, if in the reasonable opinion of the City the failure stated in the notice can be corrected, but not within such 30-day period, the Lender shall not unreasonably withhold their consent to an extension of such time (for a period not to exceed 60 days) if corrective action is instituted by the City within such 30day period and diligently pursued until the default is corrected. (c) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of
a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar federal or State act now existing or which may hereafter be enacted. (d) Any statement, representation or warranty of a material nature made by the City in or pursuant to this Note Loan Agreement or its execution, delivery or performance shall have been false, incorrect, misleading or breached in any material respect on the date when made. (e) Any default occurs under any other agreement for borrowing money, lease financing of property or otherwise receiving credit under which the City is an obligor, if such default (i) arises under any other agreement for borrowing money, lease financing of property or provision of credit provided by the Lender or any affiliate of the Lender, or (ii) arises under any obligation under which there is outstanding, owing or committed an aggregated amount in excess of $500,000. (f) Any court of competent jurisdiction shall find or rule that this Note Loan Agreement is not valid or binding against the City. Section 6.2. Remedies on Default. Whenever any Event of Default has happened and is continuing, then and in each and every such case during the continuance of such Event of Default the Lender may, by notice in writing to the City declare the principal amount of the unpaid Loan Payments, and the accrued interest thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything contained herein to the contrary notwithstanding. This provision, however, is subject to the condition that, except with respect to an Event of Default under subsection (c) above, if at any time after such principal amount of the unpaid Loan Payments and the accrued interest thereon shall have been so declared due and payable and before the acceleration date or the date of any judgment or decree for the payment of the money due shall have been obtained or entered, the City shall deposit with the Lender a sum sufficient to pay such unpaid principal amount of the Loan Payments due prior to such date and the accrued interest thereon, with any interest due on such overdue installments, and the reasonable expenses of the Lender, and any and all other defaults known to the Lender (other than in the payment of such principal amount of the unpaid Loan Payments and the accrued interest thereon due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Lender or provision deemed by the Lender to be adequate shall have been made therefor, then and in every such case the Lender may rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default or shall impair or exhaust any right or power consequent thereon. Section 6.3. Other Remedies of the Lender. The Lender may-(a) by mandamus or other action or proceeding or suit at law or in equity enforce its rights against the City, or any board member, officer or employee thereof, and compel the City or any such board member, officer or employee to perform and carry out its or his duties under
applicable law and the agreements and covenants contained herein required to be performed by it or him; (b) by suit in equity enjoin any acts or things which are unlawful or violate the rights of the Lender; (c) by suit in equity upon the happening of an Event of Default require the City and its board members, officers and employees to account as the trustee of an express trust; (d) by suit in equity, to seek the appointment of a receiver or other third party to operate the Enterprise and collect the Revenues; or (e) immediately terminate the obligation, if any, of the Lender to make any further Advances hereunder. Section 6.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Lender is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Note Loan Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Lender to exercise any remedy reserved to it in this Article VI it shall not be necessary to give any notice, other than such notice as may be required in this Article VI or by law. Section 6.5. Agreement to Pay Attorneys Fees and Expenses. If any party to this Note Loan Agreement defaults under any of the provisions hereof and the non-defaulting party should employ attorneys (including in-house legal counsel) or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the non-defaulting party the reasonable fees of such attorneys (including allocable costs and expenses of in-house legal counsel, if any) and such other expenses so incurred by the non-defaulting party. Section 6.6. No Additional Waiver Implied by One Waiver. If any agreement contained in this Note Loan Agreement is breached by either party and thereafter waived by the other party, such waiver is limited to the particular breach so waived and will not be deemed to waive any other breach hereunder. ARTICLE VII PREPAYMENT OF LOAN PAYMENTS Section 7.1. Optional Prepayment. The City may prepay, on any date on or after August 2, 2014, all or any portion of the Loan Payments, at a prepayment amount equal to the principal
amount of Loan Payments to be prepaid, together accrued interest to the date fixed for prepayment, without premium. Section 7.2. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain. The City shall be obligated to prepay the unpaid principal components of the Loan Payments in whole or in part in such order of prepayment as shall be selected by the City on any date, together with any accrued and unpaid interest, a prepayment premium, if applicable, and any other costs related to such prepayment, from and to the extent of any proceeds of insurance award or condemnation award to be used for such purpose under Sections 5.9 or 5.14. The City and the Lender hereby agree that such proceeds, to the extent remaining after payment of any delinquent Loan Payments, shall be credited towards the Citys obligations under this Section 7.2. ARTICLE VIII COVENANTS, REPRESENTATIONS AND WARRANTIES Section 8.1. Covenants, Representations and Warranties of the City. The City makes the following covenants, representations and warranties to the Lender as of the date of the execution and delivery of this Note Loan Agreement: (a) Due Organization and Existence. The City is a municipal corporation and general law city, organized and existing under and by virtue of the laws of the State, has full legal right, power and authority under the laws of the State to enter into the this Note Loan Agreement and to carry out and consummate all transactions on its part contemplated hereby and thereby, and by proper action the City has duly authorized the execution and delivery by the City of this Note Loan Agreement. (b) Due Execution. The representative of the City executing this Note Loan Agreement has been fully authorized to execute the same by Resolution of the City Counsel of the City. (c) Valid, Binding and Enforceable Obligations. This Note Loan Agreement has been duly authorized, executed and delivered by the City and along with the Note constitutes the legal, valid and binding agreement of the City enforceable against the City in accordance with its terms. (d) No Conflicts. The execution and delivery of this Note Loan Agreement, the consummation of the transactions therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict with or constitute a material violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the City is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and
adversely affect the consummation of the transactions contemplated by this Note Loan Agreement or the financial condition, assets, properties or operations of the City. (e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the City or of the voters of the City, and no consent, permission, authorization, order or license of, or filing or registration with, any Governmental Authority is necessary in connection with the execution and delivery of this Note Loan Agreement, or the consummation of any transaction therein and herein contemplated, except as have been obtained or made and as are in full force and effect. (f) No Litigation. To the best knowledge of the City, there is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other Governmental Authority pending and notice of which has been served on the City or, to the knowledge of the City after reasonable investigation, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Note Loan Agreement or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other Governmental Authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Note Loan Agreement, or the financial condition, assets, properties or operations of the City. (g) Sufficient Funds. The City reasonably believes that sufficient funds can be obtained to make all Loan Payments and all other amounts required to be paid pursuant to this Note Loan Agreement. (h) No Defaults. Since 2008, the City has never non-appropriated or materially defaulted under any of its payment or performance obligations or covenants, either under any financing lease of the same general nature as this Note Loan Agreement, or under any of its bonds, notes, or other debt obligations. (i) Change in Financial Condition. The City has experienced no material change in its financial condition since June 30, 2012. (j) Financial Statements. The statement of financial position of the City as of June 30, 2012, and the related statement of activities and statement of cash flows and changes in financial position for the year then ended and the auditors reports with respect thereto, copies of which have heretofore been furnished to the Lender, are complete and correct and fairly present the financial condition, changes in financial position and results of operations of the City at such date and for such period, and were prepared in accordance with generally accepted accounting principles. Since the period of such statements, there has been no (i) change which would have a Material Adverse Effect, and (ii) no material increase in the indebtedness of the City.
(k) No Material Adverse Change. Since the most current date of the information, financial or otherwise, supplied by the City to the Lender: (i) There has been no change in the assets, liabilities, financial position or results of operations of the City which might reasonably be anticipated to cause a Material Adverse Effect. (ii) The City has not incurred any obligations or liabilities which might reasonably be anticipated to cause a Material Adverse Effect. (iii) The City has not (A) incurred any material indebtedness on, or lease obligations payable from, its general fund, other than the Loan Payments, and trade accounts payable arising in the ordinary course of the Citys business and not past due, or (B) guaranteed the indebtedness of any other person. (l) Accuracy of Information. All information, reports and other papers and data furnished by the City to the Lender were, at the time the same were so furnished, complete and accurate in all material respects and insofar as necessary to give the Lender a true and accurate knowledge of the subject matter and were provided in expectation of the Lenders reliance thereon in entering into the transactions contemplated by this Note Loan Agreement. No fact is known to the City which has had or, so far as the City can now reasonably foresee, may in the future have a Material Adverse Effect, which has not been set forth in the financial statements previously furnished to the Lender or in other such information, reports, papers and data or otherwise disclosed in writing to the Lender prior to the Closing Date. Any financial, budget and other projections furnished to the Lender by the City or its or their agents were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair and reasonable in light of the conditions existing at the time of delivery of such financial, budget or other projections, and represented, and as of the date of this representation, represent the Citys best estimate of its future financial performance. No document furnished nor any representation, warranty or other written statement made to the Lender in connection with the negotiation, preparation or execution of this Note Loan Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state (as of the date made or furnished) any material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were or will be made, not misleading. Section 8.2. Covenants, Representations and Warranties of the Lender. The Lender makes the following covenants, representations and warranties to the City as of the date of the execution and delivery of this Note Loan Agreement: (a) Due Organization and Existence. The Lender is a corporation duly organized and existing under the laws of Nevada, has full legal right, power and authority to enter into this Note Loan Agreement and to carry out and consummate all transactions on its part contemplated hereby, and by proper action the Lender has duly authorized the execution and delivery by the Lender of this Note Loan Agreement.
(b) Valid, Binding and Enforceable Obligations. This Note Loan Agreement has been duly authorized, executed and delivered by the Lender and constitutes the legal, valid and binding agreement of the Lender, enforceable against the Lender in accordance with its terms. Section 8.3. Closing Conditions. The Lender has entered into this Loan Agreement in reliance upon the representations and warranties of the City contained in this Loan Agreement and to be contained in the documents and instruments to be delivered on the Closing Date and upon the performance by the City of the obligations of the City pursuant to this Loan Agreement at or prior to the Closing Date. Accordingly, the obligation of Lender to consummate the Loan and execute this Loan Agreement is subject to the fulfillment to the reasonable satisfaction of the Lender of the following conditions: (a) On the Closing Date, the Resolution and this Loan Agreement shall be in full force and effect and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Lender. (b) On the Closing Date, the City will have adopted and there will be in full force and effect such resolutions as in the opinion of Bond Counsel and counsel to the Lender shall be necessary in connection with the transactions contemplated by this Loan Agreement, and all necessary action of the City relating to the issuance of the Loan will have been taken, will be in full force and effect and will not have been amended, modified or supplemented, except as may have been agreed to in writing by the Lender. (c) documents: At or prior to the Closing Date, the Lender will have received the following
(i) the approving opinions, dated the Closing Date and addressed to the Lender, of Bond Counsel in form and content satisfactory to the Lender and its counsel, (I) addressing the tax-exempt status of the interest on the Loan, and (II) the Loan Agreement has been duly authorized, executed and delivered by the City and are legal, valid and binding obligations of the City, enforceable in accordance with its terms subject to customary exceptions for bankruptcy and judicial discretion, and (III) the 2002 West America Loan has been legally defeased; (ii) a certificate or certificates, dated the date of the Closing and signed on behalf of the City by a City Representative, to the effect that (I) the representations and warranties contained in this Loan Agreement are true and correct in all material respects on and as of the date of the Closing with the same effect as if made on the Closing Date; (II) no litigation of any nature is then pending or, to his or her knowledge, threatened, seeking to restrain or enjoin the issuance and delivery of the Loan or the levy or collection of revenues to pay the principal thereof and interest thereon, questioning the proceedings and authority by which such pledge is made, affecting the validity of the Loan or contesting the existence or boundaries of the City or the title of the present officers to their respective offices; (III) no authority or proceedings for the issuance of the Loan has been repealed, revoked or rescinded and no petition or petitions to revoke or alter the authorization to issue the Loan has been filed with or received by the City; and
(IV) the City has complied with all the agreements and covenants and satisfied all the conditions on its part to be performed or satisfied at or prior to, and to the extent possible before, the Closing Date; (iii) an opinion issued by the City Attorney on the date of delivery of the Loan, to the effect that (i) the City is a municipal corporation and general law city duly organized and existing under the laws of the State of California; (ii) this Loan Agreement and the corresponding Note was duly approved at a meeting of the Council that 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; (iii) there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or, to the best knowledge of such counsel after reasonable investigation, threatened against or affecting the City, to restrain or enjoin the execution and delivery of this Loan Agreement or the Note, or in any way contesting or affecting the validity of this Loan Agreement or the Note; and (iv) the adoption of this Loan Agreement and compliance by the City with the provisions hereof, under the circumstances contemplated hereby, do not and will not constitute on the part of the City a breach or default under any agreement or other instrument to which the City is a party or by which it is bound (that are known to the City Attorney) or any existing law, regulation, court order or consent decree to which the City is subject; (iv) a certified copy of the Resolution;
(v) the items required by the Resolution as conditions for execution and delivery of the Loan; (vi) a non-arbitrage tax certificate of the City, in form and substance satisfactory to Bond Counsel; (vii) the filing copy of the Information Return Form 8038-G; and
(viii) such additional legal opinions, certificates, instruments and other documents as the Lender or its counsel may reasonably request to evidence the truth and accuracy, as of the date of this Loan Agreement and as of the Closing Date, of the representations, warranties, agreements and covenants of the City contained herein and the due performance or satisfaction by the City at or prior to the Closing Date of all agreements then to be performed and all conditions then to be satisfied by the City.
ARTICLE IX MISCELLANEOUS Section 9.1. Notices. Any notice, request, complaint, demand or other communication under this Note Loan Agreement shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 48 hours after deposit in the United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The City and the Lender may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder. If to the City: City of Lakeport 225 Park Street Lakeport, CA 95453 Phone: (707) 263-5615 x 32 Fax: (707) ___________ Attention: City Manager Bank of Nevada One East Washington Street, Suite 1400 Phoenix, Arizona 85004 Attention: James Sult Jr. Phone: (602) 797-3634 Fax: (602) __________
If to the Lender:
Section 9.2. Binding Effect. This Note Loan Agreement inures to the benefit of and is binding upon the Lender, the City and their respective successors and assigns. Section 9.3. Severability. If any provision of this Note Loan Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision hereof. Section 9.4. Net-Net-Net Contract. This Note Loan Agreement is a net-net-net contract and the City hereby agrees that the Loan Payments are an absolute net return to the Lender, free and clear of any expenses, charges or set-offs whatsoever. Section 9.5. Further Assurances and Corrective Instruments. The Lender and the City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Property hereby leased or intended so to be or for carrying out the expressed intention of this Note Loan Agreement.
Section 9.6. Waiver of Personal Liability. No member, officer, agent or employee of the City or the Lender shall be individually or personally liable for the payment of Loan Payments; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duly provided by law. Section 9.7. Execution in Counterparts. This Note Loan Agreement may be executed in several counterparts, each of which is an original and all of which constitutes one and the same instrument. Section 9.8. Applicable Law. This Note Loan Agreement is governed by and construed in accordance with the laws of the State. Section 9.9. Captions. The captions or headings in this Note Loan Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or section of this Note Loan Agreement. IN WITNESS WHEREOF, the Lender and the City have caused this Note Loan Agreement to be executed in their respective names by their duly authorized officers, all as of the date first above written. BANK OF NEVADA, a Nevada corporation,
By: ________________________________ Authorized Representative CITY OF LAKEPORT
By: ________________________________ City Manager
EXHIBIT A FORM OF NOTE
A-1
EXHIBIT B COMPONENTS OF THE PROJECT The Project consists of the following: Component Estimated Cost
B-1
WATER FUND
Actual FY2010 (1) 1,241,256 1,241,256
Actual FY2011 (1) 1,175,759 131,108 1,306,867
Actual FY2012 (1) 1,439,407 77,285 1,516,692
Projected FY2013 (2) 1,444,020 91,071 1,535,091
Projected FY2014 (2) 1,588,422 91,940 1,680,362
Projected FY2015 (3) 1,588,422 91,940 1,680,362
OPERATING REVENUE Charges for service Other operating income TOTAL OPERATING REVENUE OPERATING EXPENSES O&M expense Salaries and benefits Utility costs Materials, supplies and service costs Travel and training Other operating costs Depreciation and amortization TOTAL OPERATING EXPENSES ADD BACK Depreciation and amortization NET OPERATING INCOME DEBT SERVICE 2002 WestAmerica Bank Loan 2002 USDA COP 2013 Bridge Loan TOTAL DEBT SERVICE DEBT SERVICE COVERAGE
(637,074) (131,159) (252,225) (5,794) (18,176) (143,205) (1,187,633)
(676,241) (399,296) (16,307) (143,205) (1,235,049)
(625,176) (400,327) (177,596) (197,998) (1,401,097)
(1,186,420) (1,186,420)
(1,229,492) (1,229,492)
(1,229,492) (1,229,492)
143,205 196,828
143,205 215,023
197,998 313,593
348,671
450,870
450,870
82,220 171,473 253,693 0.78
82,220 171,473 253,693 0.85
82,220 171,473 253,693 1.24
82,220 171,473 253,693 1.37
82,220 171,473 50,232 303,925 1.48
82,220 171,473 107,003 360,696 1.25
(1) From City Financial Statements (2) From July 2012 Rate Study (3) Revenues and expenses carried over from FY2014
SEWER FUND
Actual FY2010 (1) 1,694,573 21,543 1,716,116
Actual FY2011 (1) 1,623,268 78,744 1,702,012
Actual FY2012 (1) 1,934,271 26,825 1,961,096
Projected FY2013 (2) 1,805,520 193,710 1,999,230
Projected FY2014 (2) 1,968,017 193,799 2,161,816
Projected FY2015 (3) 1,968,017 193,799 2,161,816
OPERATING REVENUE Charges for service Other operating income TOTAL OPERATING REVENUE OPERATING EXPENSES O&M expense Salaries and benefits Utility costs Materials, supplies and service costs Travel and training Other operating costs Depreciation and amortization TOTAL OPERATING EXPENSES ADD BACK Depreciation and amortization NET OPERATING INCOME DEBT SERVICE 2007A CSCDA 2013 Bridge Loan TOTAL DEBT SERVICE DEBT SERVICE COVERAGE
(836,804) (121,354) (540,787) (6,538) (4,190) (631,208) (2,140,881)
(771,313) (234,042) (295,891) (649,679) (1,950,925)
(633,953) (485,032) (316,336) (553,957) (1,989,278)
(1,526,496) (1,526,496)
(1,582,311) (1,582,311)
(1,582,311) (1,582,311)
631,208 206,443
649,679 400,766
553,957 525,775
472,734
579,505
579,505
186,560
189,460
187,260
189,960
187,560 48,788 236,348 2.45
187,560 103,928 291,488 1.99
186,560 1.11
189,460 2.12
187,260 2.81
189,960 2.49
(1) From City Financial Statements (2) From July 2012 Rate Study (3) Revenues and expenses carried over from FY2014
RESOLUTION NO. _____ (2013) A RESOLUTION OF CITY COUNCIL OF THE CITY OF LAKEPORT APPROVING THE FORM OF AND AUTHORIZING AND DIRECTING EXECUTION AND DELIVERY OF A LOAN AGREEMENTS PROVIDING FOR THE ISSUANCE OF SERIES 2013 WATER REVENUE NOTES; APPOINTING CERTAIN FINANCIAL CONSULTANTS IN CONNECTION THEREWITH; AND PROVIDING FOR OTHER MATTERS PROPERLY RELATED THERETO WHEREAS, the City Council, after due investigation and deliberation, has determined that it is in the public interests of the City at this time to provide for the financing for the (i) new water meters (the Water Meter Project), (i) a Supervisory Control and Data Acquisition System (SCADA) radio communication system (the SCADA Project), well relocation and protection for existing City wells located in Scotts Creek (the Scotts Creek Project,) and looping existing 14-inch water mains on Parallel Drive and South Main Street (the Loop Line Project), the Water Meter Project and the SCADA Project, the Project); and WHEREAS, for the purpose of providing financing for the Scotts Creek Project, the Water Meter Project and the SCADA Project, the Loop Line Project, the Bank of Nevada (the Lender) has proposed to make a three year line of credit style tax-exempt loan, ( the Loan) and together with the 10-Year Loan, the Loan) to the City pursuant to terms and conditions of a Note Loan Agreement, dated as of August 1, 2013, by and between the Lender and the City (the Note Loan Agreement, ), and secured by a note, with an aggregate principal component in an amount not-toexceed $7,675,000, designated the City of Lakeport, Series 2013 Water Revenue Notes (Series 2013 Water Enterprise Project) (the Note), a copy of which has been presented at this meeting and is on file with the City Clerk; and WHEREAS, pursuant to the Note Loan Agreement, the City will make loan payments (the Loan Payments) from the net revenues of its water enterprise (the Water Enterprise) operations, sufficient in amount to pay back a certain portion of the debt service on Loan from the Lender, with any residual balance projected to be paid from the United Sates Department of Agriculture (the USDA) and other take-out sources of financing, as more particularly set forth in the Note Loan Agreement; and WHEREAS, the City Council desires and intends to use a portion of the Note proceeds to refund and fully defease its outstanding West America Bank, Series 2002 Water Loan, originally issued on May 30, 2002 in the aggregate amount of $873,577.18, and scheduled to mature on November 1, 2017 (the 2002 West America Loan); and WHEREAS, the City Council, with the aid of its staff, has reviewed the Note Loan Agreement, the form of which is on file with the City Clerk, and the Council wishes at this time to approve the foregoing document as being within the public interests of the City; and WHEREAS, in order to efficiently accomplish the procurement of the and Notes, and the execution and delivery of each corresponding Loan Agreement, the City desires to appoint Southwest Securities as Placement Agent and The Weist Law Firm as Bond Counsel to provide the necessary professional services in connection therewith; and
WHEREAS, the City Council desires to designate the Notes as a Qualified Tax-Exempt Obligation for purposes of Paragraph (3) of Section 265(b) of the Internal Revenue Code of 1986 (the Code); and WHEREAS, the City Council wishes at this time to authorize all actions and proceedings relating to the procurement of the Notes, the execution and delivery of each corresponding Loan Agreement, and the corresponding acquisition and construction of each Project; and WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of such financing authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lakeport, as follows: Section 1. The foregoing Findings are adopted as findings of the City Council as though set forth fully herein. Section 2. The Mayor, Mayor Pro Tem, City Manager, Finance Director, City Clerk and any other person authorized by the Council to act on behalf of the City shall each be an Authorized Representative of the City for the purposes of structuring and providing for the execution of the Loan Agreements and the corresponding issuance and delivery of the Notes, as well as the refunding of the 2002 West America Loan, and are hereby authorized, jointly and severally, for and in the name of and on behalf of the City, to execute and deliver any and all documents and certificates that may be required to be executed in connection with the execution and delivery of the Notes, as well as the refunding of the 2002 West America Loan, and to do any and all things and take any and all actions which may be necessary or advisable, in their discretion, to effectuate the actions which the Council has intended with the adoption of this Resolution. Section 3. The Council hereby authorizes and approves the Notes from the Lender to the City pursuant to the terms and conditions of the Note Loan Agreement. The Council hereby approves the Note Loan Agreement in substantially the form on file with the City Clerk, together with any additions thereto or changes therein (including, but not limited to, the final rate and amount of the Notes, the final debt service payment schedule, and prepayment and parity bond provisions) deemed necessary or advisable by an Authorized Representative of the City. Any Authorized Representative of the City is hereby authorized and directed to execute, and the City Clerk is hereby authorized and directed to attest and affix the seal of the City to, the final form of the Note Loan Agreement for and in the name and on behalf of the City, and the execution thereof shall be conclusive evidence of the Councils approval of any such additions and changes. The Council hereby authorizes the delivery and performance of the Note Loan Agreement. Section 4. The City Council hereby appoints The Weist Law Firm as Bond Counsel, and Southwest Securities as Placement Agent in connection with the financing described in this
Resolution. An Authorized Representative is authorized and directed to execute an agreement with each of such firms in the respective forms on file with the City Clerk. As provided in such agreements compensation payable to Placement Agent and Bond Counsel is entirely contingent upon the successful completion of the financing proceedings and shall be paid from a portion of the proceeds of the Loan pursuant to the Costs of Issuance set forth in the Loan Agreement, which is approved herein. Section 5. The City Council hereby designates the Notes for purposes of Paragraph (3) of Section 265(b) of the Code as a Qualified Tax-Exempt Obligation and covenants that the Notes do not constitute a private activity bond as defined in Section 141 of the Code and that the aggregate face amount of all tax-exempt obligations issued by the City (including all subordinate entities of the City and all entities which may issue obligations on behalf of the City) during the calendar year 2013 is not reasonably expected to exceed $10,000,000, excluding, however, private activity bonds, as defined in Section 141 of the Code (other than qualified 501(c)(3) bonds as defined in Section 145 of the Code) and current refunding obligations having a principal amount not in excess of the refunded obligation. Section 6. The Mayor, Mayor Pro Tem, City Manager, Finance Director, City Clerk and all other officers of the City are each authorized and directed in the name and on behalf of the City to make any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate any of the transactions contemplated by this Resolution and each of the Loan Agreements. Whenever any officer of the City is authorized to execute or countersign any document or take any action contemplated by this Resolution and the Note Loan Agreement, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable. Section 7. The Council hereby finds and determines that it has taken all of the foregoing actions, and made all of the foregoing findings, in full compliance with the law, and that all prior proceedings taken with respect to the Project were duly considered, and are hereby considered valid and in conformity with the requirements of law. Section 8. This Resolution shall take effect from and after the date of its passage and adoption.
Passed and adopted at a Special Meeting of the City Council of the City of Lakeport held on the 23rd day of July, 2013 by the following vote:
AYES: NOES: ABSTAINING: ABSENT:
APPROVED:
____________________________ THOMAS ENGSTROM, Mayor ATTEST:
______________________________ KELLY BUENDIA, Deputy City Clerk/Acting Secretary
CERTIFICATE STATE OF CALIFORNIA COUNTY OF LAKE CITY OF LAKEPORT ) ) ss. )
I, Kelly Buendia, Deputy City Clerk of the City of Lakeport, do hereby certify the foregoing Resolution of the City Council of the City of Lakeport was duly passed and adopted at a Special Meeting of the City Council held on July 23, 2013. DATED: July 23, 2013 _______________________ KELLY BUENDIA, Deputy City Clerk

Lakeport City Council Special Meeting

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Lakeport City Council Special Meeting

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AGENDA

NOTICE AND CALL OF SPECIAL MEETING OF THE LAKEPORT CITY COUNCIL

TO THE MEMBERS OF THE CITY COUNCIL OF THE CITY OF LAKEPORT:

5. INDEPENDENT BOND COUNSEL:

Dated: July 22, 2013

____________________________________ Hilary Britton, Acting Deputy City Clerk

From: To: Cc: Subject: Date:

From: To: Cc: Subject: Date:

<App 2013-003 - Addend 3.pdf>

RESOLUTION NO. ____ (2013)

____________________________________ KELLY BUENDIA Deputy City Clerk/Acting Secretary

_________________________________ DAVID J. RUDERMAN Interim City Attorney

Resolution No. ____ (2013)

Meeting Date: 7/23/2013

Agenda Item #5.

NOTE LOAN AGREEMENT

Dated as of August 1, 2013

By and between the

Providing for the

By: ________________________________ Authorized Representative CITY OF LAKEPORT

By: ________________________________ City Manager

EXHIBIT A FORM OF NOTE

Actual FY2010 (1) 1,241,256 1,241,256

Actual FY2011 (1) 1,175,759 131,108 1,306,867

Actual FY2012 (1) 1,439,407 77,285 1,516,692

Projected FY2013 (2) 1,444,020 91,071 1,535,091

Projected FY2014 (2) 1,588,422 91,940 1,680,362

Projected FY2015 (3) 1,588,422 91,940 1,680,362

(637,074) (131,159) (252,225) (5,794) (18,176) (143,205) (1,187,633)

(676,241) (399,296) (16,307) (143,205) (1,235,049)

(625,176) (400,327) (177,596) (197,998) (1,401,097)

82,220 171,473 253,693 0.78

82,220 171,473 253,693 0.85

82,220 171,473 253,693 1.24

82,220 171,473 253,693 1.37

82,220 171,473 50,232 303,925 1.48

82,220 171,473 107,003 360,696 1.25

Actual FY2010 (1) 1,694,573 21,543 1,716,116

Actual FY2011 (1) 1,623,268 78,744 1,702,012

Actual FY2012 (1) 1,934,271 26,825 1,961,096

Projected FY2013 (2) 1,805,520 193,710 1,999,230

Projected FY2014 (2) 1,968,017 193,799 2,161,816

Projected FY2015 (3) 1,968,017 193,799 2,161,816

(836,804) (121,354) (540,787) (6,538) (4,190) (631,208) (2,140,881)

(771,313) (234,042) (295,891) (649,679) (1,950,925)

(633,953) (485,032) (316,336) (553,957) (1,989,278)

187,560 48,788 236,348 2.45

187,560 103,928 291,488 1.99

AYES: NOES: ABSTAINING: ABSENT:

____________________________ THOMAS ENGSTROM, Mayor ATTEST:

______________________________ KELLY BUENDIA, Deputy City Clerk/Acting Secretary

CERTIFICATE STATE OF CALIFORNIA COUNTY OF LAKE CITY OF LAKEPORT ) ) ss. )

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