HomeMy WebLinkAbout0424.000,
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July 19, 1990
THE HONORABLE CITY COUNCIL
Palo Alto, calitornia
9
gurCIAL STAIEKDrr. INDENTURE OF TRUST. PURglASE AGREEKE!!T AND
ADDEHOOJ( TO AGRIpQjNT BE'I'I!IEEN PAUl ALTO. MO{JN7ATN VIEW AND LOS
ALTOS -QTII.In BONDS J 990 SERIES A
"Members of t.he counci 1 :
The purpose of this report is to request council approval of the
Official Statement, Indenture of Trust... PurChase Agreement and
Addendum to Agreement between Palo Alto, Mountain View and Los
Altos for the City of Falo Alto utility ~evenue Refunding Bonds
1990 Series A.
In December 1985 ... the city of Palo Alto issued $12.2 Dillion of
city of Palo Alto utility revenue bonds... 1985 Series A Adjustable
Convertible Extendable securities (ACES). CUrrently ... $lL 2 million
is outstanding. The bonds are rema"Cketed weekly by First Boston.
The weekly rates ranged from 5.4 percent to 6.2 percent during the
months of April, Kay and June 1990.
On July 9, 1990, staff updated the City Council on the status of
t.he refunding in CMR:-C01: o. As reported, the bond market has moved
CMR.:t2C:O
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~ck into the range to make the ret'unding effective.. The tentative
schedule of events attached to the CMR sho~ed Council approval of
those documents on July 23, 1990.
Interpel" Redefined to Include ston Drain
The City of Palo Alto has historically issued Utility Bonds ~hich
combined the strength of all its utilities, rather than issuing
separate bonds for each utility. In the 1985 bond issue, the
enterprise was defined as the electric, <Jas" 'Water and se'Wage
systems. As a part of this refunding, the -enterprise-has been
expanded to include the storm and surface water system. As dis
cussed in CMR:401:0 ... the expanded defir:.ition does not adversely
affect the financing and will clearly enhance the credit rating for
a future storm drainage debt issuance.
Qfficial stateaent
The Official Statement yill ba provided to prospective purchasers
of the new bond issue. This document describes the bonds and gives
additional infonnation about the City and the Utilities' operations
to prospective purchasers of bonds~ The information is intended. as
assurance that the City viIi be able to pay interest and principal
when it. is due.
Indenture. of Trust
Stone and Youngberg requested bids for banks to act as trustee for
the future 'bonds. Both the staff at Palo Alto and stone and
Youngberg revieYed the bids and selected Security Pacific National
Bank to act as Trustee. This selection was based on fees, services
t:o be provided, Individ,uals assigned to tbe account, past bistory
~ith Palo Alt.o, and references.
The Indenture of Trust is the legal document vhich provides the
appointment of security Pacific as trustee, outlines the duties of
the trustee, and provides the covenants ot the City.
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Purchase Aqrenont.
The purchase agreement is the leqal document 'Which p,rovides for
sale of the bonds froll. the City of Palo Alto to Stone
Younqberg~ St?ne and Youngberg viII then sell the bonds to
invest~ent community and the public.
the
and
the
staff determine4 to sell the bonds on a negotIated basis instead of
a public sale. because the lDunicipal market conditions are volatile;
there-tore, the. time of pr-icinq is critical.. .Also, timiIl9 and
notice requirements for a public sale are such that control over
the tille of sale to catch the ma,rket at a favorable time is
difficult l if not impossible; and the city believes that a prIvate
sale to an underwriter that is thoroughly familiar with the issue
will produce more favorable rates ..
addenduM to Aaree.ent ~tween Palo Alto. Mountain View. and Los
All2!;
The Addendum to Agreement between Palo Alto , Mountain View and Los
Altos establishes that the costs of this financing will be shared
on a basis proportional to their usage of the Water Quality Control
Pla.nt; simplifies the Palo Alto billinq process. since Mountain
View and Los Altos will be billed for established fixed debt.
service charges rather than charges which vary with interest rate
changes; and allows a.n early call provision for Mountain View. The
early call provision allows Mountain View to retire all o-r any
portion of their part of the bonds. but requires Mountain View to
pay any resulting costs so there would be no adverse effect on Fa,Io
Alto.
Pfrnm"endation
Staff recommends that the council authorize the Mayor and Fir.ar~e
Director to sign tbe Official Statement., Indenture of Trust.,
Purchase Agreement and Addendum to Agreement bet~een Palo Alto.,
Mountain View and Los Altos., and make any changes necessary to
complete the financing.
CMR:424: 0 1
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Respectfully submitted,
GORDON B. FORD
~reasury Manaqer
/;-tk~ ~ HARRISON
Director of Finance
GBFJEfI/JF: ec
Attachments: Official Statement
Indenture of Trust
Purchase Agreement
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o
Addendum to Agreement Between Palo Alto, M->Untain
view, , Los Altos
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o !S& y 0 NO. 004205 DATED 711 1,<JOI
I£WISSl£
~ the opinion 01 Jones Han Hil & WMo, A PlClossionailaw C<>rpo<ation, San Frandsco, Ca,fornia,
BoOO Counsel, uncfef existing taw, !h. interOS1 on the Series A Bonds is excluded ~om gross income for
lede<alinoome !ax p.l~ and sua. lnltirest is no( an ~.m of tax profetence"" pwpose. of the fode,,)
lndvidJar and <:o!pO!aI8 a~ mirimum !axos, alUloogh I is talIen into acrount in cle!anmining cO<1ain
income and earnings in compu!i"1l!he ilimaDve minimum !ax imposed on cerfain corpo<a!ior.s. In !he
~r1heI opioion 01 Bond Counsel, sua. in!erOS1 is exempt from Califofnia pBlSOOal iI'l<:ome taxes. See 'TAX
~·fWtrein. .
Oaled: August 1, 1990 Due: JUne I, as sf10wn below
The Series " BondS ",1 be initially issued as ItJ IIy re9islered bonds in the denomination 01 .5,000 Of
any inlBgral mulWple !hereof. fnt9fOsl on the Series A Bonds ",,1 be payable on December I, 1990 and on
each J,rne 1 and De<ember 1 thereal!", by check mailed by Secunly Pacilic Na6onalSanl<, San Francisco,
CaHoml", as Trustee, I:> !he regislered owners thereof as 01 the close 01 business on the fift...,th day 0I1he
month immedialely jJ<9CBding any inlarOS1 paymen! dale at !he address shown on I!le regislralion books
maintained by the Truslae; provic!ed!hat for any registered owner 01 $1,000,000 Of more in aggregalB
principal amount 01 Series A BondS, upon written reqJ&S( 01 such owner I:> !he Trustee received not later
!han the appI<:abIe Record Dale, sua. interest shall be paid by wire lransler. The principal of and
redemption premiums, f any, on !he Serie, "BondS sIlal be pa)"lble at !he principal eorpo<alelrust oI!ioe 01
!he T rusIee in San Frandsco, Calilorri., upon the presenla6O<1 and surrencfef 01 the Series A BondS.
The Series A BondS are being issued III reltJnd "'e ouIs!anding principa1 amounl oIlhe City 01 Palo
Alto, Uiity Rev..,u. Bonds, 1985 Series A ~ps!able Convertible Extendable Securities· ACES sm) (!he
'Prior Bonds') issued 00 December 24. 1985,
As _ berlin, lie Series A flond&. "'" SI.tIjott III op6onaI and "",,_, _ ...... prior'" .....,.
The Series A Bonds and all o!het Pality Bonds reonOC!ively 'the Boodsj are spedal obligations 01 !he
City and are secured by a pledga 01 and ien on the Net Revenues 01 !he City's EIecUic, Waler, Sewer, Gas
and Slonn Drainage Uiily $vslems, reo-ely '1fle Enterprise; and amounls l\eld ~orr §me \J 6me in the
00bI Service Fund all as Iu,,"or cfescli!le<l herein. The ~ 01 Palo AlIo Ui~1y Revenue and Refunding
Bonds, 1983 Series ... (!he '1983 Bonds' of .. h'c~ $.1,.20,000 are CUTT9f1t!y OtJIslanding are SBCIJred by a
prior len on the NeI Revenues. Pu!SUant to the Indenlure no additional Bonds may be sold on a panty ~h
!he 1983 Bonds. ~""lJncI.lIe"laIIl andcnd norlle!aD1g poooeroflleCly,lIIeStE
of CaIIania a: .", oils SIJJcIvisions is JlIodIIod lor lie parn1IIIII II lie Series A IIDrlIZ. Additional
bonds and o!her i .... may be issued on • panty wi1h !he Series A Bonds subjed III !he ron<ilions 01
1I1e tldenlUre as further Q>scribed herein.
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DJe t1teres!
.MlL1 !Ii!§ ~
1991
1992
1993
1994·
1995
1996
1997
1998
Due
.MlL1
1999
2000
2001
2002
2003
2004
2005
2006
[S&y~ NO. 004= lJ"'~" If! ''''''l •
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Am!l!m! Bill f~e
The Series A Bonds ani oftOflld wilen, as and f issued and actIlIl!Bd by !he IJml.""il .... subjed fD!he
OJlIlfOoIaI oIleQafIy by Jones Han HI & While, • f'roIessional ..... CoIporaBon. San Frandsoo. calircmia,
Bonc! Coonsel: Certain legal mallBft ",1 by ~ L4JOIl fa< !he City by !he City A1Iomey. l is expedBfl!hat
-III)' oI1he Series A Bonds "0'11 be mado In New y~ New y~ 00 or.boot , 1990 .
.Ally 11. 1990
"PreliminaJ)'. subject fD change.
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(S& y ~. 004205 DATEO 7111f.lOj
No dealer, brot< ... , salesperson 0< olhar perSO<1 has been iI\J!ho<ized by lIle Unc!erwn1ef \0 give anI
infGnnaffon or to ma1<e any representar,,", _than 111_ oonrained in lIli, Official S1ateman~ and, f given
0( ma<Ie, such olh ... informalion or repw...-' mus! no! be rBled upon as ha,;ng been authOlized by Ifle
Unc!erwmOf or Ifle Ci1y.
This 0fIiciaI SIaIemen! does no! oons1ilule an oI!er III se11 or Ifle soicilalioo dan oI! ... 1o buy, nor shaD
Iflere be anr sale d!he Series A Bonds ~ any person in any jJrisdiclion in .,l'ich I is unlawful b suc!l
person III maI<8 suc!o an offer, soli<:ila!ion or saTe. ThIs OfficiBl Sla! .... ent is no! ID be construed as a c:ontad
w!1I1 the p.lr<:llasllB d 111. Series A Bonds. The Ci1y considers lhi' Official Slatemen! III be 'near fino!" -.flIljn
!he meani"ll rj SEC Rule 15c 2,12. S1atemenfs conlained in !his 0ffida1 Sta!ement w~icII_ osffmatos,
becas!s or ma1!els d cp1n1on, .,!ItIheI or no! o~ so c!escribed ~ein. arB inlended so1e/j as such
and are no! III be oonstrued as a represen1alion d facts,
The information set bill Ile."';n tie, been obJained from the Ci1y and <>!her source, "'hicllara believed
10 be re5able, bu! is no! guaranteed as 10 acc\Jr3C)' or comp!eIeness, and is no! to be construed as a
represenlafion by !he Underwri!er. The infonnation and 8""reS$ion$ ol opinion herein ara subject \0 cha"ge
wiIhou! no1ice; and nelIhOf !he delivery of !his Official S!alement nor anI sale made ~eunder ,~.~ u nde<
any arrumslances. creale anJ impi<afion lIlailhare has been no change in the affairs of tho Ci1y slncalt1.
dale ~Ofeof, '
Definition of certain IBnn. used fie",," arB set bill in AppendIx A.
This 0If1Cia1 S1a1 .. nent is slilmilled in connection with lhe sale of the Series A Bonds !8ferred III
herein; and i may no! be reproduced or used, in lui or in pari. b anr <>!her purpose,
IN COIINEC11ON WIllI TtIS OfFERING, TIE lNlERWRIlBlllAY 0\'ERAll.0T 00 EfFECT
1RAHSAC1IlNS WIICH STABI..IZE 00 IIA1NTAIN TIE IWII<EJ I'RI:E OF TIE SEIlES A BONlS AT
A l£VB. ABOVE l*.TWIICH MGHT onEIlWISE PAEVAL IN TIE OPEN 1WI<Er. SUCH
STAI!IJZIG. FCOI'nrrn.1IAY BE 0ISC0ffTKH) AT Ntf TJoE.
TIE SERIES A BONlS HAVE NOT BEEN REGIS I BtiJ UNJm TIE SECUlITES ACT OF 1933.
IS AIEJIlB), IN REI.W«:E lJUI Nj ElCCEPIDN FIlOII TIE REGlSTRATUi IIEOlIIEIoI:HTS
COITAND IN SUCH ACT. TIE SERESA BONlS HAVE NOT BEEN REGIS1BIED 00 0UAlFED
lHlEII TIE SECUlITES lAWS OF IN'{ STAlE.
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o COY Of PALO AI. TO
Sria CIanI Couriy, ~
o
COY 0ClIJ0IC,L
Yke COOl>. !.byor
Gail Wooley. YlO6ldayor
Ran AndefSoo Gary Fazzino
UzKnlsS
leland D.lENy
JeanUcCown
Emily Renzel
JacI< SuIorius
atr .... 18QIIIII8IC
WHiam Zaner, City ManaIler
Anlhony Benne\li, Acting City Anornoy
GIofia Young. City C18rk
Tracey Kwol<, Acting City Audtor
_001'.'''''''
Emily Hamson, DirllC\Of
Goo!on 8. Ford, T<1!a$Ury Man~
Ran<!al M. IAlsgraves, Assisrant DifllC\Of
Jo!1n ~, \lanagef, ~ and Uanage<nenl Analysis
Eizabe!h Bar1hen. Serio< Financial Analyst
\8io& IlopIIMat
Richarll L Youn~. [)(rllC\Of
E<f,yard MrfZ<!li, Assistart [)imcIO<
Robert Colyer, Assistant OifllC\Of
NIle WOIfaIDopImIOIt
DaW! G. Adams, OirllC\Of
George BagOOn. Assistant Di_
Willam \iKs, F\egionaI Wafer Conlroi P'oat1t lAanagBf
Richard Smelser. Senior Engineer
SPECW.saMcES
8anII CIuweI
Jones Hal Hil ! WIlle
A l'roIessionalla .. ~
San FranciscO, Ca&mi.
T-.1'a)iIg Agort & RegiRW
S8cu1ily Pacilic Nallooal Bank
San Francis<Xl, ca.'fIomia
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o !S&'O NO.OO420S DATED 7111130j
lOCATION loW'
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tITROIlUCTON
THESEfUES A BCNDS
SOURCES Am USES OF FUNOS
THE REFUNDiNG ProJECT
seCURITY FOR l}E BONDS
THE EtfTERPRIse
The Electrical Ulil1y
The Gas Uiily
The Waler Utiily
The Waslewalar Uliily
The Storm Drainage Uliily
N'f'?I:N AI. OF lEGAl. PROCEEDiNGS
ASSEt« OF lrnG,t,mN
TAX EXEMPTION
RATINGS
~YI"f NO.IlO420S DATED 7rll19Oj •
I.I1SCELLANEOUS .......•.......•....•.•....•.•....•.........•..... : ..•.•
APPENOIX A· SUMMARY OF THE PRlNCtPAI. LEGAl. DCCUMENTS
The General ResoMion
The 1n<Ien1llr.
Af'I'ENOO( B· ENTERPRISE fINANCES
APPENDIX C • CITY FINANCES
APPENOIX 0 -AREA E(X»l()MV
APPENOlX E -PROPOSED FORM OF BOOD CXXJNSEl 0PlNl0N
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[S&Y 0 rIO. 00420S DATED7111.90j
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CITY OF PALO ALTO
UTIJ1Y REVENJE REFlNlN:l BOI«)S
1990 SEflIES ...
NTROIltJCfJ(JI
The PUOJ)OS& 0I1his Offio'aI Stllsmont. which inclJdes 1110 ""'8< pa~ and append'1C95 he",'o, is lo sat
brIh certain infonnam in connetlioo wiIlllllo sale oItha Cit)' 01 Palo AIIo UliIitJ Revenue Refundi ng Bonds,
1990 Series A (the "Series A Bonds').
The Series A Bonds are being is.'Ued'pursuant Ie !he cI1art .. 011110 City and 1I1e prtlllisions 01 CheplHf
12. 28 (com merocing wiIll Section 12.28.01Oj. 011110 Palo AIIo \.\Jricipal Code, fogether with Mielo 9
(comlTH!fldng wiIll Section 535501 and Miele 11 fcommencing wiIll Sectioo S3580j of GIlap"'r 3 of Part' of
Division 2 of Title 5 ofllle GoYemmant Code 01 !he SId,. a Califomia (!he ·Stal .... an as in efleel on lIIe
Closing Dale phe "Bond taw ... and pursuant to 1II0lerms and <:On<t1ions 0I1he Tnd'emur. 01 Trust by and
betweenlfle Cit)' 01 Palo Mo and SecuriIy Paci1ic Nalional Bank. as Irus!ee {the "T ruslee1 dated August I,
1990 (the "lndenluro'). The Series A Bonds ar. being issued lo refund 1110 ootslanding portion of the
$11,500,000 aggregale ¢ntipar amoun! 01 Cit)' 01 Palo Alto UliIitJ Revenuo Bonds, 1985 Series A
IMl"slab1e Convertible Exlendable Se<:ulilios-ACES sm) {!fl.·Prior Bonds"} $11,200,000 01 which all> no ..
ou\st.",ding under Reso!uOOn No. 6454 adopted by 111. Council on December 23, 1985, as amende<! July 21,
1986 (11''' 'Prior Bond Resolution'). All reforencesl<> and summanes of provisions of 1I1e Indenlure are
quarrliad in !heir onfire!)' by ref ... nce to 1110 run fndenlIJre, copies of ,.hie, are .,aJ1able for inspection at the
oIIi<:es 01 the Cirt-
The Prior Bonds were used lo ""'abiitalo Ihe Cit)", sew .. c:oIIedioo system and b expand !he lerlia<y
~ea!ment facil1ies 0I1I1e Regional Water avafrry ConIroi Plan! which is owned anc! op>rated by !he Cit)'. ft.n
of 1I1e improvements ..... e compleled on scl1edJle and within fltJdgel Ali projed accoonl proceeds of the
1985 Series'" Bonds have been expended
The p<incipaT of, 1110 rBdemplion premium. , any, and l!1e inleres! on !he Series '" Bonds are payable
from Ihe NeI Revenues as defined herein. The EnrelJl!iSo generany consists of 1I1e Cit(s e";sUng electric
energy syslem, gas syslsm. waler syslem. sal'<lary sewerage and 59W"1Ie disposal syslsm, and slorm and
surface warer syslsm. The Series A Bonds ... e special ob[gafions of !he Cit)' and, Iogeth .. wiIll any
addiliooal Palily Bonds (coI!ecIive1y"!he Bonds1 issued' purwanl t> Ihe Indenfure, ara peyable solely from,
and sacured by a pledge 01 and ien on. 1I1e NeI Rave,.,.. of !he EnTslJl!iS9 __ 1Ile general tJnd, ...
.. faiIh and ad nor Ile IalIing JXNW <l1Ile City. Ile SIaI& d Cairorria or..., oIher poiIiC3I_
....... is pIedrpI tJ .. payment aile Series A Bonds. The Series A Bonds "'" I'd 09ClUI'IId by a legal or
eqiIaIJIe pledge <lor dIarga. IBn or """"'""'" ""'" any JnIP8IIJ <I .. CiIy or ""I' dis ...... or ...... 8lCIlIiP .. NeI_
The Bonds are sacured ~ • lien on 1I1e Net R .... nues which is pnior 10 such 690 wi1l1 respect lo 1I1e
City 01 Palo "110 Uliit)' Revenue and Refunding Bonds, 1983 Series '" (!l1e '1983 Bonds1 issued in 1!1.
awregalo p<indpal amount of $4,765,000 pursuart t> ResoTuOOo No.6' T 1 (!fle "983 Gen .. aI ResoMion')
and ResoIu1i<ln No.6' 12 (the ., 96J Series ResoI.slion1 adopted by !he Cit)' Council 0!1 April 25, 1983. A
principal amoon! 01 $3,1«1,000 oIlhe 1983 Bonds is rurrently outstanding. UIlder the IndonlUre, no
_nar bonds shan be issued pursuant tJ It .. 1983 G<lne<al Resolution on. paritj with the 1983 Bonds_
The Cit)' covenants in !he Indenture !hat i ",,1 at an fimes Ii", prescnbe, "";se and collect Cnarges in
eeel> Fiscal rear which are su!licient to yield NeI Revenues equal!:> nol less than 1.25 times !he Maximum
Annual Deb! Selvice 0!1 an outstanding Bonds. See"Sewrilr for .. _. herein.
To further serure ttlB payment clltle principai rI and interest on the Bonds. the l1denrtJ re estabflShes
1I1e Reserve A!x:ount 10 be held by !he T>Uslee. An amotJnt~aI kl1l1e Reserve Requirementwil be
depOSJ1ed ill !he Reserve A!x:ourt from !he proceeds of 1I1e Series ~ Bonds. The Indenfure defines !he
Reserve RequTrement ~ EqJaI (he 'lesser r:I Maximum A."InLial Debt Service 00 an Bonds then outstanding Of
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o [S& Y 'Pi, NO. 00420S DATED 711 tl9<Jj
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such ~igher .mouot (not to e,caed ten po",enl (Hl%1 01 tI19 proooecfs rJ lI1e s.1e of lI1e bonds to lt1e
in,esting pt.!lr.c) as may be set fartl1 in a Supplem&\tal I'lc!entura. linda< certain circumstances, lt1e Reserve
JIcoount may be replaced in whale or in part by • ",rat)' bond or a loIler 01 cre<liL See 'Appendx A·
SUrnnwy oIl'lfndpaIlogai DocumenIs.'
l}£ SERES II IICHDS
The Series A I3on<fs ",1 be dated August I, 1990 and ara to be issued in the "99r"9"lo principal
.mourt, bear inler&st altho rate per an"um and mature on the dates sell:lr1h 0<1 !he "",er page herarJ.
InlBres! 0<1 !he Series A Bonds is payable semiannually 0<1 ,Ame t and December t ri each ye ... ,
oommendng December I, 1990 (eacll, an 'tlleres! Payment Dale) The Senes II Bonds will be issued in
fully regslered form, without coupons, in the deoominaliao 01 $5,000 or in any integral multiple thereof.
Principal ri and redemplion premiums, f any, 00 !he Senes A Bands. ",1 be payable at Ihe principal
oorporale !rust office althe T rus!ee in San Francisoo, Callomi. upon the presentalian and surren6er ri file
Serie'; ;..~. tnleras! an tl1e Series A Bonds W11 be payable by cMd< ar <!rail m .. led an eacl1 Inleras!
Payn.9I1I Oat>. '0 the owners 01 """'rd (\he "Owner") as rJ the close 01 business 00 the fifteenth calendar day
d the manlh inn.'>dIate!y prece<ing each tlTerest Payment Oale 'each, a "Aecord Oatei a1the addresses
lt1en shown on !he ",nes II Bond ragistraliao booI<s maintained by the T'USteelor suce purposes. or by "ire
lransfer on each Inla, est Payment Date to any Owner d $1,000,000 or mora in "99regalo pnncipal amoun!
ri Senes II Bonds 0111, ~as reqJested such transfer by written oolice filed wilt1l1la TruslBe by the Record
Dale preceding such onterast Payment Date, 11> such account as sha~ be spoo'fied in suc~ written noIiee.
Each Seri ..... Bond is to bear in_from lt1e ...... ras! Payment Dale ne'" preceding !he date 01
aulhenlicalion lhereof unTess said dale oIauthefllicalicn is an Weras! Payment Oafs, in 1&'Iic~ .,enl suc~
ilIerast is ,,",yable from sucll dale 01 aulllenlicatian, and unless said date oIaulllenlication is prior to
Oecembell, 1990, in which event such interest is payable from August I, 1990; pro.i<Ied, now",er, !hat if.
as 01 DIe dale d aulllen6ca!ion of any Series ... Bond, inler&st theraoo is in default, sucll Seri .. 11 Bond shan
bear inle<est from tl1e elate to whic!11nlaresl has previously been paid or mac!e .,ailablelor payment there<lO
in M. Interes! sh~ be calcu1a!e<! "" the ba$is d. :Jro.day year aI twelve 3(kfay months.
T ......... and EJdIange 01 Series II _
""Y Series'" 60nd may, in accoroance with its terms, be transferred upon the Bond Registralion BoaI<s
by the pernoo in whose name i is regslared, in person Of by N. duly aulllarized anorney. upon ",rrender of
such Series A Bond !of cancellation, accompanied by deli'lery 01. wri1!en instrument 01 transfer in a fomI
approved by lIle Trustee, duly executed. Whenever.ny Senes A Bond sMA be surrenderad for !ransfer, "e
City SM! execute and the Trustee SMI !heraupoo aulhenlicalB and deftver to the transferee a new Series A
Bond or Series II Bonds of r"" lanar, maturity and eggragale principal aroounL No Series II Bonds !he
noti<a 01 redemp60n of w/lich has been millled pursuanlto the radlemp60n provision' aI the Indenture shan
be subjed to tansfer.
Serles II Bonds may be exchanged a! the !rust oI!ice oIl1le T rusl .. , lor Series A Bonds d Ihe same
fenor and maturity and aI otl1er authorized deoominati::""
_~~SIdon or1.ool
I any Series A aond shaN become mubl.1ad; the Cily, at lI1e expense of Ihe O<Inor of said Series A
Boo<l; shall e,ecute, and the T rusfee shal thereupon authen!ica'e and de~,er, a ne .. Series A Bond of if,e
matun1y and principalamoun! in oxcha"Qe and substitution for the Saries A Bonds sa mutilaled but only
upon surrender" !fle Trustee rJ the Senes A Bond so mutilated. EveI}' muhlated Senes A Bonds sa
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fS& y 0 NO. 00420$ DATED 7i11/90J
surrendered 10 Ihe TM1ee shan be ean",,~ed by land denvered 10, Of upoo !he order of, 1I1e CIty. r any
Series A Oood issued sha~ be b<1, destroyed Of stollln, ovideoc<> rJ suc~ i'>ss, deslrucfi.oo Of 1I1e!t may be
subrnilled ~!he CIty and !he Truslee and, I sue;!, evide""" be satisfactory IIlll1l>m and indemnity
satisfado<y 10 "'om .~an be given, !ho CIty, allIle e><pense rJ I!le Owner, shal e'ectJlo, and 1110 Trustee
sIlal",oreupo<1 autl1enticale and derrver, ..... Series A Bond of ike malun1)' and prindpalamoonl in leu of
and in S<JbstiMon """,. Se~es A Bond so tool destroyed '" otofon [", f any suc1l Series A Bood shan have
ma/ured '" •• alha,. been caRed foI redomption, insIBad of issuing • substiMe Series A Bood "'0 Trustee
may pay I!le same <ri1hout surrendot lI1en!Ofupon receipt of indemnity satisfact"'1Io"'e Trustee). The CIty
may require paymen! of • reasonable fee for .""to new Series A Bond issued aod d Il1l> expenses which
may be incunad by !f1e CIty and "'0 Trustee. Any Seri .. A Bond issued in leu of any Series A Bond alleged
10 be tool desIroyod '" stolen shal consliMe an original oonlradual OOlg0600 00 !he part of",o CIty
w!lolhar Of not !he Se'" A Bond alleged 10 be bot destr1>yod '" slo"n be <t. any time errforceable by
a")'OOe, and shan be equally aod propo<Wnately enfi1!od Io"'e benefits of i!le Indenture willl aW oll1l>r Series
A Bonds secured by I!le Indeorure.
OptionaI-' rpIb.
The Series A Bonds mahJnng 00 '" bef",e June I, 1999, shal not be subject 10 optional redemption
priOf 10 malltrily. The Series A Bonds maturing on or at\er June!, 2000 shan be subject 10 redemption prior
1o",oir respecfi¥e maturity dales, aI!he opl"ooo of Il1l> City. as a '0'11010, or in part in in,o".o ordef or
maturities and by kJ! wilhin a matIJiity, from any soorco of available runde, on any Tnteresl Pay monl Dale on
ar after Jun. f, 1999, at iIlo following respedi'o redemplion prices [i!le 'Redemption Price, wIoicll are
e"Pressed as porcenla!ies of 1!oe prindpal amourol oUtoe Series A Bonds 10 be redeemed, plus accrv€<l
inlerest thereon 10 I!le date of redemption.
f!Bdomptioo Date
Ju no t, 2000 and Deoember t, 2000
June 1, 2001 and Deoember t, 2001
June t, 2002 and i!lerealter
Redemo!ion.Plli;.~~
102";1.
101%
100%
The CIty shan give 1110 T ,"stee wollen nalia! of its intention 10 optionally redeem Series A Bonds and
shan depo5iI all amounts recpired for suc~ redemption with !he Trustee alleast forty-fM! days poar 10 Itoe
dale fixed lor 5UC~ redemption.
I'IrI:Ioase 01 Bonds in lieu 01 RoIEi.rpIb'
.., iEllJ of redemption or Series A Bonds as described abo,e, a<OO<Jnls in !he Rodemption Acx:oon! of
I!le Do!ot Seriice Fund may also be used and withd ...... by IIle T ",tee at any fime, upooo Itoe ReqoJest or Itoe
Cit)' filed with 111. Trustee no later I!1an April \5 in any year, lor IIle purchase of!ho Senes ~ Bonds at p<!b~c
Q( priYate saTe as aod w)oon and at suc!o prioes ~ncIud ng brokerage and ortoef charges, but excludin~
accrued interes!, w!lidl is payable from !he D9bI $er\/ice Fun<l} as IIle City may in its <fsaetioo deteom; ne,
W not II oxeaod "'e prlndpal amoont of SId Series A Bonds plus I!le redemption premTum appriCable on
IIle nexl .... uiog opIionar redemption dale. me City sha~ aliloo time of any 5UC~ purchase, pay to !he
Trustee for depo5iI in floe Do!ot Selvk:e Fund",o amount d any deficiency in suc~ fuod IIhic~ may be caused
by suc!o purcl1ase. All Series A Bonde so purc~asod s~an be carn:eIIed.
AI Series A Bonds redeemed and an Se,i .. A Bonds purchased by Il1l> CrIy shan be cancolled and
des1JQyed
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o [S&~ NO. 004205 DATED iIH/90!"
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SpociaIliaidab J _ • .,00. .............. "'Cam"._' ~
The Seri .. A Bonds are sclljed to mandalOi}' redemption as • whale an an, dale or in part an any
Interest Payment Dale in in,erse order rI mallJnly and by 10( wiltlin a mallJnly, ID the e><lent rlthe No!
Pro::eeds rI flazard insuranoe no! used ID imp,",,_, rnpar or rebuild th_ Enterprise OJ the No! Procaeds 0(
<;oncJemnafioo awarcfs recei'led wiItl respect to the Enterprise at a Redemp60n Price eqJa/ to the pOndpaI
amount rI the Series A Bonds pIJs intBfflSl accrued i!1erean to 111_ dale bed fo< reclempfion. wilhalA
premium.
ttiIce rI_,piln
Unless waNed by .nl Owner rI Bonds 10 be redeemed, afliQa/ flOti<>i rI any rede'TlpOOn aI Bonds shall
be given, a1i!1e expense 0( I!1eCily, by I!1e T",sl9& by mai1i~ a copy rI an eIf,,;a! redempiian no"Jae by firsl
class maij aI !easl30 ""ys and no! more than 60 ""ys pOor 10 the date fixed for redemp6an 10 the Owner of
the Bond or Bands ID be redeemed althe aOjross shawn on the Band Re9istralion Books or aI such other
a<ldress as" fJmished in .. riti~ by such o.mer 10 lI1e T ",sloe. Neither the faJlurelo raaei,e such oolie<!
nor any immarena/ defect in any flOti<>i shan affec! the sufficiency 0( 1he proceOOings 10< the redemption 0(
1heBonds.
All afliQa/ noIiaes rI redempfian shal be dated and sha! slale:
!iJ the redempfion dale,
(i~ the Redemption Price,
~ii) f fewer !han al o.rts!andi~ Bands are to be nedeemed, the idenlificalion (and, in the
case rI partial redempfion, 111. respective principal amounts) rI the Bonds ID be redeemed,
0" thai an lI1e iedemp(ion date the Redemption Price ,,~ beca",e due and payabl_ w~h
respect 10 each such Bond or portion I!1ereo! called fo< iw.mplion, and Itlat inlerest ",ilh respect
_ shan cease ID accrue from and afief saki dale, and
M 1he place or places where such BonOs are 10 be surrende red for payment of 1I1e
Redemption Price, lIffiich places of paymenl may include the TfIJsI Office of 1I1e Trustee.
P< leas! fortj'-fivel45j days prior 10 any redemption ""Ie, the CiIy shan deposit with the Trustee an
amoun! of manB)' suffident 10 pay !he Red_mpfion Price 01 an Itl_ Bonds or portions of Boods which are 10
be redeemed on Iha! dale.
Offidal flOti<>i 01 redemption having been given as aforesaid, the Bonds or porIions of Bands sa to be
redeemed sha~ on 111_ re<lempfion dale, becam_""_ and payable at !he Reclempiian Price therein
speci!ied, and from and afief such ""re (unless the City shan defau~ in 1I1e paymBfl! 01 lI1e Redemption
Price] such Bonds Of portions of Bands shan cease III ~ave ioterast ace"," 1I1erean. q,on sunrender 01 such
Bonds fo< redemption in accordance with suc~ 006ice, such Bonds shan be paid by lI1e T rusloe al !lle
Redemp60n Price. t1stallmen!s 01 inlarest due on Of pOO( 10 the redemption dale s~an be payable as set
forth herein. Upon ,urrender for any partial redemplion 01 any Bond, !here s~an be prepared 10< 1I1e owner a
new Bond 0( Bonds of 1I1e same maturity in !he amou n! rJ 111_ unpaid principal. AI Bonds lIffiich have been
redeemed shan be cancelled and <leslroyed by 111_ Tru'; .. and shan no! be rederrvered. Neither tl1e r .. lure
0( any Band Owner III receive any ooIice sa maijed nor any dafec! therein shan affect tl1e sufficiency of lI1e
proceed'!S fo< redemption 01 any Bands nor the cessation of "",,,,a1 01 interest thereon.
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o ',S&Y(;f NO. 004205 DATED7IW.lOj
In addilion Iv \he IDregoing oo!ioe,fu<fher no!ice s~a~ be giveo by 111. Tl\Jstee as ,at fo<fh below, txrt 00
defect in sUG~ furthor notiGe rlO( aoy "-1m. 10 gi,e .1 Of any jlOrton rJ soc~ further notice shan in any
manner ""leal1l1e e~e<:tiv.ness 01 a can for redemption f notic.II1!1feol is given as aboY. p'escn'bed:
~) Eadl ~rther nolioe 01 redemp!ion gi,en sIlaJ QJnfajn I!1e informalion required above i:>.-
an cIIidaI notice rJ redemp60n pIu5 W I!1e CUSII> numoors rJ all Bonds being redeemed; tBllhe
slaled inlal9Sl rate with respect to .acl. Bond be1ng redeemed; tel I!1e maturlly date rJ eacII Bond
bEing redeemed; aod tD! any o1t1er descripllvo inform.1ion needed 10 ident'ly aooJfatefy !he Bonds
bEi"ll redeemed.
~ij Ead\ ~rther notice 01 _pIion ~a! be sen! at feast 35 days before 1he redemption
dale by registered Of certified m.,1 or ovemigli ""ivery seMce to an registered securities cIepo~10fies
!hen in I!1e business 01 holding subsfantial amounts 01 inslru""",ts 01 t;,>pes romprislng !he Bonds, and
10 one Of mOf91nfOfmalion SeMceS.
Oi~ Eacll suc1l lurtho< notice s~an be jl'JbflS~ed on. time in The Bond Buyer, Of, f suc~
ptbicatioo is 'mpraaicaI Of un !ke1y 10 reac~ a subs!antial number rJ !he Owners rJ lI1e Boods, in some
oIher fi naodal newspaper Ofpuma! whicll regularly canies notiGes of redemplion rJ other insll\Jments
slmiTar 10 !he Bonds, suc1l PJbica!ioo 10 00 ma"" at feast 30 days p<io<lo !he clale fixed !of redemption,
[IV) Upon lI1e paymeol 0I111e RedempOOn Plice rJ 1he Bonds being redeemed, eac1l check
Of other lransfer 01 funds issued for suc1l PJrp<JSe s~a! bear 111. CUSIP r<Jmber identifying. by issue
and malurfty, I!1e Boods being redeemed wiIh lI1e proceeds rJ sucI1 ched< Of otherlransfer,
The IoIIovIIng !able sets fo<fh!he estimated sources and ""'s 01 funds for lI1e Se';e. ~ Boods,
Source. rJ Funds:
Principal ~nl 01 Selies" Bond.
Pri<K Bonds Reserve Fund
Accrued irlleres!
T oIal Sources
Uses ct Funds:
Redemplion 01 PliOf Bonds
UndefwrilBr Discoonl
Cos! rJ fssuanee Fund
Debt Service Fund
Res"",. Accoun!
Tolal Uses
$
$
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o tsSy~ NO 004..'>QS DATED 7111191l! •
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The CiIy has delBmlined aft"' <11e inves5!lalioo and de&bera1io<1111at its besl intBfOSls are ~od at 1I1is
""" by 111. issYance <l1f1e SBffos A Bonds at tliced in!9f8SI rates 10 IVIund!he outstanci"9 variable rate Prior
Bonds.
Mull 00IJI SaMco
SelIor1Il below is tho annuaillobl ser;ke on !he SBffes A Bonds based on !he interes! rates and
ma~ri!y sclTe<lJTe sot IOIIh 001f1e COllar "'lIis Official S1atemenl
Year EndI"'.l
~!
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Total
e.ri~
$ $ $
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o [S& Y 0 NO. 00420'3 DATED 71111J0l
SECURITY FOR n£ BONDS
Pledged~_
The Bonds are special obigatiOOi 01 !he City and, jlO rsuantlo !he »denture, !he re are pledged to< lIle
beoefil 0I1he o,wne" 01 the Boods lila! porlion 01 Nat Reverues wtich is necessary to pay 111. piinclpal or
_pIioo Price rA and irnerest on Ole Boods in any Fiscal Year,logli!her ";\h aft moneys on deposit in l!>e
Deht SeMce Fund. The Net RevellU9S shal not be used to< any oIher porpos. while any 0I1he Bonds
remain Ou!standng, e~ as provided in It .. Menlura. This pledge sIla! constitu1e a firs~ eire.::! and
exclJsive eIlarg. and len on Il1e Net Rovenues b Ihe payment 01 the prindpal or Redemption Price 01 and
inleresl on lI1e Bonds subject only 10 the ien 01 the 1983 Bonds. The QJrrent outslaneing principa' balance
01 the 1963 Bonds is $3,140,000. The Indenlure provides lI1al no a<kitional bonds ()(l a parity .,;th 111. 1983
Bonds shan be issued.
The Net Revenues consliMe a hlst fund b Il1e S<lCUrily and payment oIl11e principal or Re<fempfiOn
Price 01 and inleresl on Il1e Bonds. The gen&ra! fund 0I1he City is not lable and lI1e CIadit or taxing power of
lI1e City is not pledged fi:Jf I!1e paymBflt 01 !he pnndpal or Redernj)lion Price rA and interest on 111. Bonds.
The Oomer oIlhe Ilonds sIlal not compel1!1e exertise oIlI1e IaJcing power by 111. City or lI1e fOOe<lure of its
properly. The principal or Re<femp5on Plice 01 and interest on lI1e Bonds are not a debt of lhe City, nor a
legal or equilable pledge. cl1arge. lien or encumbrance, upon any 01 ns properly. 01 upon any of its income,
rece;pls, Of revenues except I!1e Net Revenues 0I1he Enterprise.
Th. Cit)' covenants and agrees 1I1a1 al Gross Revenues, .men and as received. ..,1 be received and
held by the City in !rust hereunder and wi'! be deposiIed by lI1e City in lI1e Revenue Fu nd (whicl1l1as
herelofore been created pursuant 10 Ihe 1963 GeMrai Resolulion) and wiD be accoun!ed b Ihroogll and
held in tust in lI1e Revenue Fund, and Ihe City snat only have sucl1 beoelicial right or inlerest in any 01 soc11
money as provided in I!1e lnOenture. All sucl1 Gross ROIIenUBS shan be transferred. disbursed. al'<lcaled and
~~ed solely 10 lI1e uses and porposes identified in I!1e Indenture, and shal be a<:COOn!ed fo< separatery and
apart ITom an oIher money, funds, accounts or oIher resources of the City.
The Tndenture defines certain temls, Ihe use and meanings ~ which are rnportant to an understanding
r:A lI1e securily r:A lI1e Bonds. Cartain r:A!he defined lerms are set fi:JfII1 below. Cap<laNzed lerms ~.rein are
used wi1h lI1ese meanings.
'Bonds" means, collectively, lI1e Series II Bonds and any Parit; Bonds issued and at any ~me
OJ!standing under Ihe lenns of lI1e1ndenrure and under a Supplemental Menlura
Tharges' means lees, IoiIs, assessments, rates and rentals prescnbed under 1119 Bond La .. or
any ol11er law oIl11e Stale ~ I!1e Cooncil b !he waler, gas. or eledric energy. or lIle servi<:es and
!acii~es r:A the EnlBtp<ise fumis",", by 1!1e City-
"Erlterpri .. " m ..... lI1e .mole and eac11 and every part of (i) 111. existing .Iectic energy syslem
althe City, comprising oJ rao'lties b Ihe generation. produdion. transmiSsion and cfstnbutioo of
• _ energy. (ii) Ihe existing gas systBfll alll1. City, comprising al facil'.s fo< ll1e production,
storage, transmiSSi«l and distrfb\Jtion rA 9'" b pubTIc or privale uses, ~i~!he existing willer system 01
U1e City ,comprising an faaTrties to< U1e obtaining, conserving, treating. dislnbufing, sloOng and
supplying 01 walet "" oomestk use,lrrigafton, san~aflOf\, inooslri.1 use, ~re prctection, recreation, or
any oll1e< publ"lC or priv .... "ses, (iv) tl1e eXisting sanitary ..... erage and sewage disposal 5)5tem or lt1e
City. oomprising an facili!ies to< I!1e collection. treatment", cfsposal 01 sewage and waste, and (vi 11>.
existing storm and surface waler system r:A lI1e City, comprising an faciities for the collection, treatment
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o ~&y~ NO. 00420$ DATED 71; tOOl
'-"
and disposal cl slQ(m and surfaa! waler, and identified as tile Slcrn1 and Surface Water Management
IOnt"",rise and Ulifity in Qrcjnance No. 3910 effedi,e on De<:ember 21, 1989, including an additions,
be!leomenls, .xIBn~ons and improvements to ~h such system. respecfrvely, Q( any part Iherecl,
hereafter acquired Q( ronstruc1ed or financed.
'Gross R<MInuos" """'ns.1or any poriod 01 computation, an ijfOSS charges "",,",ed lor, and an
other gross _ and revenues derived by 1he Cit} from,1he ownersIlip or ope<alioo (l/ 1he Ente<prise
Q( oIherwise arising from 1he Enl8rprise (l'"ng such period. inclJdng 1M r<X im~,", kl [a) .n Cllargos
received by !I1e Cit)', jbjan rec<lip(s delined ~ om lIle in,estment 01 ~Jnds Mid by !he Diredor 01
FII1anc8 Q( Ihe Trustee uncler 1I10lndonbJre, (c) lIans"'" from any slabi~zation resOlVe funds, ldlan
moneys raceivad by 1M Cit)' from olher pubic en!6es ~ose inhabilanls aro s.rved pursuant kl
conllacts with 111. Cit)' and (e) moneys depooiIed in !he Debt SeMce Fund or oIher lund to secur01l1e
Bonds '" to provic!e lor 1110 payment of !he priodpal 01 or inlo<est on Ihe Bonds.
"Mainlenance and Operation Costs" moans !he reasooabl& and neeessary CO$lS sper1l Of
inw.ed by !he Cit)' lor maintaining and operalin~ Iho Entorp!isa, cafaJlated in accor<lance .. 'Ii, sound
actO<Jn6ng prinoiples, incI!Jcjng 1110 cos: of supp!)' of w,tor, gas and e!edric enorgy under rontracts Of
otI1e!Wisa, 1holunding of reasonable reseM!~ and an reasonable and necessary expenses of
managemenland repair and oIher expenses Ie maintain and preserve 1I1e Enle,])rise in good repair and
womng o<der, and including an reaSOf1ab1e and necessary administrati,e cosls of 1110 CiIy allnbufable
to 111. Enlerpnse and 1I1e Bonds, such a. sataries and wages and 111_ necessary conlribu5on Ie
reljremenl rlomproyees, 0II9flload, insurance, taxes (ilany~ expenses, rompensa!on and
indIemni!icatio<1 rl1I10 Trustee, !he FISCal Agent and Iho Paying !\genls and lees 01 auciters,
accountants, attorneys Of .ninears, and i.duding ar. otI1er reasonable and necessary rosls of Ihe Cily
Of charges r!!QJired kl be pald by i to comply with tile moms rJ 1I1e Bonds Of of (ho 1983 General
Reso\JOOn. tIlo 1983 Series A ResoMion 0< Ihe IfldenbJr .. but &xcludng depredalion, replacemenl and
obsolescence charges Q( roserves _ and amorlization of inlangibtes or o!I1er booI<keop1ng entries
of a similar narura
"Net Revenues" moans. lor any pef.od of romputafion, Iho amoon! rJ !he Gross Revenues
reeeived during such period less tile amount of Maintenance and Operation Cosls becoming payable
during s~ panad. •
'Panl)' Bo"""" mean. al bonds, noles Of otI1er obIigetions Oncluding, ... it~out imitation,
\Jog-mom ror.trads, loans, SUlr-' Of otI1er legal ~nandng a"angemenls) of Ihe City payable from
ar.beeured by a pledge of and lien upon any rJ Ifle Net RBvenues issued orinaJrred on a paol)' with
Ih. Series A Bonds.
The City cc"e"anls and agrees 1I1at an Gross RBvenue" wilen and as received. wll be received 000
held by !he CiIy in trust and wil be dIeposiled by Ihe CiIy In 1110 Revenue Fund (which ~as beGn created
j)IKSlIant 10 Ihe 1983 General RosOOfion) and Wl1 be aerou nled lor Ihrough and held in trust in Ihe Re,enue
Fund, and 1110 City shal only have such beneficial IIgll! Of interest in anJ of "''''h money as provided in Ihe
Indenlure. IJ such Gross Aevonues shan be ""nstarred, disbursed, allocaled and apprlOd solely kllh. uses
and purposes set fortI1 in !he _,.. and shan be OCCOtJnfed fOf S&palately and apart from an olt1er
money, "'nds, aa:ounts or 0II18( "'SO<!fC9S rJ!he Cily.
The Debt Service Fund, as a spedal fund, and 1110 Redemp.on Accoonl and Ihe Rese",o Ac<:oonl, 3S
spedalaccoonts tilerein, have been crealed
The Debt SoMe. FUnd i5 helc! and maintained by Ihe Trustee and Ihe Revenue Fund is held and
mainlained bY 111. C;recfor rI Flnonca.
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1~ Gross Revenues are held in trust by !he Diredo!' 01 Fillanee in the Revenue Fund and shan be
appfied, transferred, used and withdrawn as i:>lIows:
II) QI>!l!ll~. The Director 01 Fillanee shan fi<t1 pay ~om 111& moneys in !he Revenue Fund
Ihe budgeted Mainlanance and Operation Co&:; as such Costs bea:Jme due and payabra.
(2) 1m Serieo A Bond Payms!l!i. The Diredo!' 01 FIllan<:e shal ~x! pay and transfer ~om Itle
R8Yenue Fund 10 Ihe Fiscal ligon! for ~ in !he Bond Accoor1l and lI1e Bond Reserve Accounl (realed
pursoarIlo Sediorl 503 of It1e 1983 Genera! ResoMon suclI amounts as are nec ..... ry '" satisfy It1e
requirements 01 said Sedioo 503 in lui with respecl to Ihe 1983 Bonds.
(31 ~. On Olbeforo!he seoond day plio< 10 eacll Inlerost Paym"'" Dale, beginning
November 29, 199O,It1e Dredo<oI Finance shan lransfedrom!he Revenue Fund 10 lI1e Trustee for deposit
in Ihe Debt SaNice Fund (i) an amount eq;al1o Itle agg regate amo"," 01 inlerest In lle<:ome OOe and
payable 00 an OJtslanding Bonds on lI1e nex! soo:eedng Interest Paym"'" Date, plus M beginning May 30,
1991 an amoon! equal '" Ihe a99regale amaurt 01 Pri~llnstanmen!s bea:Jmir,g due and payable an an
OJIstanding Boods on Ihe nex! succeeding PriO(lpal hslallmont Dale. All inlerest eam1ngs and prolils 0<
i:>sse< on Ole inVl!stment 01 amoUilts in Ole Deb! $er;ice Fund sIlan be deposited in 0< c.~arged '" !he Debt
$er;ice Fund and applied 10 !he PO!JlOSOs !hereof. No transfer and Oepos~ need be made inla the Deb!
Servko Fund tlhe amrun! oonlained lt1erein, falling info 3(00Un! investment eamings and prolils. is at least
eqJaI i:> the Principal rnstanments Of Principallnstanmen!s all'J inlerosllo beoome due on !he ""xl Interest
Payment Date or Pri ocipal rnstanmen! Dale upon an OJIslanding Bonds.
(4) ~_e __ ~ Aft.ef making the ~ments. aJllx.afrorl:) and Ddll:;rern prolriided for in
subsecfooos 01 (2) and !3) above, I the 1Jaranee in !he Reserve Accoun! is less "'an the Reserve
ReQJirement, !he <!elid<lncy shall be restored by .. .".ra" ~ !he irst moneys whid1 become aV3J1able in
1I1e Revenue Fund 10 Itle Trustee lor <lepooi! in Ihe Reserve Account
tsl SUiJ)1IJ]!. As 100g as an 01 !he Iaregoing paymenTs, a_ns and transfers are made at !he times
and in !he m an"", set for!h above in su~s (1 i to !4), inclusive, any mon"is remaining in Ihe Revenue
Fund may at any 'me be l!eated as surp!Js and shal be appijed by !he Director of Fin .. 'lC>I 10 Itle PO!JlOSOs
atJthoI;zed by !he Citt Chartar.
RaleCcM!n;ri
The Ci!y shal h, proscribe, revise and collecl C!1arges during eoeM FISCal Year which (loge!her wiih
otho( JJnds accumuTaled fJOl11 Gross Revenues and wllich are rawfully aVilJ1ab1e 10 Itle City lor paymert of
any 01 !he IoIIowlng amounTs during SU(h FISCal Ye,~ are at leas! sulficient after mailing anewanees ""
rontingencies and e"Ofin!he estimates, 10 pay Ihe Iol!awing amounts in the fo"awing ",<!er.
lal an Maintenance and Opera~an Co&:; estimaled by Itle ~ i:> beaomo due and payable
in such Fiscal Year;
{bl Itle principal 01 and inierost on !he OJlslanding Bonds lle<:oming dee and payabre du ring
such Fiscal Yea<;
(c) an olher paymenls required Jor complaO(e will> !he Indenrure and !he instruments
porsuart 10 which any Parity Bonds shal have been issued; and
(el) an payments roquired 10 meet any o!he< oMgalions of the Ci!y which are charges, iens,
encumbrances upoo or payable from the Gross Revenues Of th€ Net Revenues.
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Tn addlion,!he car $1Ia" fix, """",,00, r .... ise and coiled. Charges during .ac~ Fiscal Year wl1ic~ are
sut!icifri 10 yi<>ld I'lelRevenu .. , at least equal III one hu ndred iWB<lIy-five (125%) c(!he amounts payabl.
under"e p<eeedng clause (b! in $UC~ Fiscal Year.
RIarw~
lbeCil)'is ~by!he tIde<I\Illelo ~sh"e Fl8$er;eh:co<Jnt.lobe held by ", Tru..<lea. • ..;
10 mainlain iIlenIin an """",11\ ~ lD tlte RasaIV8 AacPrsment wbjocI to Ihe provision c( tIIo Illdeoiure
pennil6ng deivery d a ~ bon<! 01_ c! cre<frt in 1!J1 01 partial salislaction c( tlte Res9!'l9 .
IleIPr6l7l8flt Se&\IJe ·IA**A-&mnarycll'liqllll..o;al~· herolJ\, The ReseNt
RequT_ mSllllS an amoul1\ ~ to \I19lBsser 01 MaJoi"mum Annual De!lI SeOlioe or sudI higher amoon!
[noIlo exceed tim perC8l1lI~O%) <Ii !he p<ooeeds rI sal8 c( lIle Bonds to 1119 in'lesling pubk) as l1\ay be ,at
b!ll1 i1 a SuJlll1em911lal indenIlJra
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o [S&,!,OO~' 00420SOATED 711119O!
,
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R£VENU£S
SaTes
rBterest
Other
from ~ontraclin9 agencies
TOTAL REVENUES
OP£RAT I NG EXPENSES
Pwrctlases
Operating. Maiutenance & A~!m.
Debt Servite-83 Issue
Debt Service-8S rssue
TOTAL OP£RATI NG EXPENSES
INCOME BEFORE OEPRECIATION
Oep reci ali on
NEf INCOME
Revenues avail for Deb' Servtce
Payments (2)
Debt Service Payment.
Debt Service Ceverage (I>
Capital Expendi!ufBS
(1) Prel iminar),.
19,138 81,330
3,926 3,493
3,()22 2,383
3,310 ~
89,996 96,8()3
47,409 49,195
19,511 19,123
553 554
~ ~
67,781 69,994
22,200 26,809
3 1 030 4,700
19,179 22, l()9
23,076 27,885
867 1,076
26.62 25.91
"10,567 12,301
87,911 86,442 94,698
4,129 4 1 932 5,350
1,648 1,695 2,854
~ ~ _5,HZ
97,(la4 97,828 108,379
46,290 42,176 49,S3O
17,093 .8,215 21,W2
549 553 551
_.B29 _c.W2 -.1,151
64,761 61,938 72,724
32,323 35,892 35,655
4,812 5,031 5,241
21,451 JO.I!t55 30,414
33,701 37,437 37,357
1,378 1,545 1,102
24.46 24.23 21.95
11,140 12,254 9,855
(2) Revenues avai labfe for Debt Service Payments are caTculated as Net Income
prus Oepreciation plus Bo~d Debt SeryicB.
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{2' ~evenues avai labre for Debt Seryice Payments are calculated as Net fncome
plus Depreciation pl~s Bond Debt Serwice.
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0 !S&y 0 NO, 004205 DATED 7/11190j
IlE'IEtM:S ~ OPERATNl EXPENSES BY lJTl1TY
Rf I'EPlJES
later
Electric
Gas
lastewater
Stor. Ofainage
TOTAL RHENUeS
OPERA TI r.G EXPENSES
later
erec:(rjc:
Ga.
lastewater
Storll Drainage
TOTAL OPERATING EXPENSES
I HCOWIE aeFOOf
(J(PREC! ~ II ()Ij
(J(PREC! A TI ()Ij
Nfl lNCOfllE
('t) E.li";~led.
(2) Projected.
~8§
S,171
55,009
19,996
9,220
~
~
&'8§
4,411
39,2S
16,782
7,203
.--.J!
aID.
22,209
3,030
19,179
(OOO's)
S60aI ~
6,813 6,~56
62,331 64,149
13,179 18,~1
8,880 S,3S8
_ ,0 ~
i!UQJ ~
~ ~
4,349 4,080
46,056 44,102
11,121 8,806
1,868 1,155
.,..---!! __ 18
~ §WliJ
26,809 32,~3
4,.700 4,872
22, lO9 21,451
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8a=S2 89 90 (1) 90·91 (~J
8,50 9,881 lO,135
62,113 61,912 72,292
16,641 18,821 17,~3
lO,~6 11,309 13,380
~ ~ ..2..m
~ m.m 119 129
~ a9~ OOc-ljl 1Zl
4,030 5,O~ 6,247
37.833 44,225 57,058
12,462 13,921 13.286
1,564 . 9,527 lO,900
~ .----n .--1l!Q
~ 72,724 M.ru
36,892 35,655 21,848
5,037 5,241 5,553
30,855 30.414 22,295
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. o ~&ry NO. 004..00s DATED 71111901
Issuance 01 PariIy Bonds
In addlion t>!he Sa<ies A Bonds !he City may, by Supplemenlallnder.lure, issue Of incur oIIler loans,
advances Of indeI>Iedness payable !rom Net Re.en<* on I paJfty with !he Series A Bonds to provide
finandng ""!he En!8<prise in sudl prindpalamounl as shafbe determined by !he CiIy. The City may ;,sue
or incur any sucII ?alit)' Bonds Slbjed to !he IoIlooOng specific condi!ions which are con<itions precedent to
!he issuance and dofvety 01 sudl Parily Bonds:
{al The City shall be in compliance with aI covenants set Ii:J<Ih in !he I1denrura
(bJ The Nfl! Re.onu .. , cabJla!ad on sound acooon6ng prindples, and e.clJOng any
ba!ances in any fund at !he begfnring 01 !he pelioa' 01 oompufalioo. as shewn by Ihe booI<s 01 tile City
10< !he ratest FISCal Year Of any mOfO rocent twervell2j montll period selected by !he City eOOing no!
,""",!han sixty (00) days pOOr to fI1e aoop!ion of fI1e Supplemenlal_tu'8 p",;uanlto which
instrumenl such Parfty Bonds are issued, as shown bjllhe booI<s 01 fI1e City, plus, at Ihe eplion 01 tl1e
City, any Of al of !he hems hereinafter in Ihis paragraph dosigna!ad V) and (iiJ. shan at least equal Ofle
hundred twenty·fi,e (125%) of Maximum Annual Debt Ser¥i<e, ",,111 Maximum An",al Debt Service
calru1aled on al Bonds 10 be Ou!s!andIng Immediately subseqJenilo !he issuance of sudl Parily
Bonds. The m, any Of Ii! 01 w!1ic!1 may be acl<!ed 10 suc!l Net Re.enues 10< !he purpose 01 issuing Of
incurring Palit)' Bonds are fI1e Jollowing:
(i] An allowa""" 10< Net RO¥onues from any adcfr1ioos to or improvemenfs or
extensions 01 !he Enterprise to be made with ihe proceeds of sucI1 Pality Bonds, and .iso fiJr
Net Re.enues !rom .ny sueh additions,lmpro,emenfs Of extensions w!lic11 haYe been ma<le
!rOO! mon<:l$ from any ",,"ree IlIA in any ca,e w!li<:R. <luling an or any par! of such Fiscal Year
or such twelve (12) monlh period. were not in ser¥i<e, Ii! in an amoonl equal t> ninely percent
(90%) 01 !he es1imated ad<i1iona1 average annual Net Aav900es to be defined !rom ,ueh
_ns. inpMemenis and extensions fiJr Ihe firs! lIlirtjo-si' (36) mortl1 period in wI1icll each
addfion. improvemef1! Of extension is respecfivelj' ID be in operaoon, an as shown in rhe wnllen
r&pO!l oIan Independert Consullan! engaged bjllhe City;
~i) an allowance fiJr earnings arising !rom any increase in rhe Cl1arges wllich has
become e!lecIiv. ¢Of ID!he incurring rI suell adcitiooal indelllednes, but whicll, du ring aW or
any pa~ of such FLSCaI Year or suc~ twelve (12) monIh period, was no! in ""eel. in an amount
equailD me amourt by wl1ic11lhe Net RO¥enues would h.,e been increased f suc~ increase in
Cl1arges had been in e"ec1 during !he w!loIe 01 such Fiscal Y .... or such twelve (12) monrh
period, aR as shewn in rhe _n report 01 an Independent Consultant engaged by ihe City.
(c) The SuppTemenlall'lOenlure providing 10< rhe issuance of suell Parily Bonds shaR
proo.ide ihat
~l The proceeds 01 suc!l Parit)' Bonds sha! be applied 10 Ihe a<XjUisilion.
corstruction, improYemert financin~ Of refinand"l of addi!iooal facoTrlies, improvements or
extensions rle"'~n~ !aciities wi1hlO !he Enlerpnse, or oIherwiso fiJr facolities. ;mprovement, Of
propel!}' whidlille City delermines ar. 01 benefit 10 lIle Enterprise. Of fiJr Ihe puopose of
refunding any Bonds in whole Of in part. indu<li"l an costs Q ncltJding cosIs 01 issu;ng such
Palit)' Bornfs and ini;lu<Sng capi!aized interes! on such Pari1y Bonds ciJring any periDa' whicf1!he
C ity deems necessaty or adVisable) relali ng lhereIo;
fnl Interest on such ?arfty Bonds sI\a~ be payable on an inlerest Payment Dale;
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• ISH 0 NO, 004205 DA TEO 71111901
"'1 The principat ri St.I<:I! Pa~ tlonds s1laII be payable on JlJne 1 in afly year in
.. hic~ plindpai is payable; and
(IV} Money (0( ale!t<i< d I'edi\ "'I ~ Surely Bood as au1l1olUe<! by !he
l'lden!IJllI' s/IaI be cIOpOs1Ied in !he R8seNe A<;coonl fiomlhe prcx;eeds "'!he $ale 01 such
Parily Bonds Of oIheIWise 10 ma-Iho amount 00 cfe!loGi! in Ihe ~ A<;coori to an
amourl eqJ8I" iI1e ReseMI RoqIi~ faki"ll int> acoounlil1e 0ebI SeIVioa on an
OutstaI>dIng Bonds Onduclng $ucII Parily Boodsj.
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o ~Y QNO. 00420S DATED 7111190j
The CIty 01 Palo AIID is!ocalUd "",roximalely 30 ""las south 01 San Francisco and 15 miles nortllwes!
d San Jose. The =950 resideitts are part 0I11le San Francisco Bay Area populalioo of ftve million.
The Citr, which is Ie Stlnfold lJriversi!y, is a majo! employmellt caofef with approximately 75,000
;:Ills and. urique residential community 01 about 25,000 I100sing unils,
The Citr was iloo<porailld in l894 and has operaIed as a charier (1)' si"",,I909. The Citr opeIalos
under 1110 oounal-mana;)Br form 01 government with nine rounci!mernoolS elected at large to< four-y"",
term .. Theldayof and VICO Mal"" are HleGfed from among 1he Coonc;1 annually. The Mayor presiOes at an
Cooncil meetings. T1' ... Citr Manageris raspoosible lor the op91"Ilion 01 all municipal functioo, e,cap! the
offices of Ci!y Momey, Ci!y CIeri<, and Ci!y Aucfrlo<. T!1.se officials ant appoinilld by and report direclly to
!fle Ci1y CoundL
The 1990-91 Budge! au!hO<izes!fle ernpToymenl. of 9.."'6 Ci!y ampIJy .... a general I\Jnd budgel 01
approximately $64 million. and an enterprise budge! 01 approximalely S 125 million. The Ci!y offer, alu~
range 01 municipal" services in add1ion 10 prO¥iding to own electric. gas. waler .... stewaler. sIomt drainage
and refuse collection utilties.
Ci1y Manager -Wi~am Zaner
Mr.Zaner was appoinilld Ci!y Managar b 1he Ci1y ct Palo AIID in 1979. Prior Ie tIli' appoinlmenl,
Mr. Zaner was !he Ci!y Manager to< lInion City. earriom1a for nine years.
Acting Ci1y Momey • An11lony Barmen;
Mr.llenneHi was awoinled Acting Ci!y At10mey lor !he Ci!y 01 Palo AlID in January of t990. Prior!O
Ihis appoinlment Mr. Benne!li was Senior As_It City AllDmey for Palo AIID !or B years. and formerly
wi!fl!fle Ci!y ADomer' Of!ice ill San Jose for 4-112 years.
City CIeri<· Gloria Young
Ms. Yoong was appoinfed 10 !he posiIioo 01 Ci!y Cieri< in 19~. She is a Certified Munitipal CIeri< and
member 01 the league 01 earrlomia cmos Pubic Safely Commil!ee.
Acting City _. Tracey Kwol<
Ids. Kwol< was appoinled Acting Audito< in JJne 1990. She previously """ed a, a Senior Aucflor.
WoNAGEMENT OF TIE FWINICl':. DEPARTlENT
The Finance Oepar1menl. is responsible b cf reeling all 01 !he Cilfs financial op91"Ifions including
aa:ounling. budgeting. Iong·term f nanda! plaMing. real property and portIolio managemert ana purchasing.
Oiredo< rI Finance· Emily Harrioon
Ms. Harrison has held tIli' posi\ioo since 1987 with prior e'penence as Cl1ief of Accou nting in the City
of San Jose and Assislant Finance Oir"""" in !he Ci!y rI Orange.
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,\ ........ ;,;;"Q..lW-<lll·'_,;.;...;;.;;,,;_"""o,!,!~~~~t'C"~~-.. .;. 'o><."_~~"\:·~·_~";;·::i"..<,:~-~·-,,-~;~->~ __ .;.,.,,~::.,,~_:.r~'_'"::.~~~";;"r:~ __ _
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T re<lSUry Manager, Gordon B. Foro
Mr. Ford has WO<I<ed wiIIIl!1& Citj since 1982 and was appointed Treasury Manager August e, 1988.
He is rospon_ "" inV9Sling 01 City funds. adminisl.ring l11e .. 1e 01 bonds. and adminisloring
banl<ing agreemanls.
}.ssisIant I'IOaJ1<:& Direct)r· Randall !.+Jog .. ,es
Mr. I.IusQwes was appolnled 10 Iha B<JdgaI t.lana~r position in 1980 was appoinled as l11e Assistanl
1'",.,.". Oirudor on JJIy t, 1989.
w.~.AGBFNT OF TIE l1TUTES IlB'NmENT
The ~Iities Depaf!marTt i; rosponsibla lor 111. operaDon 01 rour "Iiily 'yslerr .. !hal seN. Iha ~ 01
PalO MD. The Ci!y SeMcas 26,000 aocoonls k>< Iha e!aclric, gas, waler amiwas!awaler collec1ion syslems.
Oirector 01 Utii!ies· Rktlard L Young
Mr. Young 1la< _~·fiv. y .... oI.xperience";!h poNe uti5~es. Mer four yea,. with Ifl.los
Angeteo Departmenl 01 Waler aM Power, h. became engineer 01 Syslom Planning ";111 ~e Ci!y 01
G1endale, Carlforrna """'" he spenllho ne<l14 yea,., "lIimaleTy becoming 111. Power Managemenl
Direc\or. Mr. Young was appointed 10 Ihe posiIion 01 Director oIUtii~8S oIlhe Ci!y 01 Palo Alo in 1983
and has managed !he Um~es adivilies "" 1ha Citj since lIlal dale.
Assislant Di"""" 01 Ulii!ies, Engineering· EcMard Mrizel<
..... Mrizal< 1la< spenllWenIy""" years In .ng!neering and managemanl wi1111ha PalO AlIo Utilffies and
1e<1 ream as an ""!linear and supervisorin !he eledronic Testing induslr)'. Mr. Mrize!< was appoinled Ie
111. posiIion 01 Assislant Dirodor oIUtiifes, Engineering in 1981. He "as preIIioosTy a PrindpaT
EIed!fcaI Engineer Tnllle Palo Me EIecIric Uliil)' and has been • Ci!y employee since 1969.
Ass1s!an1 Dirudor oIlJllties, Operalions • Rolle!! A. Colyer
Mr. Cdy ... 1la< ~.Id Ihis posiIion since January, 1986 and is respon .. ble "" field operolions lor Ihe
EIedric, Gas, Wale! aM Waslewaler lJl1itias. fAIring early 1986 he was also responsible 10< 1ha
Regional WaI..-QuaiIy Coolrol Plant 0peraIi0r$. He hs bean an emploYee since 1985, and
pmiously S8f\1ed as Assistant Oirec\or 01 UtiIitiesiAdmirisf1at.. SeMces. He received a BS in
ldod1anical Engineefing !rom Finlay Engineering CoIIag. in Kansas CiIy, • BS io Ecooomios ar<!
Business MmirJs!raffon from Gra<:eI3nd College in Lamoni. Iowa, and a Masters in Business
Adminislralion from Missouri SIaIe UlivefSity.
1If.'II"GAflIT OF TIE P\8JC WORICS OEPARTlIENT
The Public Woil<s Dopar1mant manages Iho"... S10tm Drainage En!elpllsa and 111.38 miW<>o gallon
per day Regional Waler Quaiit}' Con~a1 Plant _ also serves Iho cities 01 Moon\:in Vi ... and los AlIos,
!he Town rJ los AJIos Hils, Slanfo<d Uriv~ and ". East Palo Me Senitary Oislrid.
OiJ1!Clot rJ Public WOOls • Da>id G Adams
Mr. Adams 1la< been Ihe Public Woil<s Oiredo< "" Iho C<i)' 01 Palo Me si;x:e January 1930. He has
been in pubic works management in Calirorria since 1975 and is 3 registered Professional Engineer in
Cailofria and Otlie.
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o !S&yo 00.004205 DATED 7/111!10j
Assistant Oirec\(lf of p""br" Works· George Bagdon
Mr. Bagdon has been Assistant Pubic Worl<$ Oueclor ~ Ih. City of Palo All<> since Fob",a!)" 1980.
Prior III cami~ III Palo AIIo h. had si, Y"'''' or engineering experience!<)( City cI Burtngame and six
)'8'Irs ~ Ihe City or MiM>aukee, Wlsconsin. Mr. BagOOn is a "'Iistered Profossiooal Engineer in
California.
ManagOf, Regional Waler <>.Jality Control Plan!· Wiffiam Miks
Manager, City of Palo Regional W.!er <>.Jality Control Plan!. since January 1989. Mr. I&s has been
employed by 1M City of Palo Mo since 1972 'Ioith plOg,essivelj '">Cr.asi09 re<ponsihtTllies in
managementisuperviSOfY posiIions since 1979. He was appointed Manage' of lI1e Paro .0.110 Regional
WatEl! <>.Jail)" Control Plant in January 1989.
Senior Engin .... • Richard Smelser
Mr. Smelser managllS Ihe Cilfs new Slcrm Ofainagelhlt)'. He has workad in Palo .0.110 Pubnc Worl<$
and U!irr\ies infras!ruc1ure management since 1981. Mr. Smelser is. registered Professional Engineer
in California and AIasl<a.
The Enlerprise is stalled 254.5 employ~ who are treated as omjl!oye.> of !he City of Paro Mo!<)(
purposes of pension ooigations and labor relations. AIl permanen! employ~ a~ covered under !he Pubr",
Employees Ae!iromenl SysI8m (PERSl oIlhe Stale of Cafifomia. PB<lsIon oosts .re 100% funded by !he
City. PEAS is. slale-wide S)'>I8m ope<a!ed pulSlJan! to TIlle 2, 0Msi0n 5, Part 3 of ... GcwemmenI Code.
The Boord of Admlnislfation of PEAS adminislers Ihe PEAS Fund (lhe 'fuod") and fiv~ oIhe, !>enefrt
programs. The Fund rep_ 547,587 mem!>el! and !heir !armies OncTudng retirees) at June 30, 1988.
There are 139 noo·managem8<1l employees wllo are represented in co<ieclive bargaining by the
Service EmPloYees !ntemational Unit, locall15a, 1Afl.ac>j. The service employees memoranaum of
understandng provides !<)( annual percentage ad"jUSlmenls in compensation. The latest se",fee employees'
acjuslmen~ effective May 1, 1989 is based on aMua! price inflalion and canna! exceed 5%.
"" 1dQti<, .. t I'oIcJ
rreated as En\erplise Funds, the Electric. Gas. Wod&r, Wastewater and Slcrm Drainage Ulfitje,. .'.
inanoe<f and opera\ed in a mannEl! comparable III private !>usiness .n'"'Pri .... City policy provides !hat Ih.
rosI 01 providing Utmly services 10 Ihe genera' pubic cooIinue to!>e funded predominalely 1h!0000gh user
cnargos.
All Enlerprise Funds ara aocoonled ~ using It .. accrual basis of accoonting revenues are recognized
wllen ""mOO. and expenses are rscognized wllen incurred. Uti1i1ies rev.,..,es are used to pay operafing
oosts. bond servfce, capiIaIexpendihJres, and reserve acru",.Talions. r ransf ... lo !he General Fund, are
based on Ihe approved rale 01 return ~ comparable public uli1i1ies and...,. established a! 11 % (Gas and
EIecIric) and 11.33% (Water) ~!he 1989-90 fiscal year.
The Uiities and Pubic Works Depar!menls are expec\led I!J conti"e meefi n9 an 0I1hei r financial
obI"iQ3fions while charging campelili .... reta~ rales 10 !heir customers. Careful budgefing and sound financial
planning flave beerl and..,l confinue t> be important fac10rs in maintaining compefitfve rates. The Utilities
Oeparlment has itll. control OVEl! wholesal. commodly costs. Much time ano" effort are spent in dear'r19 .. ith
the various oommodt)' suppiers, regulatory agencies arld commissioos to ~p € nsu re reasonabTe and
economical .. holesa1e com'Tloorty coo!s.
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R-, Mng & ..... CusDnon
The Cit)' Council flaslUl discrelion 10 set utility ral .. "" eadI d IIle five utilily syslems. The
Deparlmanl coltecls utiltr oI!arges by means <:I. ~ng1e monIhly 1>110 eadI cuslomer 1$50g charg .. ""
eadI oeMaI prOYided. 00181 IIle past Ill"" Y8'"". uncolle<:lable accoun!s "".n utiities nave aVi>'"lIed a
IolaI d $o4O.J3.41* par. or app!OJCimale!r .045% 0I11le amount biJed.
.... lIIIJ CUoIDrnn
The IoIIcwing is an ~ lsi 01 Palo Alto's Iargesl.",lty cuslcmers "" oJ five d 111. Utiliti ...
City 01 Palo AIle
fo<d Aerospace Cofpo<alIon
HewIel!-Pad<ard
Palo AJIo Schoo! OistriGI Slanford _ Cenler
Sjln!&x t.Ibs. Inc.
Varian Associates
Veterans Administration Hospilal
Wal!<ins-Jolvlsoo Coolpany
Xerox Co<poralion
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()pet'aIion 011118 Citfl _ uliily dales from 1900 when Ihe City acquired Ihe facifllias 01 Pellinsuia
ligI!ijng Comjl8J1Y. The CIty p!'O'I\ded ~ !TOm iIs own steam powered gene ... ~ng planl un1i11921. i'l
respor1S81D OoceIera1ing Joad growth, fl. CIty tnl9f9d into a wholesale suWlt oomact willi PG&E in 1923.
In 1954, Ihe CIty execobd 3 ~ all-requframenfs contract wi!l1lhe Wes!ern Area Power
Mm1nislra~ ("Wesf9mj 10 purchase pG'Ner p~ by Ihe Ceolral Valley Project. The contract wiIh
PG&E was 1l!rminmed. Slnaolhal ~me. Ihe lower cos! f!OW'!' prooiided by Western has 9f1abled Ihe CIty to
prtrMe e!edric servk:e at """" wen below :mo. p<evlling in adjacenl PG&E servia! areas.
Th. City owns no .1ecIrIc g9f1erating ra"lili... The City"s CO!1lrad for electric power with 111. federa!
government is administered by Western. Western mal1<ets power !TOm the C6ntral Valley P"'ioct. • federal
muJ5.<Jsel1y<toe!ectrio cleYelopmert in Norlhem California, and has Iradilionally been !he !east expensr.e
source 01 bulk power lor Ihe City. I proYides power to Ihe City at • capacilJ 01 up 10 ! 75 f.M wi!h assodafed
energy. Th. conlrad e","" in 2004 and is subject 10 ad"jUsUnenfs in Ih. price of power.
The City purchases suPllfemenlai power above"e capocq oIlI1e Western COi1!rad Ihrough its
membership in 111. Northern Caiforria Power Agency ("NCI' A") and is a signaloly 01 the NCPAIPG& E
tlIercon necfion Agreement The City"s I9S9 pee!< demand was approximalely 1<36.2 f.M and annual energy
ronsump(oon was approximately 1,130,564 MWH. The avBfage monthly load fac10r ';"0 ng 1989 .. as 71.7
percent
In _1\ Ihe City 01 Palo Mo is par1icipaling in NCPA'. Calaveras Hydroeledric Poojecl. Geo!hermal
PJOject (!he Cilfs s~ara ofwh"", I has sold Ie a Ihire par!}l, as <lesaibed below1 and Gey..".. Transmissioo
f'foje<:l
The City is also • member oIlI1e Transmission Agency 01 Northem Caf~ornia rr ANC"). Through its
participation in NCPA and TANC, 111. City beleves I is able 10 d"lVers<ly its source base an<l' gain economies
01 scale Ihal would noI otherwise be avaJlabTe as .. en as lessen its dependeoce on purchase<! power. Except
lor ce~ain .Ia~-<Jp costs, tunan! NCPA and TANC proj&ds are funded throogh !he respediv. agencies.
The CIty is cumen!ly pat1icipati ng in _.ral projecls, as desc.'-bed below:
CaIavenIs Ifydroeladric 1'Iojoc1-The City is • 2292 percerot paoopant in the NCPA CalOIVeras
project, a 3:lO f.M ~yd~ proiod witI1 ral.fed ra"lties. Pursuant 10 a power puroh .... ag ;semen! witI1
!he Calaveras Coon!)' Walar o;slrid, NCPA is _ to !he _ cuIpuI 01 the project lor 50 years from
February 1982, willi an CQfioo 10 JMch ... power in e,cess eI!he o;sbid rBqJiramenls !I1oraallar. The
Cilfo 22.92 percen!9f1ti!!em9nt is on o take ()( pay basis. The project is expecled 10 supply pea:. bad
requiramsnts and complement c!I1er resource. wh"", ara presently and an6dpafed 10 be availabfe Ie the
City. NCP" has enlera<l into a conslrudion conlrad 10 provide 1or!l1o design and conslrudion 01 !he project
on a !lJm~ey basis. The construdion was comple(e<lan<l' operation ellhe project was commenced on
February 1, 1990.
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GedI .. "oaI-The City is a 6" 158 percent participant in tlle NCl'A Geolhennal PlOjecl Number ~,
ronsis:ing oIlwo (2)110 MW geo!hermal steamii&"",aling ptants operating in !he Geysers area. Palo AlIo
has sold a~ or i!$ shm 0I1I1e project 10 111. lurlod< Irrillalioo Dislrid ('TID") on a ta1<. '" pay basis "" !h. if. or !he ptant since 111. need "" bese loa<! generafion is lmiled during !his ~'11' period
C8IJaIriIt()ggo T ...... issiuo. f'locjaI:l-The City is a 4254 percenI pao1idpation d lANC's share 01
• proposed lhird 500 KV AC 1nlertie lraosmission lno loom 1I1e Pacilic No<tl1west 10 NOO!1em Caffomia
Based upon a 1,600 WI lrans,", capaboToty, T ANC • .<pedslo receive 677 WI 01 capaa1y. Present ptans
cal lor in. completion io 1993.
The Ulili .... Department con6ouas III explore addtiooalpower '''!'Ply opporlunmes inclJding ev.\J.~on
01 demand-side resou""s and em.rging lechnologies sud1 as fuel cells, p/>cIovol\aics and oU1er ...-able
rescur",""
F "'m 1984-85 to 1988-89, sales revenues increased aI • rompound an nual rate 0I6-7%. Operating
revenues flave geooraJly increased with eacll fiscal year due 10 rontinued ~rowfh in energy coosumpti"" and
rat. increases from cur suppier. Puoollase power cools playa major roTe III Iormura~ng 1I1e City", financial
policies as 1I1ey perta1n 10 !he E1ecITic SystOflL This impad: is evidenced by !he 6$~ compounded an",ally
power puodJase cos! inaease between (he)'ears or 1984-85 and 1988-89.
The Soyeor projected financial S1a!emen! sllows saTes reveeue furecaslod 10 iflcrease bj 4.3%. This"
revenue increase reflects an average annual grav1h fate in kwh sales d "l"% over t11is perK>d.
A retail rale decrease in 1988-89 is refleclod in 111. revenue estimates due 10 a proposed reduction in
purchase cools lor Western _" The net increase " operating CO$IS over !he remaining years is
expected 10 be accommodaled by revenue generated by additiooaI saiIes and a relaliveTy s!able rale of
capila! investment
The major impad: 011 Doe EIecl1ic U!ilily is power puoollase •• pense "hic~ is estimated at a no! increase
d 37% 0Y1If Ill. ~Jear period ills live year period inclJdes 1I1e proposed 19B1H!9 decrease in Western
Power ~ !n Iem1s or absoM. dor .. rs, wlloTesaIe ool1Hnodly costs are _><peeled 10 increase by $a,en,ooo and..,l malnlain 1I1ese CO$IS at ~mately S3¢ our 01 eacI1 safes rev""ue doIar in 1993194.
This eslima!e is based on continued "" .. labiily or federal powef loom Weslem as p<eseniJy provded under
!he existing contract.
6irnn~ rates 10 Palo AIIo'. residermal accounts were 111" lowes! in Caifomia in 1988·89 as delermined
by • SUMly conOOded by 81e Palo AlIo um .. Deparfment
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The Ulfities Depa_I990-95 Cap'IaIlmprovem"nI Program Repo<1 indca!es lIle major PfflIlO$ed
C31'1a! expen<f\ures lor ltoe electric system are "" internal system improvements. All improvemenls 10 tlle
existing system tl!aI $27]09,000 lor !he five-year period, wi!h proposed annual expoodlures .arying
between $6.4 mi1T~ in [seal ye .. 1992·93 ., $3.8 million in 1994-95. Thelarges! major ca!eg<>I)' of
improvements 10 lIle sy<lem .,., described as boJlh major and IOU1ine dislnMoo system projedslo!amng
.~roximalely $13 min"". Underground projects Io!amng $5"9 million compOse (he second fargesl ca!eg<>ry
01 Electric CIP projects"
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Thelollowing laNe .!'ow. a lell-year hi~ and fi,&-yeat projected I900fd of electric utJ1ty
opetafions by mwfl sold. The ..... of change show 1l1at ll1e number of ruslomers has remained almost
eonslanl and bad grow!ll has _ moc!eralely driven by increasing """nomic acfi';i!y and oome inaeas<! in
housing densily.
Fiscal
.'I'..e..a..L
1980
1981
1982
1983
1984
1965
1986
1981
1988
1989
1990
1991
1992
1993
1994
1995
"Source: Ci!y 01 P'" Mo
Energy
Sol d
IMIHl
783,970
8'10,378
BM,012
88-4,178
945,l83
965,133
972,867
981 jOOO
1,011,587
1,029,387
FlVE-YEAR (1~1995l Pfl().ElB) SAlES
1 .036 • (XX)
L 051 • ()()()
1,071,000
L086 ... 000
1,098 ,000
1,112,000
COIoI'CUIJED AATE OF RANGE
1980-89
1990--95
·22-
2.76'\
1.4:lX
165.4
165.6
163.9
174.3
178.5
186.3
181.2
188.3
178.4
186.2
183.0
181.0
197.0
190.0
192.0
192.0 •
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The Ibllowin9 ..-9Oerg, sales by class and number of elecinc custome" by class !or !he years
1984-85 Illrough 1~ and projocled sa"',"
Fiscal Year
Energy SaTe. MIH
Res; den Ii ill'
Connercial
1 ndus t ri" a r
MUniCipal and Othrr
fotal
144,860 145,930
314,829 317,155
454,860 458,220
51,184 51,562
965,733 972,867
Electric Customers by Class
Res j den tt iI t 23,501 23,722
Conrnercial 2,235 2,221
rnduslrial 194 . 168
MUnicipal and ~ther 242 238
Total Customers ~,H8 ~,375
PIlO"I!;CT~!t
fis.caf Year
Energy Safes VIH
Residential 155,400 158,550 162,900
Ccnnerdal 337,738 344,582 351,'Kl2
Industrial 487,956 497,841 507,~7
MUnicipal and Other 54,980 56,021 57,081
1981i-81 J9SJ.-BS
148,050 149,931 153,714
321,762 322,839 336,~37
464,877 484,894 484,621
62,311 53,917 54,615
987,000 1,011,587 1,029,387
23,876 24,175 20,989
2,323 2,327 1.534
191 203 161
168 173 56
~,556 26,878 22,740
164,700 1.66,800 166,800
354,036 357,948 362,512
511,506 517,158 623,752
57,556 58 ,194 58,936
TOTAL 1,036,000 1,057,000 1,077,000 1,066,000 1,098,000 1,112,000
'Source: Cit)' of Palo AIID
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I'«~
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flemaindel CMIr
\&Olmeroial Balas (ScbacMtl.,z}
My 11, 1986
fl!!Ml&~.El!!Ma!lIIl
!iln=ilamand M!id:
Energy Rale (summe" Energy _ (win!e<)
~ndMil!l~
eO! Ki!oWaIl.lJw
$,0370
$,05ER
$,0700
$.0691;
$.0622
$.0465
$.0398
ElEClRIC tml1Y
CcAill*i,.,,, IIiIIt &rroundI1g CornmIriIies
RaIs EIIoche 2+90
ne.l~.n'ial (500 k~h)
~.rd.1 130,000 IIIH'.; 120 KI)
Industrial (2.400.000 KWH'.; 5400 KI)
$
-24-
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22.52
2,178.00
144,048.00
p G & E
$ 48,70
2,989.4()
206.m.W
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29.137
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TIE GAS UTl1TY
/imlI)'
Municipal ownership 0I1he gas s,stem began on 0cI00er I, 1917 .. f1<In lI1e City purcl1ased!he Palo
AJID Gas Company\t,rough a $40,000 bond issue. On October 1, 1929 natura/gas .. as irnrodJced inl0 lI1e
Cily's mains, as Palo AJID began purchasing gas from Padlic Gas and Electric Company tpG&E), This
natural gas. [whjd, PG&E OOIained from 1he lower San Joaquin 041 field.) ~ad a superior ~ality 011180 bru
pe< cubic!oOC Au conseqJenoe, oomes1ic gas consumption began 10 "SO dfama1i<:a1lf in lI1e early 193C' •.
Tf1<I syslem and ~. gas consump!ion have grown ~.h !he developmerr1 of 1he City. PG&E has lrad'itionally
beeI11he Cily's sourC<l cI supply. PG&E ~.ad d'IVOlS.;ried its supply arrangements ""ring \11e 50 years I f1<Is
.... 19d Palo AlIo; I now OOIains suppies bc(h tom \11e Soul!1westem United Slates (!hroogh 8 Paso Natural
Gas Co.) and from canada
The City'. curren! Nalllral Gas Supply Agreemenl wnh PG&E is dated June 30, 1 S89 and is subject 10
pe<iodc ad]Jsbnenllo !ra<:k changes in PG&E'. tansmission and gas portfolio rales. The City also has
Natural Gas Supply Agreements with several 'spot marl<et' ,"ppiers located in !he soolh .. es!em U11100
SIales .. 1>0 provide supplemental suppnes ;t faVOOlbie prices, Tf1<I City also uti;"es PG&E's gas s!ofa99
system to "bank" inexpensive gas supp~es whict.l can be .,..;thdra'oNn ci.lri~ the winter monfhs when r;as
prices rise. The carlfolTia Publc Uliilies Commission has a number ci on·~ng investigations which may
signilicanfly restructure CaliTomia's Gas Forncas1lng. The Palo Ano Gas lJIiily closely monftors and
inlervenes in Ihese proceed ngs 10 p<olect ~s interests and Insure developmenl of an op5mum pcrtlono of
supples,
fld&:;
The City'. gas system performs !he functicns rJ p",ssure regulation, distribution and melering, The
City does net Ioresee adding 10 lI1e service area in !he lulure, Planned imp<cvemenls ..,l ccnlrc1 and red'uoe
syslem leaKage and increase the capao'l)' of certain Ines 10 moe! currenland p<ojected <lensiW in certain
areas 01 !he City.
~fli$!;o$liQll~
From 1984-85 10 1988-89 sales revenues decreased at a compound annual rate rJ 7.4% because of
conservaficn elfOOs.
Tf1<I City's ccsts 10 purchase gas have ac\uaily decreased by 34,]% from 1984·8510 198&-89 due 10 •
sma1J de<:rease in saTes and as a !'€Sun of tarn rlQ nafinaf gas prices.
Prior 10 19881l're City mainlained its rales ala bed pe<oon1ll9O _111. rates charged by PG&E. In
1988 fle City date<mined IhaI its gas supply ",serve was in e,cess rJ lI1e amc<Jrn required and refunded in
111. Iorm of credts '" rebales approximarely S 1-0 mimon. The CiIy'. 1990 gas rates are appro'imal.1y 27%
Tower Ihan !he rates ,,~ic!l PG&E charges 10 "'~denffa1 cuslomers in neig~bc<ing cilies.
The five-year p<ajected saTl>s Ic!vcast shews a 57,5% revenue increase by 199:>-94. This revenue
increase rellects 0 ,6% annual growth rare in sales (!henns~ Sal.s es1ima1es are principally affected by
a<lditicnal days Ie< leap year and wea!her facio"', Tf1<Ilargesl operati ng cos1 acccun~ng Ie< higher ",venue
~iremenls is an anlidpafed rise (51.2%) in wholesale commodity cosls effected bylhe City suppner.
In terms of .bscIu1e dell."" wholesale commocily costs are e>pOCled 10 increase by $5.2 minion and
wil increasell1cse cos:. 10 approximately 67 cenls out of eac~ sales revenue doP.ar by 199:>-94. This
estimate is based en !he conti nued supply 01 an gas requirements by PG& E under .,isti ng conlract
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condtions and PUC mguTaooos. Tha esff male would be signilicantly aft.red by securing long-term IO .. -rost
wppiemen101 wpplles IllfOOgh ..,Ioring iolo • join! venlura gas oxptaralion progIam andlo< purchasing gas
supples direclly!rom Ihe ws! head.
The Uiflies Oepartmenll990-95 Capi!aI tnorove~ Program Report identifled ,arious projeds
klfafng $~.843.361 in llfCI)OOed axpen<l1ures lor fl. gas S)>lem. System extensions and replacement$,
incPJ<Ing meters, rogulakim and mains compnsa 111. majority Jorlhe proposed capital spending in a lola!
amourn rJ $9. f million ewer five years_
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The loIIowiog !able shoW$ • len-year Ii.tonca! and tva year proiect~ reoor~ r:I gas itlQrms oo!<! .""
_ til. roo .. r:I grO\\1h in !I1e C1Iy aM impact r:I climatic .afialioo OR Il"S usage.
800,,,,,: ~ r:I Palo Mo
GAS\JJlJTY
lfK.YEAR. 1ge9 HJSroRJCAI. SALES
0Jantit1
fiscai Sold
J'I!IL (ThlIrmi)
1980
1981
\982
1983
19M
1985
1900
1981
1900
1989
\990
\991
1992
1993
1994
1995
32,448,880
30,859,077
35,489.153
36,457,091
33.680,897
31,957,25S
35,2,S)39
31,398,000
34,~7,000
35,427191
36,118,000
36,277,000
36,~a,ooo
38,601.000
36,;>54,000
36,921,000
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o !S&y 0 NO. 004205 DATED 71111901
TOHL 36.116.000 36,271,000 36.438,000 36,601,000 36,764,000 36.921,000
5<>,,<8: ~ rJ Palo Mo
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The OJrrenl .. Ie sched!1e is sIlown below. For approidmalery 25 yea .. , lI;a Cit)' has milntained rales at
a leva! Eqlivalent to or tower IIlan tha rates charged by PG&E in adjaoont s<,1Vioo areas. As el Ajlrll', 1990
f1e residontiat rates ani 27% ilwer "an PG&E rales, oommefdaf rates are 13% tower and induWial rates
.,..4% lower.
Rales:
Gl-R Com rnodty Cl1arge:
Sum me< Rale
o to 20 tIlerrns, per tIlerm
Over 20 t!le<ms, per thl1lm
GASRAlU
EF"""fEC.cii,1VE MY 1. 19119
lFor indiviooall)-me!ered res1<len!a! cuslomelS)
(May I to Odober31j:
Winfer Rat. ~_ I to Apo130):
()'96 t!lerms, per tIlerrn
Over 96 !he<ms, per t!1erm
Gl-C ('.omrnodty Charge: (For an other cuoomers)ndudlng commerdaI customelS]
Year-rouoo rate "" an gas usage e '" 25,000 tf>errns, per therrn
eMir 25,000 tIlerms, per tIlem!
TIlE WATBt tJ1UlY
Per Meier
Per Month
35.71
66.3¢
35.7~
66.3¢
51.0¢
44.8¢
Priot to inooIpora6on in lB94 tile areo tIlat was 10 become !he Cit)' 01 Palo Mo developed" a number
elsmatl popuIaOOrl oonlels. These cenl ... wera S8!Ved by private water compor.ies that <!tow 1Ileir suW~
from n!IafiveI\' shalow .... 1Is. 1r11a96,!wo yea .. aIIs!:ncorporation, • bond issue .... s authorized ""
purchase by Ihe Cit)' el a majomy d lIle water companies. 1r1 SU<X4e<fng 19ars addtioMr purcllases
oomple!e<f f1e acq.Jismon r:I pnvafe!y owned facilities.
Deep ... 1Is J)fOIIi<1&<fwalerlo tile grodval!y increasing popu1a6on untill9J3. 1If'en!he decline of /he
groundwater revet neoassitaled lIle purchase 01 imported water. Tha growing <!em and !herealler .. as me!
wi!h if1cneasing porcllases el suwty ~orn !he Waler Department r:llIla Ci!y and County cA San Francisco
!SfWOI. In 1962, in order 10 p10vide a higher ~aily elllater to its customers, Palo Ana !legan suwtYing
100% cA fts water from SFWO.
-29-
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l$&::)'c NO, 004205 DATED 7/111901
San Fral'dsco impo<!s BO% '" 1he .. ater supply sold 10 Palo Alto froo1 the Tuolumne River walershed in
the Sie., Nevada """,yosemite Nat50nai Pat!<. lmpooncfed ill HeId1 HeId1y Resarvoir, Ille ",.Ier is
doivered t> lermina! """"""rs on 1he San Frandsco Peninsula via an IKjUedud that crosses Santa Clara
CourIIy, pmvkIng aa:6$$ t> 1he CiIy cI Fob Alto and o!he< wholesale aJStomers, The remaning 20% cI the
""PIiY is bca! rul1()f, """",ncfed in reservdrs Ioca!ed in the Coast Ranges 0I1he San Frandsco Peninsula
and East Bay,
The aJrrenI ... ter sates _ wiI!1 SfWO was implemented 0<1 July I, 1984 with a 25 year term to
e>pro on Ju ne 30, 2(109, I is a. aJl-roqu;remen«s cootrad "th e,picil provisiOns i:>< ~sling wIlolesa1e
ra!BS to matc!l c!langing revenue req.irem9f1fls oi tie SFWD 00 a pellodlc basis-
Tho City also main!ains lis own deep ... , system. wIlich cool<! supply haW rJ the servi<:e .r .. •• needs
"" an errergeocy basis.
The SFWD ruppty is deivered 1Ilrough 1oJ, con noetions !hat lap inlo Illr .. different brand> pipe! nes 01
the SFWD aque<lJct The City also continues to main!ain and operate leur deep wens as • supplementary
and badwp supply,
The SFWO .. ater is '" 9,celTent <pally, Coosequently, the City's watertreatmert is im~ed to noori<fe
injecOOn.
The aJrrent ra18 strudure is an increasing bIx:k rate to enc:otJfaQe wafer conserva1ion. The Crt)' aTso
has programs I can impTemel'll in respoosa to perio<k drought situations,
The City 01 Palo Alto m'lintains aboot !Q,5 million 9al1oos rJ storage in lis dis!n1lU1ion syslem. Current
""erago consump!ioo is 16,1 milion gallons per day, Most,reas '" the City are raled Class 3 (vB<)' good) by
the Board 01 Padfi<: Fue Underwnlers,
~""""""'of~ ..
From 1984-8510 1985-89 sa"" reverrue increased aI a compound annuaT rale 01 9,3""-
I'\Jrc!lase cools 01 water nave decreased by 17.6% f<nm 1984-85 to 1985-89, refleCting a decrease in
.. ater LSag". and Decreased water purcllase cools,
The 5ve-year projec(ed inancial statsmen! shows sales revenue forecasted Ie increase 59,1% by
1993-94. This r8VIIIluelncrease rellec!s annual grow1Il in saTes loIaing 22.4% over this period, Refrul rales
are anticipaled t> remain Ita! O\Ier 1hel!ve-year periQd Ther. was a 56% rala increase in July 1988 and a
13,5% inclease in July 198910 compltllsa18 lor the saTes reduc1ion due Ie cooser....oon. rn term. oI_ute
do\Iarll, wholesale comlOOdly cools are expeded Ie increase and wiI rssul in cosls rJ apprOJCimalely 28
cents oo.A rI eacI! saTes revenue _by 1993-94. m. estimale assu mas continuarJO<1 Q/ tie Hetcf>.Hetclly
system and the Cit(. water suppfer and the adequacy rJ necessa~ laalties,
CaJifomia TO in ils 1oor1h year rJ a drought The Crt)' 01 San Francisco has imposed watsr ra~oning on
its munk:ipat customers, indJdng the Crt)' at Palo Alto, Palo Mo', al10tment is 27% below the alT\Q\jn!
purc!1ased in 1987, The City ri Pelo Alto is responding with a1hree part Water Management Plan:
(1) TmpTemenffng a Drought Rafe Scherule with adjusled rata blocks and more steeply in<:~ned
rates in the higher fiers,
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o (S&Vo NO.OO420S DATED 7111J9O!
(2) Expandng lIlelst cJ prohibitions beyond rro.. alr •• oft in Ille .,;sling ... alar use oro.nance.
(3\ "iliati"" a larg6l.e<I program 01 pubic ~a<:~ and conserva1i<l<1 assistance.
The San Francr.co Wa/Bf DEpar!menl ~ .. i~ed .27.6'% w~o!esale rata increase efte<:fi'l9
"" .. 20, \990. This inc>eaS6 W11 tarlslal. into approlllmately an 11% r8fail ral8 increase lor Palo Me
coosume«s.
~"M"""" Pqmm S!mmar;y
The Ul1ties !lepa11me<11199().95 Capilallmprll"ement Program iden!i1ies $7.001,850 lor. variell d
water system pnljOCfS. The but< d 111. fund ng. $5.& mi1\on, is ~Ied for water main rep1a<:ern.nl$.
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Sou"",: City rA Palo Afto
F"1SCaf
.YelL
1geO
1981
198.2
1983
1984
1985
1985
1987
1988
1989
1990
1991
1992
1993
1994
1995
1985-89
1990-95
/
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fS&Y n NO. 00420S DATED 7/1 WO!
'J
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W)
5,506,090
7,043,093
6.84f~450
5,576,334
7,427$24
7,338,060
7,223,915
7,389 .. 000
7,661,265
6,350.384
6,700,000
6,915,000
],285,000
7,435,000
7,509,000
7.553,000
-024%
4.01%
..
o (S& y 0 NO. 00420S DATED 7'11 r90l
The fol1owi"9 _ Wat", sare. by class and number of Water custom." by ,lass !or til. years
1964-651hfo<Jgh 1966-89 and projected sales.
Cd SAlES, WAlHICUSTOY:RS
fjseal rea r 1984-35 1985=86 1986-117 .mL-i!8 ~
later Salet eel
Resident iar ~,801,l1S 3,741,988 3,827,502 3.963~355 3,289,499
Connercial l,4S2,936 1.430,335 1,463,022 1,514,%0 1,257,375
Industrial 1,489,526 1,466,4SS 1,499,957 I,S53,207 1,289,126
MUnicipal and Ot~er 594,383 58S,138 596,51J9 619,753 514,381
Toral 1,338,060 1,223,916 1,389,000 l,651,2S5 6,350,384
later Customers by etass
Res'dential 16,421 16,489 u:.. .c:;.'1"l .-.... ,." -"',587 16,563
Contnercial 1,691 1,690 1,749 1,733 1,129
Indus' ria' 244 244 249 216 267
UUnicipal a~ Other 424 410 342 326 328
rotal Customel"$ 18,780 16,533 16,877 18,924 16,901
.c:~ -Waler CU$to.,ers
l'BQ.Elf~
tis.ca.l ___ .Y'.".I J~~c9!) l~oi!.! 19111c92 l~c\l;l )~i!.~ 1l1l14~
Water Safes ccf
Res i d'enti a 1 3.410,600 3,581,910 3.173.630-3,851,330 3.889,662 3,912,-454
Coamercial 1,326,800 1,369,170 1,442,43<l l,472,l3O 1,486,782 1 .. 495,494
rndustrial 1 ~360.100 1,403,745 1,418,855 1.509 .. 305 1,524 .. 321 1,533,259
Municipal and 542,100 560,115 590,085 602,235 608,229 511,l\l;l
Other
TOTAL 6 ~ 1()(). 000 6,91S,OOO 1,285 .000 1,435,000 1 95U9 • {)()() 1,553,000
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-sou""': City of Palo A1ID
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For 5/8-inCII meier
Fot 3101-irdl meI8r
For 1-i1<:h meIar
For I 112-111c11 mel ...
For 2-inc1l meier
Fot »do meIBr
Fot4-inc:lo meier
For S-incI! mef8r
For 8-lnc:II meIBr
Fot JO.lncII mel ...
QJanIily Ra1e: (To be added to SeMce thO'll.)
(Ooe$ nolAl!led spada! d«>Jghl man"llQm8(\t rates)
Per Mole<
PorMon!h
$2.50
2.60
2.80
3.90
5.10
8.50
12.50
22.65
35.15
4350
Per Me1.,r
Per Month 1 tJtLQil9" .. S tb{Qug" 1_
first
Hext
Next
Next
Next
Over
4 Cd
6 tel
10 tel
30 tel
950 tel
1,000 tel
$1.00
1.62
1.65
1.61
1.68
1.10
Tempo.rary unmet8red service 10 residential
subdivision developers~ per connection
WATER lJTUTY
OOIFNUSONWITH~~
HAlES EFf£CT1IIE 2-1-90
(Non IJoaIgN RaIos)
$1.16
1.86
2.02
2.07
2.08
2.09
$2.50 per month
palo AI to
~froundi~g Communities
Meuse-
Resident,al (Baseline)
Resid'entrar (Average)
Commsrci31 (Average)
Industrial (Average)
$ 5.89
20.56
75.81
884.01
$ 8.06
19.36
70.09
665.31
·Surrounding Connonities -.hie'h also purct1ase .ater hom San francisco later
Department incruding veolo P.r\, UO~ntai~ View and los Altos.
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15& yO NO. 00420S DATED 7111190j
n£ WASfEWA1HI UTUTY
The waslewater coI!ec!io<1 system became PalO Alto', ffrsl Utility ;"1896 s.rving a poputalion rJ abouI
3000. CUrranily,lI1B aJiIec:(on syslem S8fV96 approximately 5<,000 residenls in PalO Alto !Ii!hin its 25
square mile S8fViC8 area.
Vi k * Traallmarl
The CiIy rJ Palo Alto operal9S a 38 million gallon p9I day (mgdJ F\agiooa/ Waler OJaJiIy Con~oI Ptanl
CRWQCf'l serving a 96 square mile area inOOdng Ih. ciOOs rJ Palo Alto, tos Mos. Mountain VIeW. ttl. town oItos Moo tills, Stanlofd Uriversity and Ih& Ea.! PalO Alto Sanitary Oislrid. The Ci!ies rJ Palo Alto,
Moolnlain View and loo AIDs are parlnBrs in an agrBBm.rt specifying condition, lot ffnancing and operating
!h. Plant los Moo tills, Ihe East PalO Mo Sanitary Oislric!, and Slanfard University ara inciJded by
separale conlrads IIiIh Palo AIto.ticIl are ref.rred 10 as sulrpaMer agreem.nts.
FacMes
In 1934, a wasT_lr&almert planl ..... c:onslruclad 10 provide primary lr&almenl 10 an wastewater
colleded in !he CiIy and S!arIord Uniwrsity. !mpfOV<!menlS .,1948 and 1956 incr.ased ~e_ capacily,
addressed special seasonaT wast. loads and .><Iended the ou~d inTo San francisco Bay proper.
In 1973. <O!lSlruc!ion rJ!h. basi<: serondaly lraaTmenl facilily was compleled I!iIh ser.ice extended 10
indJde ._aler lr&almBfll .... lhe cities 01 Palo Alto. Moonlain View and loo Mos as .... as los Mas
HIls, Stanford University and Ih& East Palo Alto SaniIa!y DislJicl These raolties •• re financed ~ !he local
enulias wiIh Ih. assisIance oIledaral and ,Tole grants.
Tn 1979. We 10 rederal ruq\iremenls ",TaIed 10 secondary "aalmen! _00, acfllanced wastewater
Irealmen! raolties ""'" added 10 !he plant Funding 0I1h.lse raoTIties .... s from !ederal and sial. grants and
reimbursements from !he 1973lrea1mBn! faally construdion project.
In 1983. a wastBWaler system s1.Jcfge dewaT.ring facilily was added fa t .. plant Funding 0I1he $2.6
mil1ion raolly was !rom. pct1ion 01 !he proceeds rJ II1B $4.765 rrullion 1983 Series A Ulifilies Refunding
bonds.
Tn 1985. a RWOCP~ E>pansionprGgram was <le>Ie1oped 10 meat th. needs rJal!he raally's
par1ner agenci •• throug~ 1995. This expansion increased th. eopad!)' rJ!he plan! kl 38 mgd, and
primaryrsecondaly TrBafmBn! lor peak """ waaII1« IIows kl SO mgd.
Also in 1985 •• ~ capital impw.men! program was begun;" !he WaslewalBf Co!Iec1ion Syslem
de<icaled kl inllownnfillnmon (1ITj source de!oction and syslem re1la!>lIa6on. Tllesetwo major ... slewalBf
projeclS were funded by !he issuance rJ Ih.e $12"2 million CiIy rJ Palo Alto Uilly R ..... "'. Boods, 1985
SenesA.
BetwBB!1 1986 and 1989 approlCimaleiy $3.5 miUion rJ bond funds ,""Bfe .'pended 10 perform th. mosI
needed lIT rehabililalion. WOlf< is coofinuing using annual sysl.m revenues.
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o !S()OC NO. 00420$ DATED 7111190)
It.ii ..... , ... Oi ...... ,", aI <:¥om"
fiI,m 1984-85 k> 1968-ll9 safes revenues increased at • compound annu'" rate d 2,8% whid1 rafIects
rElVlli1\l9S n>qLired k> "", ... ligher costs 01 operalk",.,
The ._aIao I88idfomaI taIeo 00 nol illlow a per una consumed increase, but m onoot1y !Ia! ram d
I8es par hO<JseIloId, t.cn an d now ra185 00 nalll8C8SSan1y rES'Jt in increased "_" 'agar~ al1I1eir
SOJote. Henot toe net ....,.." lY8fag& anflJai growl!1 in now is naI reIIecIed in Iha pmjecIed ravenue
piclJfa AnI\cipaIecI inI:rM* in operaIicn and maintenance costs resuR in sl<Jniticarilly hig11ef revenue
rBqJinImenIs. This es&ma18 is bass<! on toe assum¢on Iha! preserllevols oIltealmenl are a<fequa!e and
no major caIlit>I.~ras .. 1 be ,"",ired by toe 3ay Basin Plan or 0!h9f Regional Wale< QJally Control
Boaod decislcns.
The !"ar(, ciscMtve info San Francisco Ba1 is aulhorized by a 111 ... year NaIiooal Pollution
Disc!1aoge Elminalion S\ISl8m ~S) p!lrml whic~ was issued on December 28, 1988 by toe Regional
Wa!8f QJaIily Control Board flo. perml was amended May 16, 1990" inclJde __ "'" pre-lraatmert
ard waste mlnimizalion RlQUiramenls. The penM; req.oi .... SSVllfai O<Ogoing slUtI .. ''''~vtIi''9 paolk:ular
romponenls 01 !lie Plarts e4!\Jent AI sIudy deadlines have been mil! and 1I1e CiIy is ~ng $900,000
per year " con6nue toe _h. The !"ani is meeling a. tlsc!1arge raqui,emenls specilied in Is NPOI:S
P"'."'iI. 01 pra-lraalmert ord wasle minimlzallon requiremenls and aR orh9f environmental ,"",iremenls,
incloding "" quaiIy.
The wa!8f conserva6on measures adopled in response" doooglo! cootItiOfls resu I in a ,eduction d
_or charges lor major ruslomers, Consequen1ly, !he CiIy h3$ signfficanlly increased 111. per uri! rate
Ie< _at9f coIIecIioro " 0llIIfI! rev.nue ,"",i,emenls.
c.pIaI ~, ............ PIIIp'II SuIomaoy
The Uolities Dopa!Iment 1990-95 Capitallmp/o';IlfOent Program Report isis 0 I>.Omber of capi!al
projecfs wIoicl! are" be (nanoed !rom _9f syslllfO revenues OV9f 1110 upcomi~ fiv.year period.
Tho 1iv&-yoar period lor WaslBwafer CoI1ediOfl Iolals $9.3 million 01 whic~ $9. f million IS Ie< CoIIedioro
SysIIlfO Rel,aloiila60n. Mo,e1f1an $3,0 million is projected Ie< !he Watilf QJali!)' Coolrol T,oatmont !"ant
improvernenls ard equipment replacement FulUre C;q;i!aIimprovomenl Programs propose experdilUres
oxceetlng $02 million per)'lOa' lor tr ... ltnen! plart raliabilly and Eqlipment replacement needs.
''''icaWK;ocIod <:¥o ....
The following !able oelleds a ren-yoar hislonear and five-tear projected rBOO<d of waslewa!er trealed,
The projeded inaease in ~1iIy ofwaslawal9f lraaled is due III increased growth in toe cilies of Mountain
View and Easl Palo Mo,
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~
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
19!1O
1991
1992
1993
1994
1995
1980-6S
199().95
!S&i' 0 NO. 00420$ DI\TED 711 1001
Waslowaler
Trealed
lMOO.J
25.8
25.7
27.3
25.6
29.0
26.9
27.0
30.3
23.5
222
23.0
24.0
25.0
25.0
27.0
25.0
"Waslewala< _ is lor !he cities cJ Palo AJIo, los AIIns and Mooltain VIBW, !he East Palo AJIo Sanifa'Y
Oislrid, Slanlorll Unive<si!y, alld los Aftos !fils.
Mar plan! 8lCp3nsion, RWOCP capaciIy irlcrea<ed 10 38.0 MGO. FIOITI 1969 to 1987, plan! capaciIy
was 30.6 MGO.
Soun;e: City cJ Palo AJIo
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o (S& YY; NO. 004205 DATED Til If.lOl •
---The "'!Towing _ Waslowalor Collection by class and number 01 W.sllIWatOf cuslomers by etas.
lor !he yean; 1984·85lhrough 1988-89 and projecled sales.
1130 fflEAlBl, WASTEWAlER CUSTOUERS
Fiscal Year 1984-85 1965-88 1986-81 j981-88 1988-89
I.al ... le, T,ealod YGD
Rei iden tial 12.2 12.2 13.7 "10.6 10.0
Connerci.l 1.8 1.8 8.8 6.8 6.4
fndustrial 5.7 5.7 6.4 4.9 4.6
UUnic+paf and Other 1.2 1.3 1.4 1.2 1.2
Tota! 26.9 21.0 30.3 23.S 22.2
Palo A II.
'aslewater Cuslomer, by Cfass
'Resident ial \8,895 19,188 19,239 19,285 22,967
Comnerciill l,37S 1,402 1,392 1,446 1,979
rndustrial 118 174 117 117 191
Municipal and Other 135 125 111 61 317
Iotal C<Jstoeers 20,583 20,881 20,925 20,975 25,454
PRO·!!;~IEl!
Ei:5~al !ear la89:::20 199G-Sl ISS] 112 li/ll2-9a .19lla--~ lSS4-l!5
lastewater Treated MGD
Residential 10.4 10.9 n.3 11.7 12.2 12.6
Conmercial 6.7 6.9 1.2 1.5 1.8 B.l
Industrial 4.9 5.1 5.3 5.5 5.1 5.9
Municipal and Qther 1.0 1.1 1.2 1.3 1.3 1.4
TOTAL 23.0 24.0 25.0 26.0 21.0 28.0
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"Sou",,: City 01 Palo AAo
COI.!IAERCtAL RATES:
BWlrlIlllZi
Minimum """'lie per connection per month $25.90
Based an rna!ered ..alar, per 100 rubic Jeet $2.30
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o (S&Y i!ii NO. 004205 D,i.TED7Jlli9Oj
~~ .~~l!\MItdi~lIa!gi~_~=QI.25,~Y.quar!ly OQuiva~~.p!!L~Y
~ ®tf)l]!lir>e\l.~ml!\§~~er_ll$igun~~",pnD!Ic
CoIoctioo Syslem Operalion, Maim9f1aoce, and InfiltJaffon Inllow $636.00 per mi11ioo garons ($0.48 per
100 cubic lee! 01 metered wafer J
Advanced WasIII Trea1mer4 Operalioos and Maintenance CIlarge
$557.00 per milon garons ($0 .• 2 per 100 cubic reel 01 metered walar).
$ 131.00
$ 279.00
S 1,750.00
$ 10,000.00
AlI.Q!hQ!: Es!;P!ishmenb
per 1000 pounds of COD
per 1000 pounds 01 SS
per me pounds II NH:l
per 1000 pounds of IoXlcs
loIinimum CIlarye per connedioo per month
Quanlil)' Rales:
Based on metered waler per 100 cubic feet
I;)QM1;SI1C.f!AIES:
f!ltMQntl1
Ead! cfomes1ic cfwe§ng uri!
SPEC1Al NOlES:
$10.00
$1.75
$10.00
/In oocupied domestic dweI1ing is designated as any house. <O!Iage, na~ duplex unit, Of aparlment unft
having kilcl!en. boOt, and sIeepi"91aa16es and 10 whidl utm1ies S8fVices are being rendered,
My <!welling un~ befng indvidJal1y served by gas Of _ meier W11 be considered as con6r<Jous!j
""",pied.
fOf any _n9 unl befng served by more !han or.<! waslBwaler "mnedion. the monthly c!large ,.,1
be applied 10 eadI connection.
WASTEWATER IJT1.JTY
CONPNIISOH WITH SUIIICllNlKl <XlMWUNITES
RATES EFffC1IYE 7·1-90
So r round i ng
Conmun i ties
2clcW_.
Residential <Baseline)
P~Jo~JJQ
$lO.00/monlh
1. 751Ccf
$9. 26/1000 t 10
.85/Ccf Retair/C~r~iat
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o ~~NO.00420SDATED7111J1l1l! •
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STORY DRAJiAGE t1TlJ1Y
The City r:J Palo AlIa created b!' Ordinance a S100n and Surface Wa!&I Man""ement and Utility on
November 6, 1989. On November 27. 1989 !he Council approved a me!hod ilf cabJlating $loon I)<inage
lees an<l eslallIislled. ~ RaI. Sd\edJ1e b' Ihe El1le!pllsa 10 be e!fec5ve January 1, 1990. Stom!
Orainage lees ""'" ccITected b' Ihe mt time with Ihe City"s FebNaoy utiiii)' bit
The purpose r:J Ihe S1nnn and Surface Water Management l.~j1ty is 10 coos1rvclan<l m<intain stoon
drainage imp"""""",!> on • ~-wide basis. The City is respo.l.'bIo b' an drainage facilities in !he street
and !he pubic right rlway inQxj'ng OJrbs and ~utI ... , calcll basins, pipelines and pump station .. These
~ coiled stoon water and <OOV8y llo!he &lnla CIar.I Valley Waler Distlicfs system rI majo<
cflannels and creeks toilhin !he City. The City has determined !hat ~s _n system is incomplete Of old,
l/llder.;ized and in poor ooOOition. Mer ooosidering a number or anomafive funcing soIuOOns 10 correct
"ese problems, the City conclJded l!1a! Ihe only feasible me!hod was !he levying ria moolhly S10rm
Drainaae Fee based on !he average area rI impervious «wer (2,500 square feeQ fer a Palo Mo home.
Fees ferinduslrial and com_cia! burlcings are eqJivalent 10 !he single family rales, but are based on the
acktal impervious surface on l!1e properly. The i",aI fludgelfer !he Sta<m Drainage En1erprise Fund b'
199().91 is $1,560,000.
C~1il!.tnP~.~~m_ll!a!¥
The City has kfentilied $lU million r:J Sta<m Drainage Cap1allmjlfovemenl Projects including $2.69
mi1i:on pfion'l)' one improvements, $4J8 million priori\)' two projects and $6.96 priority!hree improvements.
The projecIs are foca!ed 1hroughoul!he City and indude new storm !!rans, implOllemen1s 10 existi"9 pump
stalions, new pump s1a!ions, and a pondi"9 srud)' at !he M.JnlcipaI Airport The City inlen<ls 10 use
Enlarprise bon<fs as a means r:J financinglhese improvements. To \tis end !hey have hired a financial
_" develop a financing plan ,",!he improvements. The irs! bond sale fur Storm Drainage
tnprovemenfs is planned in ~scalyear 199().91. The City intends Ihat i1s S1nnn Drainage improvements""l
be u",,"rlaKen as S10nn Drainage Fee ravenues are sufficient fc pay mainlenaoo! and operaIing expenses
rI!he Utililjl and provide an "'rement of ad<i1ional revenue" oov ... deb! service payments resulling from
!he improvemenls.
S1o!T!! Drainage Fee ScI!eMi
Rales Effeclive 1-1-90
SlQfm Drainage Fee per E~1ert _nDoI Unit ~ .... _.$3.25
Spada! t.fo(es:
1_ An Equivalert Residential !Ali ~ is !he basic un~ b' compulation of stonm drainage fees for
residen!alan<! non·residential cuslomers. All single-family and duplex units are considered I ERU based on
c1a!afer Palo AlIa an<lare considered fc have an average impervious area r:J 2,500 squar. feel. All oIher
pmperlies .. 1 hav. ERlfs compu1ed III !he nearest t!10 ERU using !he ~n 9 b'mula:
No. 0 f ERU := lID.Qtl!l.2f,l§ _____ ~_Le_a ____ C~-~-----f.-LJ
2,500 Sq. ft.
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iSH ~NO. 004205 DATED 7111J901
M'PPCNAL OF LEGAL PROCEEDINGS
The 1eg.,11j' oIlhe sale. e,eculion and dei"1VE!<y 0I1h. 1990 Series A Bonds is sulljed 10 1I1e approval 01
Jones Hall Hland WMe San Francisco, Caifomi .. acting .. Bond Counsel. Bond Counsel has nol
un<lertallen anyl8Spon.it'ii~ ror!he acCUl'aC)l. complwoness 0< fairness 01 !his Official Slatemeot. 11 copy of
"""" legal ~nion Wll !>8 ¢nfl><! on """" Bond arnj is a1!ac1>ed herero as Appendx E.
ABSENCE OF UTlGAOOII
M Ihe ~me 01 detvery oland payment lot Ihe 1990 Senes A Bonds. Ihe Cily .;1 certify 1I1at !hera is no
action, sui!, j)IOCOO<ing, inquiry '" i",esfigafion. at law Of in equi!y. before", by any coort, regulatory agency.
pub6c board Of body. pendng ",,10 the knowledge oIlhe Cily, threatened againsllhe Cily a1fec5ng Ihe
exislen<:e oIlhe Cily Of !he 5t1es 01 is officers 10 tIleir raspec!i'O offices 0< seel<.ing 10 restrain 0< 10 enjoin l11e
.... 0< <Ie!vE!<y 01 !he 1990 Saries 11 Bonds, 1I1e app'!Calion of Ihe proceeds tIlereol in acco<dance witI1 tile
Indenture. or Ihe 00_ 0< appkalion 01 any Net Revenues provided ror Ihe payment 01 !he 1990 Series
A Bonds. or in any"~ cootesfing Of anedi ng tile validity 0< enlorceabii~ 01 !he 1990 Series A Bonds, Ihe
!n<!enfure. any aclioo 01 tile Cily OOflIernpialed by any 01 tile said <Iocumenfs. Of Ihe col1edion '" applicaOOn
oI.ny reven""" PfO'Ii<led ror !he paymenl 01 !he 1990 Series A Bonds. or in any way oontesting Ihe
comp1e!eness Of accuracy of ". Official 51alemen! or any amendment or suppTemenllherelo, '" contesting
tile powers oIlfle City or is aulhon1y "ilh respect to !he 1990 Series A Bonds Of any ac!ion 01 !he Cily
oontempraled by any of said <locumenls, 00f 10 Ifle knowledge 01 tile Cily, is tIlere any basis therefOf.
TAX EXEMPTKlN
In !he opinion 01 Jones Hal Hil & While, A Profession allaw Corporation, San Francisco, Cal~omi ..
Bond Counsel. .objecI. however. 10 Ihe qualifica!ions set forth bel:>w, under e,;s6ng law, til. inleres! on !he
&ods is ex,,"<Ied fIOm gross income lor federa! income tax purposes and sudl inl_res! is no! an ftem 01 fax
preference for purposes or Ole federal' alternative minimum tax imposed' an imi"viduals and coq>Oraoons,
provi<led, however. thai. ror!he purpose 01 computing !he aftema6v. minimum tax imposed on such
~ons [as cfefined lor federal iOOl"'e tax purposes}, such inleres! is tal<en into account in delemnining
certain ncome and earnings.
The opirions"" forth in !he prECeding senlance are subjed to !he roodllioo !hat Ihe City comply witI1
aN requirements 01 the Tn!emat Revenue Code 011986 (lJ1e 'COOe11ha! must be sa6s!ied subsequent to !he
issuance 0I!he Bonds in Ofder Iha! suc~ interest be, Of con~nue 10 be, exc1u<fed from gross incomeror _aI income tax purjXl6es. The Cit)' hs covenanlad 10 OOfnp/y wfth each sucl1 requirement Failure 10
comply wit!l c81lBin 01 sudl requirements m~ cause !he inclusion 01 sudl interest in gross income 10(
_at income fax purposes Ie be r.troacfive 10 !he dale 01 issuance 01 the Bonds. Bond Counsel expresses
no ~"ion regarding o(her fedara! fax consaqueoces ansing wfth respect tJ l11e il<Jndo<
l'l<>opedive purdlasers 01 !he Sonds should be aware !hat (i] Section 265 01 the Code <lerias a
OerucIion ror interest on indebIedness incurred or continued Ie purchase Of carry the Bonds or, in tile case 01
• Nnancial institution, Iha! por!ion 01 the Bond owne(s inlerest expe",. allocaled 10 inlsfest payable 00 the
Bonds, (ii] wit!l respect 10 insurance c","panies subjed 10 the fax imposed by secOon 631 01 !he Code,
seclion B32IbX5)(BJ(i] reduces !he deWction ror 1o<s rOSOOles by 15 percent 01 the sum 01 certain iiams,
inciJ<fng inlefesl on the Sonds, (iii) lor taxable year; beginning before Janua<y 1. 1992, inte<est on 1I1e
Bonds earned by scme corporations oould be subject to !he enviroomentaT tax imposed by secOon 59A 01 1I1e
Code, (IV) interest on tile Bonds earned by certain foreign corpo<afions doing business in !he U,,1ed S1ales
could be subjed to • branch profits tax imposed by section 864 of the Code, (v) pas~'Je investment income,
indudng interest on the Bonds, may be subjed Ie lederal income faxation under section 1375 of the Gode
ror subchapler S Corporafions that have subchapter C earnings and profits at 1I1e close of tlle taxable year i
~reater than 25% d the gross receipts or sue'" subchapter S Corporation ~ passive investment tncome, and'
(\/11 secflOO 86 of !he Code requires J9Cipienls 01 certain Social Seo.Jri~ and certain Ra,road Retirement
benefits to take into account, in defermining gross income, receipts Q( acouaJs of interest on the Bonds.
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In the furOler opiriioo r:J Bond Counsel. such 1ntcrest 'rs exempt from eanfomi a personal' income taxes.
RAn«>
ldood1's lnvesll:Jls Ser.ice, I1c. ("MoocIy"'l and Standard & f'oo(s CoIpofaoon ("S&P") ~ave given the
1990 Series A Bond& lIIe rati"9 of" and •• respectiveTy.
The raWngs railed only lIIe vi .... of such organiza5ons and an e,plana5on 01 !he sljJni1icance of such
ratings may be OOfained from !hem as roIIows: MoOOy's1nveslors SeMce, U., 99 Churcll Street New Yo"'
New YorI< 10007. or Standard & f'oo(s CoIporaffon. 25 Broadway. Now Yorf<, N .... Yor!< 10004. There is no
assurance 1haI!he ratings .,1 continue b' aIrf 1fY .. period or time or 1!1a1l11ey Wll not be revised" downward
or wiI!1drawn entirely by !he rati"9 agencies, I in !he judgment of such rating "geooes. circumsfanres so
warranl My such downward oevision or .. ilhdrawal 01 suel1 ratings may have an adverse _ on h
marl<e! priCe or !he 1990 Series A Bonds.
It •• ,illig
Stoo .......•.•.... &. Youngborg.llle Underwn1er. has purchased lI1e Boncfs ~om!he Cit;' at an aggregate discount or $ __ . . ___ ~ !he IOO>! par vaTue of Bonds as set for1h on lIIe COlIer P"9. of 1!1is OtIeri"9
Memoran6Jm. The pubic alIering p<ic$ maybe dla"9ed from time 10 time by 111. UOIlo".n10r. The
lJn<leiwriIer m"1 oller and son Boncfs 10 certain dealors and ol!1ers at a priCe ower 1!1an !he alI.ring price
sfaled on 1I1e IXMlI' page hereol.
AddiIionaI cq>ies oIlhe Cit;"s Offlcial SIaIemeof, as wen as copes or 1I1e Indenture, may be obtaioed
from Ihe U",le.wn1er. Slone & Youngberg. One California Stree!, San Francisco. earrfomia 94111.
AJI quotatioos from and summaries and _:<planaDons or !he Indenture and oll1er slaMes and
cfocume!1rs coolained here1n do not purpo~ to be romplele. and """,enee is made '" suc~ documenrs.
indenlllre and slaMes for lui and compIefe sfalemenrs of 1I1eir proIIisions.
This Official &aleman! is submilled only in connedion with lI1e sale or !he 1990 Series A Bonds by the
Cit;'. All estimales. assump60n •• sfaffstical inIonmation and ol!19( ,falements confalned herein. while faken
~om sources considened reiable, am not guaran!eed by Ihe Cit;'. The inlormaoon con!alned herein should
net be conslrUed as reprvsenffng an roOOffons a~BCting Ihe Cit)' or Ihe 1990 Series A Bonds.
Aft il1forma5on conlained in !his OtI'lCial Stalem.n! pertaining to the Cit)' and Ihe Project flas been
~misfled bj' 1110 cay. and 1!1e e,eru5on and delivery of !his 0fflciaI Stalemen! ha.e been dUty authorized by
1I1e Cit;'.
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CITY Of PALO ALTO
By: ~MikeC2b.b_
Mayor
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APPENOIXA
SUMIoAAAY OF 1liE PRINCIPAL LEGAL OOCtIMEHTS
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APPENDIX A
SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS
The lollowing sfatements are bfief summaries ol certain pcovislons of General"
Resoluflon and of the "Indenture. These summaries do not purport 10 be complete, and
reference is made to Ihc General ResofufK>f1 and the indenture tot a fun and comptete
statement of such provlsions. Certain capnafized words and terms used in this
summar) and not defined herein are defined in the rndenture. Certain other capnalized
terms u sed in this Summary are defined elsewhere in this Offtcial Sta!emenl Other
captlanzed terms used herein are used with the meanings set forth in the summary of
!he Indenture.
THE GENEf-lAl RESOltnJON
The General Resolu!ion is aCopled pursuant 10 Ihe Bond law. ~ au!holiZes an
issue of bonds identifiecl as lI1e "City of Palo Mo U1i1~y Revenue Bonds" and a firs!
series Olereof known as '"1990 Series "Of.
Ii. defines She Enterprise as set lOrth on page 8 of StlFs Official Statement, and
provides Ihat 1he k>fal' princpal amount of 111e Bonds snan be without limitation ell:cepI:
as provided in 1I1e Resolulioo ()( as may be DmHed by lalli, and sfla~ be issued sutlject
to the 1erms, cOO<fruons and lim ltafions estabflsfled in the ResoiuflOO.
If further provides 1hat the Bonds are 10 be revenue bonds, payabfe exc1usively
from the net revenues of 1he Enterprise and such other ru nOs a s are specified in the
Lndellfure, and that such: net revenues constitu(e a trust 'urd fof the securily and'
payment of the pr1ncTpaf or redemption pr'ice of and interest on 1tle Bonds; the general
fund oIl11e City is no! r.able and 1I1e credit ()( laxing power of lI1e Cily is 001 pledged lor
II1e payment of 1I1e principal ()( redemption price of and interest on lI1e BoOOs; the
Owners of II1e Bonds may nc! compel the ex ercise of the !axing power by II1e City Of !he
Iorfe~ure of Is prope~y; the prindpal ()( redempflOn price of and inleres! on !he Bonds
are no! a deb! of Ihe City. no< a legal ()( equilable pledge, charge, roen ()( encumbrance,
upon any or its property. or upon any of its income, receipts, 0( revenues except Ihe net
revenues of the Enterprise .
• lurthe< prov'.des 1I1a1lhe Bonds sflan be issued pursuant 10 and secured by Ihe
1nderrture~ and appfoves and authoriles ~s execufl.on.. The 1990 Serres A Bonds afe
authorized 10 be issued and saki' 10 Ihe Underwriter by negotiation within certain
parametefs.
Finan)', the OffJCiat Statemenl ts approved and its distributoo ard use by the
Urderwr iter authorized.
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THE INDENTURE
Certain Definitjoos
'"federal Securities" means any r:J the tonowing whk:t1 al1he time of investment
are legal inves1men!s under !he laws of lIle State for \I1e moneys proposed 10 be
invested therein.:
{aj direct general obfIgalions of :he l.k1ited States of America ~ncluding
obr.gafions issued Of held in ~ entry 1om1 on the books of the Department of
111e Treasury of l1le Uni'led Sta1es of America); and
(b~ obligations of any department, agency (X instrumentality of the
United States of America She timeTy payment cA principal of and interest on
which are unconrntionany and funy guaranteed by 111e United $tales of America_
"Gross Revenues" means, Jof any perro of computafl{)(t,. an: gross charges
received fof"~ and an other gross ncome and revenues derived b}' the Cdy from. She
ownerst1ip Of' operari011 of the Enlerpfise Of otherwise arising from the Enterprise
during such period, inc;uding but not ~mfted 10 (a) an Charges received by \I1e City. {bj
an recelp;.~ derived from the i1vestment at funds neld by (he Direck)r of Finance or ahe
Trustee under the Indenture, tcllransfers from any stabilization reserve funds. ~ all
moneys received by the CftW from other pubrlC entitles .. 'hose inhabitanls are served
pursuanllo coolracts wilh \I1e City and (e) moneys <Iepos~ed in !he D€b! Service Fund
or other fund k> secure the Bonds Of' to provkSe for She pa},menl of the principal 01 Of
Interest on C\e Bonds.
"Inlerest Paymenr Da1:e~ means, ..... "1i-h respect kJ U1e Series A Bonds~ June 1 and
December 11':1 each year~ beginning December 1, 1990, and virtll respec1 '10 any Parily
Boods, any date on which interest is due and payable thereon. arld continuing so k>ng
as any Bonds or Pari!y Sands femain Outstanding_
"Quafrfied Surety Bond" means a suret;' bond issued b)' an insufance company
fated in Ihe hignest ctaims paying category by Moody's and S&P_
"Reserve RernJirement" means an amount equal \0 tile I€sser of Maximum
Annual Debt Service or such higher amouoj (no! 10 exceed len percenl (10%) 01 U1e
proceeds of sala of She Bonds kl the investing pubfic) as may be set forth in a
SuppTementai indenture.
"SopoIemenla! lodenfure" means an y irtdenlur8, agreement resotuOOn Of other
if1strumenl hereafter duty adopted or executed by the Cfty in accordance with 1tle
provisions of 1he In6enture.
Funds and Accounts
The Indenture estabfishes Ole Jonov.;ing funds and accounts:
1. The Res.erye A.ccDIHlC (within She 000t Service Fund)_ An amount equal 10
1he Reserve ReQuirement win be Oaposited into 'ne Reserve ,l.ccount from ,he
p'oceeds of tie sale of the Bonds and this arr,ount · .. in be maintained in the Reserve
Account Any defldency 'herein must be replenished trom 'he first a .... aitabl"e Net
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Revenues. As an alternative, Ihe Reserve Account may be funded. in whole Of' in part..
with a Qual iliad Surety Bond or a letler 01 creClt
2. The Revenue Fund AI Gross Revenues are deposited into the Revenue
Fund. TIle mooeys in tile Revenue Fund must be used \a pay Ille Maintenar.ce and
Operations Costs, 10 make lransfers 10 ttle Debt Service Fund. and thereaner as
folIo""S:
(aJ 10 1I1e pal'1Tlent 01 capita! expendtures 01 !he Enterp<lse;
fb) to!h e annval payment into a reserve fund tor conti ngencfes, of an
amounl not 10 exceed ten percent of ttle expenrnture 10r cap-tal outlay foe' the
year, e)(ckislve of bond expenditures. The 1ota1 accumuraled in Ws :eserve 'lor
contingenc;es shan at no time exceed five percenl of the book val ue .of the
Enterprise's capital in service. This reserve fund snaR be available Jot \Jse by
the Enlerprise, onJy 'lor replacements Of' emergency repairs and after speciaJ
appropriafion by lIle Council;
(cJ to payment into !he genera! fund by quarterly allotments; and
fdj 10 any lawful purpose.
~. Qeb! Service Fund Mcneys deposned in tile Deb! Service Fund must be
used to make. when due, the payments of 1he principar or and interest on Ole Bonds.
4_ Redemption Accounl (within me Debt Service Fund). Monel's in Ule
Re<lemplion Account muSi be used 10 redeem any outslandng Bonds caned to<
redempUon subject 10 the lerms and conditions of the Indenfure.
The Revenue Fund is he~ by !he Oirector of Fmance or the City~ and the
remaining funds are held by the Tru.5fee.
TransfCl and Excl'lanoe 01 Bonds
Any Bond may, in accon1ance with i!s terms, be transferred upon the 8on<:I
Registration Books, by the person i'l whose name 1 is registered, in person 04' by his
duTy authorized attorney, upon surroodef' of such Bond for cancenation, accompanied
by deTivety of a written instrument of transfer m a urn approved by the Trustee, ctu'y
executed. \lVhenever any Bond is surrendered b trans'er. the City must execute and
the T ruslee must flereupon authenticate and denver 10 the transferee a new Bond Of
Bonds 01 like tenor, maturily and aggregate p<incipa! amount
Bonds may be exchanged at !he corporale !rust offICe of Ihe Trustee to< Bonds er the same wnor and maturity and of otller authorized denominafKlf1s. No Bonds the
.-of ,edemplion oIl/hiell has been mailed are subject to such e,change.
lost and Mublated Bonds
If any Bond becomes mutl1aled .. the City, at the expense or the Owner of said
Bond, must execute, and the Trustee rnusl1heretlpon au(henticafe and defiver, a new
Bond of tike maturit~ and principai amount in exchange and substituuon for the Bood
so mutilated, bot onty upon S\JrTencJer 10 the Trustee of the Bond so mul~ated. Every
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mutJl3!ed Bond so surrendered to U"Ie Trustee must be cancened and destroyed. t1 any
8000 iSsued hereunder ts lost. destrO)'ed or slolen .. e .... idence of such 10'55. destruction
Of theft may be submitted to \1le City and the Trustee and. if such evidence be
satisr~'1Ory 10 Ihem ancl incJemnLty satisfactofy to them is given,. the City, at the expense
of the Bond Owner. must execute, and the Trustee muSllf'.ereupoo auUlenocate and
denver. a new Bond or like maturity and prioc'fpal amount in lieu of aM in substitutiDri
lor !he Bood so lost, destroyed or slolen (()( ~ any such Bond shan have matured 0<
shan l'1ave been cancened Jor redemption, instead of issuirlg a substitute Bond the
Trustee may pay 1he same without SUHendef thereof upon receipt of indemnity
satisfaclory 10 the TrusteeJ,
Investment or and SecuritY lor~
AI moneys held by the City Of the Trus1ee in the·fu;l(ls established ptJ(suana 10
t1le lodenture are required 10 be inves1ed as provided tor in the Indenture. ~n
computing fhe amount in any Fund Of Account, AuOlorized Investments mus! be valued
at tt\e lower 01 the cost Of the market price thereof, exclu~ve of accrued interest
Vafualion must occur armua~y. except in me event at a wlthcSfawal uom the Reserve
Account. whereupon investments must be valued immediately after SU{;h .... iltldfawat If
amounts on deposit in Ihe Resehle Account are, at any time, less than the Reserve
Requirement, lhe deficiency m\.Jst be made up from the first avai1abre moneys received
after fle required deposits 10 the Debt Servk;e Fund are made, an as sel brth in the
lndenture.
The 1n<1eflture requires the calcula!ion and rebate of cer"ta1n ex~ss investment
earnings. \0 the federal govern ment, in compfiance with Secnon 148 0( the tn1ern at
Revenue Code 0( 1986.
Insufance
The City covenanls that iI \lim al an times maintain such insurance 00 lhe
Enterprise as is customarily maintained with respect 10 works and Pfoperties ol like
chafacter against acckfent 10, loss of Of damage k) such worlc;s Of properties, Jf any
usefuf part of 'the Enterprise is damaged ()( destroyed. such part must be restored \0
use. The net proceeds -of inSUfance must be used lex repairing Of rebufk:tng the
damaged ()( destroyed Enterprise, aM 10 Ille extent no! so apprled, must be applied 10
lIle redempfion of the oolstandirlg Bonds on a pro l' ata b~s, and Joe' sucll purpose.
paid into !he Redampf>on AccQ(J nt
Any such insurance must b9 in She form of por~s Of' cootracts lor insufance
with insurers at good standing and be payabte to Itle Oty Of' ihe Trustee, 04' may be m
1tIe Jofm of sen-rnsoraoce b~ the Cfty_ The ory must estabtish such fund Of' funds or
reserves as are necessary 10 rxovide kx its ~l1are at any such self-insurance. The Cfty
must file Of' cause '10 be filed wfth 1tJe Trustee, annually w'ilhm one l'1undred twenly (12Oj
days afte< lhe close or e""h fiscal Year, a Certificate or the Cijy (aJ setting Iorl'> a
description in reasonab1'e detail of Ihe insurance then in effect, including an1 self
insurance tund, maintained pUfsuant \0 tl1C requiremenfs descfred "10 thiS paragrapl1.
and {b3 statir1g thai the City is 11len in compliance wiih such requirements, and (cl
stating whethef during Ille preceding Fiscal Year an~ loss has been incuned with
respect to Ihe Enterprise and. if so, 1he amount of net pl'oceec!s of insurance, induding
the net proceeds .of any sell-Insurance fund, coverir1g such loss and specifying ~he
reasonable and necessa[~ costs of repair, reconstruc(K)(] or reptacemenl thereof.
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Anai ost Sale EmtnenJ Domain
Except as j)(ovided in 1he Indenture. !he efty covenants lllal She propl3rty.
rac~ilies and impfovements rA ltla Enterprise win not be mortgaged -or otherwise
encumbered. sold, lease, pledged, any charge placed thereon. or disposed of as a
whole or subslanfiany as a whale unless: (aJ Ihe C~y causes 10 be filed w~h Ihe Trustee
written ellK:Jence trc"m each Rating Agency that such sale Of' {)thet ell sposition will roO(
cause a reductioo or wnhdfawa! oIlhe rafing Ihen assigned 10 lha Bonds; (b! such saTe
or other disposition is so a rrang.ed as to provide for a cootinuance of payroonls iri10 fle
Revenue Fune! suff.ctent in amount ID permll payment therefrom or "e principal of ar.d
interest on.,. lhe premiums~ i any, due upon the can and redemption thereof .. the
oulslancfing Bonds, and atso 10 Pf:rv'OO k,.-such payments irllO the funds as are
required uode< lhe larms of l!1e Indenture and any Supplemental [nde:1ture; and fc) the
Cdy has IDcl with 1he Trustee an opinion of Bond Counsel to 1he effect Olat such sa'e Of
other dispos<lion ",,11 not adversely aflect the exemption from ledefal i"<:ome laxafion of
interest 00 the Bonds. The City rurther covenants V"lat the Net Revenues Of'" any other
funds pledged or otherwise made ava~able to secure payment of the pt'"fncipaf of and
inleresl on lha oulstana.n9 Bonds wiD nol be morlgaged, encumbered, sold, leased,
pledged, any charge placed Ihereon, or dlspoS<ed of 0( ured excap! as authorized by
111e 1erms of Ole Indenture. The cny further covenanls thai i win not enter into any
agreement which impairs the operation of the En1erprise or any part 01 it necessary to
secure adequate Net Revenues 10 pa'y the princpal 01 and interest of the Bonds Of
which oIherwise would impair Ihe rights oIlhe Bond Owners wHh respect 10 1he Net
Re\lenue!> I any sOOslan~aI part oIlhe Enterprise is sold lhe net proceoo. lhereof
must either be used for 1he acquisition and/or constructioo of improvements and
exfenstons of the Enterprise ()( be deposited with She Trustee in the Redempnon
Account and be used 10 redeem the outstanding SOnds on a pro rata baSis,
The City covenanfs tllal any net proceeds received as awards as a resun of the
taking of all Of' any part ol (he Enterp4'ise by the lawfuf exercise of eminent domain • .
and k> 111e extef1( that such rigl1t can be exerctsed against such property of the Cay,
must either be l.!sed 'lor the acquisition and/or construction of Improvements and
ex1enSiOns of 1he Enterprise [)( Shan be deposIled with the Trustee in 1he Redemption
.Accounl and be LlSOO 10 payor redeem the outstancfing Bonds on a pro rata basls..
0ft1er Covenants by V1e Crty
For lhe p<oIecfion and secur~y oIlhe Bonds. Ihe City has made Ihe lo/1o..,ing
a&i6onal' covenants with the Bond OWners in the Indenture:
1. • wi! not mortgage or encumber \he Enterprise '" lhe Net Revenues,
excap! as provided in:he lncfenfure, provided lhat Ihe City may ente< inlo long
tenn contracts 10 finance suppnes of water. gas. or eleclri<:: energy, payments
undef which are accounted fof as Maintenance and Operation Costs.
2. I! will maintain and operate ~he Enterprise in an effteient and
economical" manner and i!. win opera1e. milil1tain~ pr':JServe and keep t11e
E ntefprise and every part thereof in good repair. working orDer and condition.
3. I!. .... m acquire and construct Lmprollements 10 'he Enterprise as
required.
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4. II win pa~ and cause to be paid punctuany the Pfirx:ipal aoo the
tnterest on the Bonds on the date Of dales and at the place Of piaces and in the
manner menftOOed' in the Bonds and in accmdance with !he lncfenture.
5. I will pay and discharge any and a~ lawful' claims for labof', materials
and supplies which, t unpaid, might by la ... become a ~en 0< charge upon !he
Net Revenues at Ihe Enterprise and which might impair the security 01 U'le
Bonds. The City shari also pay trom the Net Revenues an laxes and
assessments or other governmental charges lawfuPTy revied or assessed upon
She Enterprise.
S. • wiD keep proper tx:>o;c:s of record and accoonts of the Enterprise,
separate from an otner records and accounts, in which compete and correct
entries shaR be made 01 art transac500s relarlng 10 1he Enlerprise. Said ~s
shan. upon reasonable request. be subject 10 [he inspection of the Owners of
nof: less than ten percenl {10%} of tl1e {)utstandirl9 Bonds Of' their
representatiVes authorTzed in writing.
7 •• 'Will cause the bc>c*:s and accounts of the Enlerprlse 10 be atx1lted
annuany by an SndeperxJenl Certified PutJlic Accoun1ant arid .... in make
availabre Jot inspectioo by the Bond Owners at the Prindpaf trust offICe of the
TrlJ'Stee~ upon reasonabre request. a copy of (he report 04' such Independenl
Certifiod PubflC Accountant.
a. It will preseNe and protect the security 04' the Bonds. rd compele with
1he EnterprTse and pay an lawfuny imposed taxes and governmental charges.
9'. PI. wiJI cause 10 be prepared annuat'ly. not more t1Ian one hundfed
efghly (1SO) days after 111e dose of each Fiscaf Year a summary statement
showing the amount 0( Gross Revenues and the amount of an other funds
conecled which are required 10 be pfedged Of onlel\i.'Is.e made availabre as
security fa( payment ol pi"mcipaf of and interest on the Borrds, the
disbursements from the Gross Revenues and other \mds in reasonabre deta".
and a general statement of 1ne financial and physical COfIdltioo of the
Enterprise. The Oty shan furnish a copy of the statement to 1he Trus1ee, aoo
upon wrftlcn request, 10 an'i Bond Owner.
10. I: win make no use Of permit I11e use of the Bond proceeds Of any
o(her moneys in its posses&on Of control in any manner which would cause Ihe
Bonds 10 be arbitrage bonds within the rr~eaning of tf'Ie Interr'laf R.e-Jenue Code
0( 1986, as amended
11. No a<kitionaJ bonds. Of other oortgaflOl1s shan be issued ()( bcurred
having any priodly in paymenl of principal Ot interest out of the Net Revenues
over (he Bonds. The (Aty may. however, issue bonds Of other OOfigafions
secured by a lien on Gross R8\lenues ()( Net Reven ues which is subofdinate 10
1he rien eslabnshed by the lnde;1tU re. upon such lem)s and in such principal
amoonts as 1he Oty may determine.
12. No additional bonds shan be issued Of oorigat~ons ioc:urred
pursuanllO 'If'.e 1983 Ge~fal Resoruroo.
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13. r;t will not la'ke. nOf permfl nO( suffer 10 be taken any action wrth
respect 10 the proceeds of any of l'tle Bonds which would cause any of the
Bonds to be "arbrtrage bonds" within the mear1ing ol1he Ta.lC COde.
" 14, No! more !flan len percent (10%1 of\l1e Net Proceeds oIlhe Boods
shan be used in a manner wh;Ch would 'cause the Bonds 10 become "-private
activity bonds" under and within the meaning of Sec!ion 141 lal 01 the Tax Code,
IS, "elmore than live percent {5%) of \he Net Proceeds of the Bonds
sha! be used. directly ex indirectly. 10 mal<:e Of' finance a loan (other than loans
constituting Nonpurpose Oblig alions or assessments) 10 persons -other than
state or local' r;ovemmefl! units.
16. I will not take an y acf;on or permit Of' suffer any action 10 be ta'k en •
lhe resuPi of the same ..... ould be to cause any of the Bonds \0 be "federany
guaranleed" within the meaning 01 Secfoo 149(b) 01 the Ta, Code, 'will adopI.
make, eKecute and deliver any and an such further resolutions, instruments and
assurances as may be reasonably necessary or Pfoper to carry ov11he ir!tenr~
or kJ facilitate ttle perJormance of Itle Indenture, and lot Ihe beHer assuring aoo
confirming unto Ihe ONners of the Bonds the rigNs and benefits Pfovlded in the
Indenture .
• sl10uld be noled Ina!: none of the provisions of paragfap"hs 13 10 16. incrUSlve, awy 10 Bonds Of other oblIgaflons the interest 00 llIflich is no( subject to eKcluoon
from gross income under appf.cable federal income ta)( laws and regulations.
MoQmcaflCln and Amendment of the lndenture
Tne City may, wit.hout the consent 0( the Bond Owners. acJopl at any time a
Supplemental Indenture 'Jot anyone Of' more of the iollowing purposes; provi6ed.
however~ (hal no sue" moctiflcafK>n sl'lan {al extend 1he maturity of the Bonds or redK;:e
the inferesl rate on any Bond. !bJ reduce the percentage 01 Bonds required kJ.r written
consent 01 !he Owner of such Sond 0< (c) without ""itten consent modify any rights 01
!he Trustee:
(a) 10 add o(he( covenants and agreements thereafter 10 be observed. Of
10 ~mit or surrender any rigtlts or power reserved 10 Of' conferred upon the Crty;
Of
tbl '10 core any ambiguity, Of' cure COrfect or supplement any derectiv~
provi~. Of in any o1f1er respect whatsoever as the aty may deem necessary
or desirable, provided under any circumstances lt1at such modifications Of
amendmenls do rid adversely affect the interests or the Owners or the Bonds;
(oJ 10 p4'ollide lOt the issuance of any Par~y Boods. and 10 prov!cIe lhe
terms and condiUons under wllicfl such Parity Bonds may be Issued~ Of
tdl to amend any prov;&on relating Jo 111e Tax Code. io any ex1ent
wl1a1socver btA only j and 10 the ex!enl such amendmenl ... rn no( adversely
affect the exemption lrom fedefaT income taxafioo of interest 00 any ol the
Bonds, In the opinion of n afionany-recog rlTzed 80nd Coo nset
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SllooIemen!al Indentures ""th SgndhQ1de.-s' Consent
1'he lndenlure may be modified at an~ time by a supplementat indenture with
fle prk>r writ1en consent of tha Owners of a majority Glthe aggregate j)(inclpal amount
0I1l>e Bonds Ihen oulslanding. No such modiflCalion 0< amendment shan (al extend
1he maturity cJ or reduce U1e interest rate on any Bond Of otherwise al1er Of Impair the
oortgafoan cl1he Cny 10 pay Ihe principal, interest 0< redemption premiums at Ihe 6me
and pace and at (he rate and in the cunency provided 1herein of any Bond 'i'.'fthout the
express written consent of Ihe Owner or such Bond, (b~ reduce Ihe pe rcent age of
Bonds required Jot the written cor1senl1o an,. such amendment Of modification. Of' (c)
wtthoul its written consent 1hereto. modify any of lI1e ri~ts Of' OOfigaflOns 04' the Trustee.
Any Bond Owner may accept any amendment as 10 the particular Bond held by
him. Of her, pro'olided (hat due notation thereof ts made on such Bonds.
The Indentul'"e defines each oJ the fonowing as an event of deraufi.:
1. defauh in the due and punctuai payment of the Pflnc"ipa' of any 80rd
'When and as She same becomes due and payab!e, wf1ettlet at maturily. by
proceedings Jar redempOOn.. by declaraf;on. Of other\lrl1se; Of
2. defauft in (he due al1d punclual payment of interest on any Bond
wflen and as sucn interest instar.ment becomes due and payabJe; 0(
3. defaurt in O1e obsovation of an~ co .... enants. agreements or concfrt)oos
on the part of the City COfltained in 1he mdenture Of" in ahe Boncjs. and such
defauft. has continued for a period of sTxtj days after the City 15 given noUce 1"n
writing or such defau1i by the Trustee; or
4. if (he Cft:~ files a 'petiti~1 Of answer see'king reorgarrizatiOr1 Of
arrangement urKfer the federal' bankruptcy taws 04' otl'ler appIicabte taws Of
statutes of 1he United States of Ame6ca. or ., a court or competent jurisdiction
approves a petition. filed witn Q( without the consent of th-a City. seeking
reorganization under ihe federal bankrup1cy laws Of any other appflCabfe laws
or staTutes or 1he lIfli1ed Stales of America. ()( if. under the feooraJ bankruptcy
laws ()( the provisibn of an,. olher law 'for Ihe refter (Y aid or debtQ(S. any court of
competent jurisd"1Ction assumes cus100y (Y C()(1trQCi 0( 1he Oty Of of Ille .... hI:>m or
any ..-antia! part 01 ~s property.
Upon the occurrence and during the continuance of any e .... ent of default. 1he
Trustee may, and upon .... ritten nof}ce: from the Owners of a maj()(:ty in aggregate
princpa! amount 0I1he Boods at the 6me outstanding sIlan, <lectare tile princpa! 01 an
01 the Bonds then ootstand4ng. and 1he i.nterest accrued thereon, 10 be due and
payaNa immediately. and upon any such declarafion the same shan become and s11an
be immediatery due and payable, anyV1ing in this Indenture Of in the Bonds cootained
10 !he contrary natwithslanding.
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In an event of defaun 8S described above, a~ amouT'its received bJi the Trustee
pursuant 10 any right given or acflOn taken by the Trustee undef the provisions of ltle
1nden\1Jfe shel be applied bl/ !he Trustee in the ",nowing order upon presentation or
11M! several Bonds, a nd !he stamping thereon or the amount or !he paymenl if only
partially paid, ()( upon !he surrender lherevl it luny paid·
Firsl, 10 !he payment or lIle cosls and e'penses or \he Trustee and or
Bond OtIners in declarlng SliCh event of defaun. including reasonable
compensalion 10 !heir agents, allorneys and counsel. .nd "'!he paymenl or \he
co~s and expenses of the Trustee, i any, in carrying out the provisions ot the
Indenture, including reasonable compensation to its agents. attorneys and
coo nset; and
~. to {he paymenl of Ihe whole amount then owing and unpaid
upon the Bonds iof interest and principal, with Interest 00 such overdue
amounts \0 me ex1ent permTtted by Taw at the net effec'flve rate of interest then
borne by Ihe outstanding Bonds, and in case such moneys shan be insuff~denl
10 pay in fun I'te ."hole amount so owIng and unpa"d upon the Sonds, Olen 10-
the payment of suell interest. principal and interest on. overdue amounts lNithout
preference 0( pOC>rily among such interest,. pr1ncipat and interest ()(1 overdue
amounts ratably k> the aggregate 0( such interest. principal and interest on
overdue amou nts.
The Bond Owners are entitled 10 exercise the remedies set tort11 in the
tndenture~ at law Of W1 equity, to enforce the payment of the princ~aT of and premium, if
any, and interest on the Bonds and 10 enforce any rights of the Trustee under or with
respect'!> !Ile 1n<!enlure.
DeFeasance
If !he ClIy shal pay and discharge any or ~n or lI1e outstanding Bonds in any
one or more of Ole JoIIowing ways:
{a] by wei and lruIy paying or causing 10 be pa<l1t1e princ~aI or and
inletest and p4"emium [If any} on such Bonds. as and when 1he same become
due and payable;
IbI bl/ depositing wi1fl fle Trustee, in trust. or 0< before maturil)', mcney
which. 1Oge!he< with Ihe avaITabie amounts \hen on deposlt in the funels and
accounls es!abIisfled porsuanllo lIle indenture, is luDy sufficient 10 pay such
Boods, induding an principal, interest and redemption premiums; 0<
[c} by depositing with a qualified escrow holdet. in trust. Federal
Securities in such amcunl as lIle City. <"erifled bl/ an Independent Certified
Pubr..: AccounlanO shan determine wilt, together with 1he interest 10 accrue
thereon and available moneys then on deposit in 1t1e IDnds and accounts
eslabrtShed pursuant 10 the Indenture, be fun), suffiCient 10 pay and dischafge
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the indebtedness on such Bonds (inciuding all pdncipal, interest and
redemption premfums) at or before their respective maturily dates:
and if sueh Bonds are to be redeemed prior 10 111e maturity lherooC notice of such
redempfJOfl Shan !'lave been mailed Of provisfon satisfactory 10 fle T Tustee shan have
been made fa< the mamng 0( such nOlioe, then. al Ille eTeeDoo 0( the C~y, a""
noIWitllSlanding Illal any 0( S<lCh Bonds sIla! no! have been surrend"'ed fa< paymen~
Ille pledge 01 !he Nel Revenues and otller funds provided fa< in Ille Indenture with
respect 10 suet! Bonds~ and an other pecu niary OOIigations of the Oty under the
"Indenture .... ith respect 10 an such Bonds, shan cease and lerm[nate, ekcept only the
_Illalion 01 the City 10 pay or ~use 10 be paid 10 l11e Owners 0( such Bonds no! so
surrendered and paid all sums due thereon from amour.ts set aside 10:' such purpose
as aforesaid, aoo alf expenses and costs of the Trustee. NoOce of such electlOO shan
be flIed with Ihe Trustee.
Any funds thereafter held by tile Trustee, which are not required Jof said
purposes, shan be paid over 10 !he City.
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!S& Y DOC Wt}430S DATED 4124190J
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CrIV or 'AUI ... 10
'totAl Ent."," .. o-bt 'MM". to.,.,.
Tilft V ...... Hht.,y with 50 Vea' f ......... t
$ (OGO)
0 .... ' .... DtNet letal n ....
Cal ....... o,.l'IIting C.l.l.Yel'u Re .... u. land o.t.\ Sa,..,t f;. Tob.l ftud a.. .....
final .-. . _-_M' .... IIII.anu. DRt S.P¥ia • Cow._ Chttl'gll. ~-t~:' V ... R • .,... tal (1) (Nt.A) " .... ilaltl. .... i .... (') (5) (0)
1960 3.4,6)6 2S,791 9,365 52. 16.(11 52. HI.O! 0 ."
1961 41,113 30,1)6 10.9Z5 '48 19.94 .48 19,94
1982 49,913 36.1;17 14,290 .,. 27.80 514 n,60
1983 56,651 40,678 16.,36() la, 42,9c. '0' 42,94
1984 69,660 50,791 19,017 208 (2) 91,12 lOa \H,7Z I 1985 82,607 59,211 23,917 .l' 45,91 51, 4S.91
1986 89,996 67 I 787 2).016 ,., 26,62 66' 26,62
1981 96,803 69.994 Z1,M~ \ ,016 25.92 1,016 2!).~2 l 1986 91,084 64,761 33,701 , ,378 24,46 1,378 2'.46
1969 97,828 61,936 37,4:11 1.545 24.23 1,541) 24.23
1990 108,379 72,724 37,357 1,702 Zl,95 1,702 21,95
1991 115,5Z9 600 S\ ,tSl b,b()() 29, "5 1,2B7 22.641 , ,1JiJ, 4,53
1992 122,499 5.100 85,597 9.700 34,4Z9 1,521 22,55 ll,Z21 l .• ) (
1993 131,321 2,800 89,683 11,900 4Q .066 l,~28 26,22 1),428 ~,87
1994 1014,632 4,600 94,890 12.500 ./13,368 1,526 28,4Z 14,026 ),98
1995 156,21b 2: ,Ih>O lOQ,199 \2 ,suo 41,CCQ ',S23 31,l~ 14,023 .1\,27
(1) Ex..:ludtt dltp"lfcl,tlrm tlnd .Il101",,1 .. \10" upltn ... , 0
(2) ~D bQn4 p"'nc1ptl' WI.!I. p .. iu 'n fhul 19B3~S4 nUIli to ltlfeuanu of 1919 ""ond, wIth 1983 "ltfunding bond proclllllldll.,
(3l fundine} fell' C.l,JI/."'" project will b, d ... wn f"om ,plllcLal "."'''111111 ut up for thl, pu"pou.
(4) RIllIlItI'lV" ~v.lltlblB djyidltd by Reyenve 80nd Oltbt Slt .. ..,.;c. lI.eqvlred,
(5) ll.venvE' Bond Oltbt S."1I1clt R.quired plus C.hl/It"'" Oebt.
(6) RIII~.I'l\li' ~n"abhl plus C .. l.lII ..... Debt. dilfidltd by Total flMlid Chargill',
B-l
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10 YEAR TRENt> OF UNCOU.£CTlBLE BIllS BY $ J\MOU'fl />1m
PERCENTAGE OF TOTAl BI\.LING
$ ~un'
~~LliL!~ _6XIJ§l!_._
1979-1980 33,229,000
1980-1981 39,401 ~OOO
1981-1982
. 47,579.000
1982-1983 53,122,000
19831984 66.789.000
1984-1985 71.123,000
1985-1986 82 .~11.000
1986-1981 90,158.000
1981-1988 91.254,000
1988-1989 90,566,000
Amount
!1!=.1~
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NlA
NIA
33,590.00
·38,750.00
43.270.00
66.215.00
38,535.00
49,562.00
34,101.00
.06%
.06%
.06%
.04%
.05%
.04%
..
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ts&y DOC W'C)'430S DATED 4124190j
APPENOIJ(C
CITY FINANCES
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CITY 0,. PAl.O Al.TO
Tat.1 tNbt to A. .... N V.lLle
Taul o.a. ... e .. Capita
TIh'I 'f .... Hiatal',. ph •• fhe 'i_I" " .... 0 ....
(1)
Galle,.., J1..".n .... (1) ~ Cabt to
rh,al AUanad Oblh~.t1OI\ 8!)fld COI\\1I\g"I1t Tatal AU8 .. lIId Yatal Oebt
Y •• ,. Pupulatlon V.lue Bontled Debt O.bt O.b\ O.bt V.l .... Par C.p1~.
198() 5!i.225 $1,))4,)12 (4) $6.86) $2,320 $ 9.183 1 ,57)! $ 166,28
1981 !i5,OOO 2.~2.487 6,071 ',890 7.967 0.33 144,85
1982 55,300 2,763,261 14,036 ',470 lS,5()6 0,56 280.40
1983 55,900 3,166.228 19,094 4.766 23,859 0.75 426,82
196'" 56,100 3,4!!1,251 1'1,160 4,765 (3) 21.925 0,63 390,82
1985 56,200 3,855,817 22,079 4,479 $152,)00 118,856 ".64 ~18Z.53
1986 56,800 4,515,649 21,773 16,414 190,968 229, HiS 5,07 403o:!,42
1987 56,600 4,8M,1111S 21,869 16,206 209,654 247,729 5,n 4316,84
1988 56,900 5,162,625 20,671 15.664 209,266 245,801:1 4.16 4320.62
1989 56,950 5,J~9,!i81 19,616 15,430 Z06,462 241,508 0lil,52 4240.70
199O 57, 000 5,550,000 20,(09 14,770 205.000 2:19,979 0lil,32 4210.16
1991 1)7,000 5.800,000 18,921 '4,110 203,000 236,091 4,07 4141,95
1992 51,000 6,050,000 ".770 13,550 201,000 232,:\20 ),84 4015,79
1993 51,000 6,300,000 16,676 12,805 199,000 nS,4il1 3,63 4006,401
1994 57,000 6.550.000 15,')51 12.035 197,000 ZZ4.586 J.4~ 394{),11
1995 57,000 6,800,000 ''',481 11.235 195,000 220.716 3.25 )87O!.21
(1) Gl"lIltr .. l Db li gilt 1 Of! Bonded O.bt 1 nel IIda" General Obligetion bonda, Special AU*u'nent Debt,
Cerllfh::ilt4l. of P .... Ul;'h .. lon. and Cepltal lUIII! ObH9ii.tion',
(;2) Contlngl;lnt Debt ;1 P.'o AHa', pMUon 0' NePA', debt for (ilhve"u Hydl"D 1'0\lf1lr ProJIHrt Debt,
(3) No Bond pl'lnlJ1p.1 wu p .. id ;n fi .. l 19830080:1 to de'a.a. •• lln of 1979 Sondl with 1983 R.fulldlng ftond
Proc"ed. ,
(II) Adjll!tlld (1'0'11 1.'5\ of "r.lI" M.rht V.ll1"" to 1001 of "rail" MIII~lIt V.lue lt fol' conlhten~)' of
p"n('nlatlon,
C·1
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CITY OF PALO ALTO
SCHEDULE OF DIRECT AND OVERlAPPING OEBT
1989-90As~ valuation: $5,864,060.]47
Q!BECT ~RlAPP!NG BONDED DEllI: ~ Deb! 1111189
Santa Clara CoonIy Building Authorities
Sanla Clara CounIy Flood Control and Waler
ConservaflOO District. Zone W-1
7.395% $18,434,551
Foolh." Com muni!y College o;s!fict
Foolh." Com muni!y College Dis!fict
CertfficroesolP~~flon
Palo AlIo t "'iliad School Ois!fict
Whisman School Ois!Jicl
Other School Oislricls and School AuIhoriIles
CiIy 01 Palo AlIa General Fund Obr'9alions
Cily 01 Palo AlIo Special Assessment Bonds
Mi<fpenlnsula Regional Pari< Ois!Jicl
Sanla Clara Va~ey Water Ois!Jicl
0.787
21.606
21.588
91.131
5.783
Various
10Cl
100.
13.649
Cer\ifteales 01 Parti~flon 7.395
Other Special Oislrlc1s Vanous
TOTAL GROSS DIRECT AND OVERlAPPING BONDED DEBT
lass: EI Camino HospiIaI AuIhorily
(l00%sen-~l
TOTAl NET DIRECT AND OVERlAPPING BONDED DEBT
('} Based on 1988-89 raflOS.
(2} Includes Terman School Tease purcl1ase obrtgaflons.
Ra~j~tJQ89..90 A$Sft$SM yaJyatjon;
202,101
334,893
4,209,660
1,057,119
256,186
173
11,551,000 (2)
7,546,000
4,616,091
1,569,958
~~
$49,790,788
4706
$49,786,082
~ OF AUIHORIzE!UM:l UNSOLD GEN!::AAL QBLlGADONJ3Qt-!Q$:
Sanla Clara CounIy .. _ .. _ .......... __ .. __ ._.. $222
SlATE ~ING A!O REPAYABlE AS OF G'3QI89: $51,723
Source: Canlo"';. Munic~! SlaflsUcs, Inc.
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is& y DOC ~cy::;s DATED 41241901
)If'PENOIXD
Nt£AE~
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The 1988 SUrvey 01 Buying Power (Sales Managemen() estimated !he City's median
household eIIec1Ive buying h;Ome [disposable personal income) at $«,012 (1988
income). By comparison. median ~ E8I1or Santa Clara County was $44,717
and $30,542 lor fle Slate of Car~omia. The k>IIowing labu!alion shows !he dislribulion of
effec1lva buying income by income groups.
CITY Of' PALO ALTO
EIIocIiw Buyrog .,.,.,.".,
!!l!;QmeClass
Under $1 0,000
$10,000 ·19,999
20,000 • 34,999
35,000·49,999
50,000 and OVef
Percenlof
fulseholds
7.5%
12.1
19.6
lS.4
44.4
Talal
Media., Household Effe<.1ive Buying Income
SotKce: 1969 SUrvey 01 Buying Power
100.0%
$44,012
CITY OF PALO ALTO
Household EtIeciYo :r.: .,.,.,.".,
BV ...... 'lisbicai rand
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Uoder $'10,000-$20,000-$35,999-$50,000
fi.M S)Q 000 1a.m M.m ~ i..nd'_Q ..... .e __ r:
1981 12.20 1.00 15.80 31.70 21.:)()
'1982 1().1() 11.80 21.:)() 21.80 23.00
'1983 8.70 14.90 24.80 21.50 :)().'IO
1964 1.40 12.:)() 22.60 20.90 36.80
1985 e.90 15.1() 22.1() '18.20 35.70
1986 8.60 14.20 21.20 11.60 38.40
'1981 1.50 12.20 19.70 ~.70 43.90
1988 1.50 12. '10 19.60 16.40 44.40
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Tota'
P-t-il..e.!l.l
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
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19S1
1982
1983
1984
1965
198t'
19S1
1965
o
Paro Allo Median
HO\J.ell<>! !U.el
$34,477
32,110
36,021
40,279
37,829
39,753
43,98t'
44,012
Source: Survey eX Buying Power
Santa Clara
County Eer
$32,336
30,510
33,780
37,176
35,702
37,511
41,748
41,717
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CfTY OF PAlO AlTO
Major InclJs1riaI ~
1989
Slate of
talLf..g_rru..t.....fB!
$23,0>8
24,260
26,040
28,348
26,551
28,221
30,531
30,543
The following are Palo Mo', largest employers:
1,000 Of more EmpIoyees_
CQm9l!O)l
Ford Aerospace Caporalion
Hewlell-Pac1<ard
Syn\ex
Varian Associates
Wa!1<ins-JoIvlson
Coherent, Inc_
Lockheed
501 -1,000 E~~_
Seckman Ins1rumenl
EIecIric Power Research Inslr.
Palo Mo Medical Foundar"",
St.mlll9 Software
SYV A. Company
101 -SOO Employees
A./za CaporafIO<1
Bemam CapiIaI Management Group
Computer Curriculum COrpOraflOO
Gasblteja School
Conagen Caporaf"'"
Cooper Companies
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Seryice/Prodvc!s
Aerospace Equipment
Computers, electronic
PharmacetJ!ical
EfecIronic equipment
EfecIronic com~s
Laser Oplical Systems
Research and Developme ....
Clinical Instruments
Energy Research
Mecfoca! Clinic
Software
DiaQOOSIic T osting
EqlJlpmE'fll
Tharapy, syslems
FOlanCia! Systems
Software!Currlculum
Malerial
Girfs School
Siomecf+eal p<oducls
Diagnostic and Surgical
EquipmE'fll
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Crystal Technology Inc.
Dn~ Research
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0ia10g Informaf"", Selvices, Inc.
Oigija! Syslems Research Cen\er
Dow Jones and Co. Inc.
The Emporium
F accloIa MOOI Company
F ai1ure AnalysiS Assoclalion
FoolhiD Co/f~Jdd1efield CarnpllS
Hare, Brewer and Kaney, Inc.
Horl<1ay Inn -Palo Mo
Hyaft Palo Mo
Hyatt Ricl<ey's
Mac Arthur Park
Ne1"man-MarclJS
().Jality T echnoloQy
Regis L1cKema, V>c_
Pen1nsuta Times-T ribt.Kle
Sal<s I'llth Avenue
Syslems Control, Inc.
Tab ?lQ(jocls
lelesenw<y Sys!ems, Inc.
Times Tribune
Wam Sttool Journal
Xero<
~ ..
Optical crystals
BiolOgical Equipmen.;
Eleclrlcal Rameya! SeNice
Computers
Publisher.Joomal.
Department Store
Mea!s
Engin&er;.,g Coosunanls
College
Commercia! and n:luslrial Roono<s
Hole!
Holel
Hole!
Restauranl
Department Sto.e
Opk>-elec!rooic Devices
PlbrIC Reia~ons Service
Publishing
Department Store
Engineering
Data equipment
EIec!OCa1 reading aids
Newspaper
Newspaper
Business Macrunes
~e: San Jose CIlamber 01 Commerce, Induslrial Directory
HOUSING ANO BtJltDlNG AClMTY
tlQ!@g
In January 1989, Iha Cily had 24,B94 ""'-">lr9 ooi\s, an iocrease 011,183 o.,er 1900.
flenlals 10< one and two bedroom ~enls and duplexes range !>elw""" $600-1500
per moolh. Rerlals 10< two and tlvee bedroom oomes vary from $1,100-1,600 monthly.
Sale p<ices 01 home. spread ... the approximale range o! $250,000 10 $2.5 milrlOfl
<lepeoding on the "1l". s1ze, COO<frtlon and IocarIOO 0I1he home. There are eig/ll primary
_ sulJuroan areas within five m~es 01 Palo Mo, with home prices vatying !rom abovl
$250,IXXI-$4 mi1[100 or more,
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8wlolflg pennils issued by &he Ctty over She past five years are valueo at more than
$500 miiroon A summary by ndividual yeaTS is presented below.
'! .. 1!JitJJ __ 9D
Residential
Noll-Resident;al
Total
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CfTYOF PAlO AlTO
Buiking Pem1ft VoWaIions
Thousands of $
For Yoon; 19851hrough 1989
.19~ J!m6 JSlll
$ 31,461 $29,500 $ 39,205
--",6 042 ~ --.J~ ...... m
$107,503 $73,890 $113,544
liSa ~
$40,870 $ 47,334
..&.:120 ~.?W
$97,090 $112,543
Palo Mo's major industrial employers are clustered in \he City's three industrial
parks. The largest 01 the Ihree, StanlOfd Induslllal Park, covers 660 acres, and houses
approximalely 31tenanls. The part< is zoned 10< fogtol manufacluring.
Sites are leased Irom Stanford University lOr a maximunlerrn 01 51 years on a net
ren! basis with \he lenanls paying an taxes and assessmen!s. Ea<:h lenart construc!s as
own ooilding. Stanford exercises arcMeclUral control, requiring \essees 10 subm~
complele plans 10< approval pOOr 10 construction.
The Palo Mo Industria! Pari< is \he City's second largest induslllal park. Covemg
90 acres, !he pari< is also zoned 10< Iigt( manufacturing and !las about 151enanls.
Saylands Susiness Part< is !he f>jrd industrial pari<; it covers 5.2 acres.
BetaUrn!!!!
The two largest shopping centers in Palo Mo are \he Stanford Shopping Cent'-'f and
the Town II Country ViRage. The StanfOfd Shopping Center houses abouI. 90 slores,
which ncTude Saks Fifth AV90U8, NordslrOfnS, NeTman-Marcus, The EmpoOum, and
Macy's. Town II Country Vinag<> includes over 1 ()() 1enan1s, primarily specially shops.
The IoIIowing tables shows laxab1e sales dala 10< the City 01 Palo Mo sinca 1984.
From 198410 1988 IoIaIIaXab/e sales grew 6.8%.
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1985
1986
1987
1988
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• [8&'1 DOC v()o430S DATED 412~~
CfIY OF PftLO ftL TO
T ""able Pem1 its and Transactions
1984-1968
IQllLRfiiiLs..t.o.In
Tuable
lola I .I." Oul reh
Taxable
Penni ls Transact~ Pe rm i t $ JJ_i:J1S.i.<iut!.2DJi
929
920
911
920
985
611.3U
658,381
671,929
668 ,250
118 , 922
2,876
2,943
3,020
3,065
3,117
996,879
1,033,819
1,022,213
1,033,202
1,069,254
Source: CaHfornia Stale Board of Equalization..
StanfD<d lJnj>'e"'ity was established in 1 B85 by Senator and MfS. Leland Slanfonj
as a memorla11o !heir son, leland,.1<. Enronment for \he Fan quarter 1989 was
approximaTely 13,354 sludents. The University's aeadem", innuence has been a
princ"pa! faclor in molding communijy .flRudes and Ioslefing an environment n which
technology has_.
The University employs approximalely 1,3151acuny members and a slaff 016,940
(no! inclu<ftng Hospffa! .Iaf! no! associa!es wilh \he Me<fteaf SchooI).
The mru1<et _alue 01 !he University's endowment assels was estimated as 01
August 31, 1989lo1als $2,083,916,000. Stanford is a separale unincorporated area.
Tr~
Hig/lway 101. also!<nown as !he Bayshore Freeway, and Inlerstale 280 D< \he
Junipero Serra Freeway, COMecI Palo Mo 10 San Francisco in \he North and San Jose
10 \he Soulh.
San Jose Municipal Airport is Toealed approximalely 15 mnes from Palo Mo.
NaOOoal and regional air service is pr_1or ~ andfreigh( by 13 airlines.
The COy is aI:>cM 20 mnes from San Francisco International Airport. The Santa Clara
. CounIy Airport in Palo Mo selVices private aircraft.
The car~omia Oepartmenl 01 TransportaflOfl (CftLTRANS) provides commuter !lain
seMce 10 San Francisco and San Jose from Palo AlIo. Ad<frtional ran passenge< seMce
Is a_rulable hough AMTRAK. which has a lerminaf n San Jose.
The Sanla Clara CounIy Trans~ Dislricl provides local bus service in and arouod
\he cay. The San Maleo CounIy Trans~ Dislricl (SAMTRANS) provides seMce between
Palo Mo and San Francisco.
Deepwaler !lanspD<lar"", is ava~able at the Port 01 Redwood City, six m~es north.
Por1s al San Francisco and Oakland are we~ equipped \0 handle an types 01 coas!a1 and
overseas cargo. AJIlhree pD<!s are conveniently accessible by Ireeway \rom Palo Mo"
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[Silo y DOC WOJOS DATED 4/2419Ol
S1arlford Universil)' Medk:aI Center houses 663 beds and Veteran's Administrations
Bosp!lal houses 1271 beds. 80th lacmti.s are located in \'le City, as are several prtvate
coovalescenl hoopiIaTs and nursing homes. The StanfOl'd University Meelka! Cenler is a
recognized cenler for med"teaI resaarch and is famous for pioneemg in e<gan Iransp/anf
surgery. City residents are also close 10 !he Et Camino Hospital in Mountain View, \'le
Kaiser FooodaflOO HospiIafs in Santa Clara and Redwood City. and hoopiIals in !he San
Jose area.
The City 04 Palo AlIa owns 4255.B acres 04 par!< and rec'eafioo lands. The two
largesl parT<s are 1,500 acre Byxbee RecreaflOO Nea and !he 1,430 acre Foothills Park.
Several counIy parl<s are also located near Ihe City. These City and counIy parl<s and
recrealionallan<ls provide residen!s 04 Palo AlIa with a wide variety of recrealiooal
opportunities thaI include l1i1<ing, fishing, picnkT<ing lennis and swimming. There are
Ihree QOlI courses in V>e City including a municipal coorse. Palo AlIa has fIVe museums,
incW"'9 Ihfee art museums on \he Stanford Campus.
The high quaroly 04 put>rlC and pivaTe educafion in Sanla CTara CouoIy refiects
wide5pread interesl in This "'-"'reel and !he large number 04 deg<ee holders living in !he
area. The City is served by 14 schoo!s (\ 1IYu 12j, serving approximalely 1.500 s!uden!s
in !he Palo AlIa Unified ScIloo! Dis1ricl
Stanford University, eslabl'ished i11885, is Toca1ed adjacenl 10 !he City. Situated on
over 8,000 acres, V>e Universlly has a lOla! estimated enrollmen! of 13,354 including
undergraduate, graduale and posl-<!ocforal students.
Palo AlIa is within !he Foothill CommU!1ity eonege Ois1rlcl. which operates two
modern campuses with a lOla! enrollmen! of approximalely 39,1SO day and evening
students.
In addiTion 10 Stanford University, other nearby educalional instiMions offering
undergraduate and graduate degrees include !he University 04 Sarna CTara, San Jose
State, San FranciscO Stale, \he University 01 San Francisco and UnIversity of California
BerKeley.
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JONES HALL HILL& ',"HITI':,
CAAaLI!!5 p, ... %> ....... 5
.512:PiI •••. CASA.l.1!:t)QIO
rqOM .... S ..... DOWHI!T
..... l).~ C ••• ~.J.·
.e:HIIlna I -'QJII1!!5
"""U.LUN B. M.&"Pl50.
n..,. .... JD~. OSTXa
BalAN D. QUINT
,. ... U1.. J, ralJotKIO
S.K.£.JK),.. ST ........ TO ... "'-:BITII'!
City of Palo Alto
250 Hamilton hen ue
PalQ ArtG. Can famia 94301
.to 1'1oI0PZSSIO.N.&t. ~ ..... ..., COIi"POIUt.TIO!<l
___ ,1990
YCJoL'Iit ~H8AHCA.D~ao Cf.,STt:l'/
StllTI!: JQ~
SA. ... 7:&:AJOi:CISCO 9 .. 111
141~ :)9l~8780
T"!:L1!COP1e:a
_4LOJ ~ "1!i7'84
.413' OQI'1!Io180
1 .... 3. W)oe -83()1J
OPINION: City of Palo AIIo, Carrtomia Utmty Revenue Refun<fmg Bonds 1990 Series A
Members of !he Council;
We have acted as bond counsef in oonnecflOl1 with the issuance by the City of
Palo Alto, California !the 'City'} of S Utilily Revenue Refunding 8oflc!s
1990 Series A I!~e '8onc!s1 pursuanl 10 the cl1arter of the Cft)' and !he provisions of
Chapl ... 12.28 p,mmencing wit~ Section 12.2S.0lq. of Ille Palo AlIo Municipal Code.
~I~er witll Article 9 (commencing with SectI"" 53550) and Article 11 [commencing
w~ Section 5358q of CMpter 3 of Part 1 of Division 2 of rare 5 of \he Govemmen!
Code of the Sta!e of eanfomia, the Indenture 01 Trust (the 'Indenture"), dated as 01 ===-=:' I, 1990, by and llelween the City and Secunly PacifIC National Bank, as
Trust .. , and Resolution No. . (the 'Resolution') of the Council of the City adopted
==::-::-::-:.,1990. We ~ave examined \he law ancl such certified j>foceedings and otw
papel1) 85 we deem necessary to rencfet this opinion.
As to QUesflOOS of fact material to our op!nlon~ we have reITed upon
represen!.fions of the City conlalned Tn !he Resotution, !he Indenture and the certified
j>foceedings and other certif>eations 0{ pullrlC officiars fumislled 10 us, without
uncler1aking 10 verify such lact. by independent invesligaflOfl.
Based upon 00f examinatiof1.. we are of the opinion.. under exIsting law. as of the
date hereol, that:
1~ The Cit,. is duly created and varldly exisf1ng municipal corporatiOn and
chartered city wit~ the power 10 enter in10 the Indenture and 10 perlorm the agreements
on Is part contained therein.
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=-----=~~-. 1990 Page2
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2. The Indenture ~as been <My autllorized. executed and cleDvered by t~ City
and is vaficl. binc!ing and enforceable a gains! tile City n accordance witll h ferms.
3. The Bonds con.mute .alld and binding !;peelal obugations 01 Ihe City payaole
sole~ from Net Revenues of the EnTerprise (as SucI\ terms are defioed in Ille indenture)
and (){her moneys. as descOOec1 ., ~ Inde nlure.
4. tnterest on the Bonds is excludable fron gross income 10f federal inCome tax
purposes, and interest on t~ Bonds Is oof an item of tax preference fa< purposes of the
federal aftematiye minImum tax Imposed on Individual. and corporatioos; it shoulcl be
ooted. oowever. that for the purpose of computirlg the alternative minimum tax imposed
on COfpC>fations {as defU1ed tor federaT i1come tax purposes}, such interest is taken k1to
account in de~srmining certain ilcome atld eaming5.
The opinions set JortJ\ 111 the preceding sentence are sooject to the oonoftlon that
the City comply wfth an requirements of the Internal Revenue Co<le of 1986 that must be
satisfied subsequent to the delivery of lIle Bonds n order \flat such interest be. or
continue 10 be. excluded froro gross Income for fmora! income tax purposes. The City
has covenanted 10 comply wfth each such requiremenL Fanure to comply wlt~ certaIn of
suc1l requlrements may cause the incfusfon of slJdl i'lterest m gross r.come f.or federal
i'lcome tax purposes to be retroactive 10 Ihe <late or delivery of \he Bonds. We express
no opinion regarding other federat tax consequences ariSfng with respect to the Bonds.
5_ Interest on the Bonds is exemp( from personal income laxation imposed by the
Stale 0( Cal~omia~
The "gilts of the Owne," of l'>e 8on<Is aTld the enforceability thereof may be
'SooJect 10 bankruptcy. lnsclvency~ reorganizatiOn. lTlQ(alofium and other $"mijar raws
affecting crecfrtors" rights heretofore or hereafter enacted and may also be ~ublect to the
exercise of j.Kfldaf discretion in appropriate cases.
Respectfu I1y .ubmit! ed.
A Professional La .... Corporation
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"-------------------"-------------------------------
INDENTURE OF TRUST
by ard between !he
CITY OF PALO ALTO
and
SECURITY PACIFIC NATIONAL BANK
as TruSlee
Dale<! as of August 1. 1990
Relating 10
City of Pafo Alto
Utility ~enue Bonds
and
Utility Revenue Refunding Bonds
1990 Series A
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IHOEH1URE OF TRUST
THIS IND€~ Of TRUST, made anel enlered ;"10 as 01 August I, 1990,l>y
and IleIWeen !he CHY Of PAlO "l TO, a chartered cijy and munIcipal corporafoon
organized and eKisling under !he constnufton and laws 01 !he Slale 01 califomia (the
"C<Iy1. and Secur~y PacifIC Nafional BanI<. a naUooaIl>anTting associa~on organized
anel eKisling under !he laws of !he unned Slales of America, with a COfpo<ale lrust offtCe
;" San Francisco, Caf~o<nia, and l>eing qualified 10 accept and administer !he trusts
!lereby crealed [\he 'Trustee");
WITNESSETH:
WHEREAS. \he City is authOrized pursuanl 10 !he provisions 01 Chapler 12.28
(commelY."-lng with Section 12.28.010) 01 Ille Palo Mo Municipal Cocle, enac1ed
pursuant 10 !he c/larlef 01 the Ci!y, 10 issue ft. revenue Ilonds lor the pu rposes of
financilg improvemenls 10 an enterprise of !he City and 10 refund any oonds issued lor
such purpose;
WHEREAS, lIle City has herelofore au!ho<lzed, issued and sold $4,765,000 01
lJIJlily Revenue and Refunding Bonds, 1983 Series .... 01 which 53,140,000 are
"""enDy outstanding, and $12.200,000 01 Utility Revenue Bonds, 1981; Serles A
(Adjustallie Convenillle ExTendable Secuflties-"CESsm) (Ihe 'Prio< Sonds"),
$11,200,000 01 whiCh are curren1ly ouIsIanding:
V.'HEREAS. the CouncA, after due inves6gafoon and deliberation, has
derermined!hat • is in \he interests 01 the Cfty at this lime 10 authorize an issue 01 ~s
revenue _ anello provide lor the issuance oIlhe first sarles thereollor the purpose
01 refunding the I'riO< Bonds, anello that end Ihe Cily Counei has lIarelolore adopted
ftS ResoIUIion No. __ , approving and authorizinS an issue City 01 Palo Mo Utility
Revenue Sends (Ille 'Bonds") and a firS! serieS thereof denominaled UliTily Reven ue
Refooding Bonds 1990 Sefies " (the 'Series " Sends' lor such purpose;
WHEREAS, in o<clef 10 provide lor \he aU1henliCaflon and deflvety 01 \he Sends,
10 establish and declare the lerms and COnelllCM1. upon wI1ich the Bonds are \0 I>e
ISSued and secured and 10 secure \he payment 01 !he principalthereol anel 0I1he
inlerest and premium, • any, lIlereon. !he Council has authorited !he .XOCuliCM1 and
de1"Nerj oIlI\is Indenture;
WHEREAS, an 0I1he Bonds will I>e secured Ily a plOO;je of the No! Revenues,
as defined here .... anel certain oIher moneys and securifies held by \he City and lI1e
Trustee l>ereunder, and
WH fREAS, al acts and proceedings required by Ia", necessary 10 make the
Series " Bonds, when execu!ed by Ille CiIy, au\henflcaled and denvered by the
Trustee and rul) isSued, the varld, Ilinding and legal specfa! OO1>gafions 01 the City,
and 10 constHute this Indenlure a vafld and Ilinelng agreement lor 1I;e uses and
purposes herein set 1orIh. in accordance with lis terms, have Ileen done and laken; and
!he execution and derrvery 0I1I1is Indenlure have beeo in an respects dul) au!ho<lzed;
NOW, THEREFORE, THIS INDENTURE W1TNfSSETH.1haI ir1 orclef 10 secure
!he paymenl 01 the principal 01 and lI1e interest and premiu m (~ anyl 00 an Bonds ar
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any time issued and Outstanding under Ilis Indenture, according 10 !/leir 1000<, and to
secure O1e performance and observance of an t1'le covenants and coocfitions tharain
and here;" set Io<!h. and 10 cIecIare the \erms and conditions upon and subjec110 whicl1
Ihe BondS are 10 be issued and received, and i1 consiOeraflon oIlhe premises and 01
(he mutual covenants herein contained and of 1he purchase and acOOpfance of the
Bonds by !he <Nners thereof, a nd lor o!her valuable consideraflOn., the leceipt
whereof is here!>y acI<nowIedged, the Ci!y does hereby covenant and agree wfth Ihe
Trustee. 10< Ihe benefit 01 !he respecllve Owners from lime \0 fme oIlhe Bonds. as
follows:
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ARTICLE I
DEfINITIONS; AUTHORIZATION AND PURPOSE OF BONDS;
EQUAL SECURITY
SECTION 1.01. PefinHiQns. UnTess 1!Ie conlexl <>c\.,...ise reqo ires, lIle lerms
defined in lIlis SecfIOO sIlaR 10< an p.Jrposes of 1I1is 1n<1enture and of any Supplemental
Inden1ure and of lIle Bonds and of any cer1i1icate, opinlan, requesl '" olller documents
herein mentioned tlave the meanings hereIn specified.
"AuttxxjlAd lnyes!ooflnf$" means any secur1ties (other than those identified in
paragraphs la, and !dl of Section S3601 01 the Governmen1 Code 01 lIle Slate] in
which the City may tega"y invest funds subject 10 fts control, pu<suanl 10 Article 1,
commencing with Seenon S36OO, 01 Chapter 4 of Part 1 of Oivislan 2 of Tille 5 of Ille
Government Code of the Slale, as no ... « hereafter ameode<l.
"Ayerage Anoual QeH SeryicB" means 111e 100tI aggregafs Debt Service b" ltIe
entire periOO during whlcllThe 8on<!s are Outstanding divided by !he n urriler 01 FiScal
Years Of portiOnS Ille<eaf <IuOnil which 1!Ie Bon<ls are Ou1standing.
'80m! Coonser means any att«ney at law Of finn of aftOfOeys, of naflonany
recog<lized standing In maners per1aining 10 The federal lax e,emption of interesl on
_ isSued by stales and pof~ical subdivisions, and duly admitted 10 ",acnce la.,
beforalhe highest court of any sla!e of 1!Ie Unfted States of America.
"Bond Law" means Ille charter of Ille City and The provislons of Chapler 12.28
(commencing with Section 12.28.010), of 1!Ie Palo Afto Municipal Code, Iogether with
Article 9 (commencing Wh SecfIOO 535501 and Miele 11 (commencing with Section
535&Il of Chapter 3 of Part 1 of Division 2 of Tille 5 of the Government Code of Ille
S1a1e, a" as In eflecf 00 1I1e CIos1ng Dale.
"Bond Purchase Aoreemenl' means !he agreement between lI1e City and Ille
Original Purchaser wher~ the City agrees 10 sel and \he Original Purchaser "9'ees
10 buy the Series " Bonds.
"Bend BagrsJraWn Books" meaf1S #1e books maintained by the Trustee
""rsuan! 10 Se<:!ion 2.08 lor lIle registration and Iransl", of owners11i1' 01 !he Bon<ls.
'B!ID!l§' means, coIlecfive!y. IIle Series A Bon<ls and any Paray 8on<!s isSued
and' a1 any time OJIsIanding hereu nder and under • SuppTernen1al Indenture.
'Boo<! Year" means 1!Ie twelVe-month period beginnIng on Ihe anniversary of
lIle Closing Dale In each year and ending on lI1e day prior 10 lIle anniversary date of
Ille Closing Dale In Ihe followIng year e'cepl1I1al (i] lI1e first Bone! Year shan begin on
\he Closing Dale. and 00 !he laS! Bond Year may and on a pOOr redemplion dale.
"Business Qay· means any day other than a Saturday. Sunda)' Of a day on
whic~ lI1e lnS<J1'ance Truslee is aulho<ized by law 10 remain closed
'CertjflCille of !be Cllli" mean. a certificate in wriling sIgrled by Ihe City Manage<.
Dilecfor of FInance Of Assistant City Manager of Ille City, 0< by any oll1er officer oIlhe
City duTy au1hor\zed by lI1e Councillor 1I1a1 p.Jrpose.
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"Charges-means fees, 1o/ts, assessiTlents~ rates and renlals prescribed under
1I1e Bond La ... ex any other law oIlI1e State by Ihe Counc~ for lI1e watOlf, gas, (J( eleclric
energy, ()( 1I1e serv!ces and facirilies at I!le Enterprise furnished by tfle City.
~"means I!le City 01 Palo AlIo, a chartered c~y and municipal ccxporatioo
organized and edsl1ng under the Constitur"", and laws 01 the Slate, and any
SJJOCeSSOf 1herelo.
"QnslM Pale" means the date upon whk:h there is an exchange of any Ser:.es
01 8on<fs for Ihe jlfOCeeds rep<esenVng Ihe purchase 01 such Series by tfle Original
Purchaser lI1ereol
Tffl of 19iyaOCft flJruj means O1e Fund by that name eslabflsl1ed pursuant 10
Secflon 3.0~.
T.Mt$ of Issuance" means a~ expenses incurred in connection _ith the
authorization. issuance, sale and derlVery oIl11e Bonds, including but no! Dmned 10
compensation. lees and expenses 01 1he City and the TruSTee and Iheir respective
counsel, compensation 10 any financial consonants and urn:ferwrners, legal lees and
expenses, munic~ bond fnSUfance Of' surety bond premiums, firing and recording
COSIs, raflng agency fees, wsls 01 p<sparaflon and reprooucflon 01 documents and
COSIs at p<inVng.
. ~ means tfle Counc! oIlhe City ()( any other legisTafive bOOy oIl1le City
hereafter p<<Wided for pursuant tJ law.
"I">ebr Service" means, during any period of computation. the 8mounl obIained
for SUCh peOocf bylolanng 1I1e following amounts:
(a} Tile p<incipal amount 01 an Outstanding Serial Boncfs payable by
Iheir terms in such pet'~;
(bl The p<incipaT amount 01 aO Outs1anding Term BondS scMduled 10 be
paid ()( redeemed by OjleratiOf at mandalcxy Sinking Fund InSfanments in SUCh
period; and
!c} The <ereSf which would be due du ring such period 00 the
aggregale piincipaf amount of Bonds ... hOCh woul" be Outslanding in sueh
period i 1he 8on<fs are pa1d 0< redeemed as scheduled.
"DeD! Seo6ce Fund' means 1he ~nd by that name established and held by 1he
TruSTee jlU<suanilo Section 4.03.
"Enterprise" means 1he whole and each and every part 0I1il1he e,istng eTec1ric
energ~ syslem at the City, comprising an ''''''lities for the generaflon, 1"_1011.
"ansmission and <l1s1rt>u!ion at elec!ric energy, (iiJ the existing gas system at 1he City,
~ng an facilItieS for !he p<odocIion, s/0<8ge, "ansmission and distril>JflO<1 01 gas
for pubrlC 0< private uses. (iiQ the existing .. aler system of the City. ccxnp<ising an
faciTIflOs for Ille obIaining, coosesvTng, lreating, <!islribuVng, SToring and supplying of
... at ... for domestic use, Irrigation. sanftaroon. indJ slrial use, fire I"otection. rllCfesfjon,
or any other publIC or piivate uses, r,.., Ihe exisling san~ary sewer age and sewage
<l1sposar syslem of 111. City, comp<ising an lacRiIies for the conecflon, Irealmenl ()(
disposa! 01 sewage and wasle. and M !he existing slcxm and sU<face waler system at
lI1e City, comp<Tsing an facilities for Ihe _on, Irea!menl and disposal 01 storm and
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surlace watef, and identified as the StOt'm and Surface Water ManagemenJ Enterprise
and Utility ... Ordinance No. __ , adopted by the Co-lncij 00 _____ , 1989,
including an additions, betterments. extensions and improvements '10 each such system
respectivel'y. fY any part thereof. hereafter acquired Of constructed Of financed.
"Event 01 DermOl" means any of the evenlsdescrbed in Section B.O'~
"federal Securities" means any 01 the tonowing which al1f1e time of iwestmenf
are legal "'vestments under the taws 01 the Slate 10< the moneys proposecl 10 be
invested therein:
(al direct general obIigaVoos of the unfted Slates 01 America ~nclUcling
obrlQ8fioos isSued ()( held in boo!< entry form on !he booI<s of !he Deparlment of
!he Treasu'y o(!he Unfted Slates 01 Americal; and
(bj obIigaflQns 01 any claparlmen!. agency or instrumen!anty 01 the
Unfted S1a1es of America the timeTy payment 01 prlncipaT 01 and!n!eres! on
wf1ich are unconditionally and fully guaranteecl by the Unfted Slates of America
"FwaocjaJ Guaranty Agreement" means the Financial Guaranly Agfeement.
daled as 0I!ha Closing Dale, by and be!ween!he CiTy and !ha tnsurer.
'"financial Newspaper" means The Waif Street Joumal, The Bond Buyer Of' any
_ newspape< or journal prlnled in the Engr.sh tanguage which pobIishes financiat
news and is circulafed il San Francisco, eaHfornia, and in New YOOc. New Yor1c... and
selected by !ha Trustee. whose clecfsioo shan be anal and conclusive.
"Fiya' Apart' means the Fiscal Agen! appoin1ed and acting as sucfl ptKSUant b
. lIle 1983 General RasoTuDon. 1he 1983 Series A ResoTuVon and !he Prior Bond
Resoiulion.
"fiscal year" means Ihe period commencing on July • .of each year aoo
letmln8Vng on the nex! succeed1ng Ju ne 30.
"Gross Revenues" mea"'s~ 10r any period of compu1ation.. an gross cf'Jarges
received for, and aa 0111 ... g'oss tJcome and revenues derived by Ihe CiTy from. Ille
()wnership or opet'aflOfl of the Enterptise or od1erwise arising from (he Efrterprtse
durfng such peiiOO, i1cluding but no! fimned 10 (al an CIlarges received by the City, (bj
aa receipls elerTved !rom the investmenl of luncls ~e1d by the DiraclOt of F.,ance ()( !ha
Tru5lee uncler IIlis 1ncIenlure, tel Iransfers from any slabililafion reserve funcls, (d) al
moneys receiVild by !ha City from other pubrlC entities wllose in~abi1ants are SMled
pursuanllo contracts wfth !he CiTy and (el moneys cIepoe~ed in the Debt Service Fund
or oIOO( lund 10 secure the Bonds or 10 proviele 10< Ihe paymen! of lIle principal 01 or
In!ere51 on lIle Boods.
"'mproyemenJ" means any ackfrtion .. extension,. improvement. equipment"
machinery or other facifrties 10 ()( 10< !he Enterprise ()( any part thereol.
"indenture" means this lndenture of Trust. as CAlgTna"y executed Of as I: may
from Ume 10 Ume be suppTemanfe<!. modified or amended by any Supplemental
IndenIure purduanllo !ha provisions hereof.
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"hldooflodent Certified Pubfic Aocoyn1anf means any certified pubr.e
accounl8rl! Of' firm at such accountants appointed and paid by Ihe C{fy~ and who, or
each of .,hom-
lal is in !act indej:endenl anlf no! under dominaf"", of the City;
Ibl does not Mve any subSlanflal identity of interest, diract or indirect,
wi1h !he City; and
(c) Is not and no membel of wl1ich Is connected wIDl tile City as an officer
or "mployee ol!he City. but ",ho may be regularly relained 10 make annual or
O!her audits of !he books of or reports 10 tile City.
"n1f>MndenJ Consultant" means any financial 04" engineering conSlJrtanl
Qncluding wilhou! ~m~a~on an y Independent Certified poor", Accountant) with an
es1abflshed repulaflOO In tile fielcl ol municlpal finance or firm ol such consunanls
appointed and paid 1»1111. City, and who, or each of whom-
la) is in !act independenland not under dominaflOn of tile City,
Ibl does not ha"" any subslanfial idenlity of interest, di ract or indirect,
wi1h !he City; and
«;} is not and no member ol which is connecled "ith Ill" City as an
officer or .mpIoyee of 1I1e City, but who may be regula~y retained 10 make
annual or oll1er audits of !he books 01 or <epo~s 10 1!le City.
-Io!ormafoo Seryjcfts" means Financial Infofma600. loc.'s ·Oaily Carted Bond
Service". 30 Moolgomery Stree\, 10th Floor. Jersey City, N.w Jersey 07302, ADen!ioo:
Edlor; Kenny InformaflOl1 Services' "Called Bond Service", 55 Broad Stree\, 28th Floor.
New YOO<. New YO<1< 10004; MoocIy's L"veSl",s Service "Mu nicipa! ancl Govemment.·
99 Church Street. 81h Floor. N .... YOO<. Ne ... YO<1< 10007, A!lenfion: Municipal News
Reports; Standard & poors Corporafion "Called Soncl Record,' 25 Sroaclway. 3<cI
Floor, New YOO<. New YO<1< 10004; and, in accorclance with lIl.n currenl guideron •• of
Ihe Securm •• and E,change CommiSSiOn, such oII1er adelresses andlor such other
services providing inform~on ... ith respecllo caned bonds as the City may designate
i1 a Request of !he City __ ed Ie the Trusfee.
"insurance Trus1ee" means ___________ _
"IOSIITer"' means __ n ____________________ •
'1ofAresf payrnenr Dale" means, "With respect to the Series A Bonds. June 1 and
0ecemlJer 1 i1 eec11 year. beginning December 1. 1990, and with respect 10 any Parily
Boncls, any date on which interest is we and payable thereon, and confinuing so long
as any 6oo<Is or Parii)' Boncls remain OufsIanding.
"'ntetest Beoyiremaor means~ as of any particlJfar date of calculation,. the
amoon! equal 10 any urpaicl rnt.reSl!hen due and payabfe, plu. an amoun! wflTch wi.
on the nel<! succeecling IntereSl Payment Dal. be equal 10 !he ifllereSlIo beoorn. due
ane! payable on til. 8ooc1s on such nel<! SUCCeeding fnterest Paymanl Date.
"lnvestmenll'looeall" mean. any S8CtJray las said term is clefined in SecIiOn 165
19J (2) (Aj or IS) of the Tax Cocle), obfogafion, annuny or inveslment-type p"'perty,
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ell:c1uding. however. obfiganons lt1e Interest on whk.;h is e);empt from income tax under
sec1ion 103 oItl1e Tax Code.
"Maio1Maoce and One.rafioo Cos.1$''' means ~he reasonabl'e and necessary
cools spent 0< lnCuned by !he City for maintaining and operating Ine EnterprIse,
calculated in accordance ... i1II sound acrounting pOnc~;es, Incloding !he ",,51 01 supply
of ilIatsr, gas and electric energy under contracts Of otherwise. the funding or
reasonable reserves, and an reasonabfe and necessary expenses of managemenl and
repair and other expenses 10 maintain and preseIVe lhe Enterprise In good repair and
working mOOr, and including aM reasooable and necessary adminislrafive cosls of (he
City attribu!abl'e 10 the Enterprise and the Bonds, such as safaries and wages and the
necessary contribution., refirement 01 employees, ovemead, insurance, taxes [4 any),
elj)enses, ca<npensatioo and inclemnirlCation of !he Trustee, !he Fiscal Agent and 111.
Paying AgenIS and fees oIaudilO<s, accoyntanls, an()(neys or engineers, and includlng
oR other reasonable and necessary ""sis 0I1I1e City 0< onarges required 10 be paid by
110 C()(npTy with !he lerms of Ihe Boods ()( of !he 1983 General Resolution, the 1983
Series A AesotuflOn ()( 1I1e Indenture, but excluding clepreclaVon, replacement and
obsotescence c'harges or reserves therefor and smot1ization of intangibres Of' othet
bookJI;eeptng entries fA a similar nature.
"Maximum Annllal Qebt Service" means. 2.11! o(!he da12 of calcuraflOn, the
maximum amounl of Debt Service b" the current Of" any future FIscaf Yeaf.
"Moody's" means MoocJy"s lnves10rs SeMce. a corporation duly orgarlized and
e,lsVng unda< and by Virtue ~ the laws ~ lIle Stale 01 Deiaware, and fts SUIOCeSSO<S ()(
assigns, except 1I1al if suen ccrporaVon shan be dissolved 0< roquidaled 01' shan no
longer perfomllhe Iu nc!ions of a secur~ies raVng agency, then !he term "Moody's" shan
be cleemed 10 refer 10 any oIher naVonaWy recognized securities raVng agency selec1ed
lJy!he City and approved by 1I1e Trustee (whlcll shan be under no rlalltlily by reason of
suell approva~_
'"Net pnx;oooo". when used with referance 10 111e Bonds, means [he face amount
of the Bonds, plus accrued inferest and ",emfu,", I any, tess original issue discount
and less proceeds <Iepos~ed in !he ReSOlVe Acoou nI; "Net P,OCeeds", when used witlJ
reference to any insurance Of condemnation award Of' saTe of property. means Ihe
gross proceeds from the saTe of prope rty or i1 surance Of" condemnation award with
res;>ecllo which 1ha1 term is used remaining after paymen! 01 an e'penses ~nclOOn9
anomeys' fees and any extraon::1inary expenses of the Trustee) incurred in the
collection of such gross proceeds.
"Net Revenues" means, for ally perfOd' 01 computation, d1e amounl of the Gross
AeIIenues received during such period less 1I1e amount of Mainlenance and Operation
Costs becoming payable during such period.
"1983 General ResaWUQo" means Resolution No. fil11. "A Resolution
Au1horizihg Ihe Issuance 01 City 01 Palo Mo lJIjmy Reven ue Bonds". adopted by Ihe
Coonci on April 25, 1983.
"'983 Seaas A Bonds" means !he $4,765,000 aggregate ",incipaT amount of
City of Palo Mo lJIjRly Revenue Bonds, 1983 Series A. authorized by lhe 1983 Series
A ResoluflOO, 0( whicn $3,140,000 are now outstanding.
"t 983 Serjes " BesoluVQO" means Aeso!u~on No. 6112, adopted by lIle
Coord on Apr~ 25, 1983.
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~Nonpyrpose Qlr~anQQ" means an)" lnvestment Property which is acquired wIth
II>e Gross P>ocee<ls and is NlI acquired in order 10 car'1 0UI1M goveromanlar purpose
of Ihe Bonds.
-prjgInaf Purcllaser"' means1he first pttrtl1aser of any Series ~ Bonds !rom 1he
CIy.
"Oy1sta ru1j 09-. wflen used as of any parflCufar time with reference !o Bonds,
means [subject 10 !he ptOvisions 01 SecOOo 7.0~l an Bonds 1Mre""e executed, issued
and der.verecj ~ the Clt, under this Indenlure except -
(aJ 800ds lIlerefor. cancened by !he Trus!ee '" surrendered 10 \he
Trustee for cancenanon;
Ibl 800ds paid or deemed to have been paid within 1!1e meaning 01
,Section 9,03; and
(c} 800ds in r ... " 01 or in subSti1uf"", for which o!he< Bonds sIlal have
been executed, issued and c1errv",ed ~ the Clty pursuant to lIlis Indenlure Of
any Supplemental lncIen1ur •.
~ Of "Bond Owna(' or "Boodowne!", when usee! with respect to any Bone!.
means the person in wllose name Ihe ownership 01 sucll Bond shan be regrst ... ed on
Ihe Bond RegTslralion BooI<s.
"Parily Bonds" means an ~ notes or other obIigarlOOs ["",Wng wfthout
Imftaf"'" ~Ietm OO<1lrects. loans, sub-Jeases or oIher Jega! financing arrangements)
of Ihe City payable from and secured by a pledge 01 and fien upon any 01 Ihe Net
Revenues issued Of incurred on a parity wHh I1e Serles " Bonds pursuanllo SeGflon
3.06.
"Prinripa! lasla nmenC means with respect 10 any par6cufar Principal [nstaJ1 ment
Dale, an amount equal 10 the sum 01 (iJ Ihe aggregate pri.I>Cipa1 amou nt 01 Oulslanding
Serial Bonds payable on such Principal Inslanmen! Dale as determined by Ihe
approcable SupplemenlallndenlUre (but not ocluding Sinking Fund Inslanmenls) and
(ii) !he aggtegare 01 S<nl<ing Fund Inslanmenfs ",~h respec! \0 an Outslanding Term
800ds payable on such Prillcipallnslanmen! Date as determined by Ihe appljcable
Supplemental lndenlufe.
-prince tnslanrnenf Date" means \he cfa.fe on wflic'h Principaf lnstanmen!s ara
required to be made pursuant 10 Seer"", 2.01.
"Prior Bond Beso'Llfioo" means .ReSOlution No. 6454~ A Series Rasolutk>n
Authorizing the Issuance 01 a Principal Amount 01 $12,200.000, CHy of PalO Mo.
Cafllornia Ulimy Revenue Bonds, 1985 Series" (Adjustable Convertibre ,,>lendable
Secur~ies·ACl:SsmJ adopled by Ihe Coo nci on December 23. 1985, as amended July
21. 1986. and In eflect on the Closing Dale.
"Prjor Bonds" means !he $11.500.000 aggregate pincipal amount 01 CHy 01
Palo Ano, carrfo<nia Utilily Revenue Bonds, 1985 Series A (Adjuslable Con verlill!e
E>lendable SecIJfHies·ACESsm), $11,200,000 01 which are now outstanding under 1!1e
Prior Bond Resoltlfion.
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"Privat;:: Susiness Use" means use direclly or indirectJ~ in a 1rada Of' buSir1ess
carried on by a nafural person Of' in any activity carried 0f1 by a person other tlI2 n a
naflKar person, excluding use by a governmental unit and use by any person as a
mernbet oIlhe general putJroc.
"Purchase Price", for fle purpooe ct compulaflOn oI1he Y"M of !he Bonds, Ms
\!1e same meaning as 1he lerm ~lSSUe p<ice" in sectioos 1273(bj and 1274 of Ihe To. coc.., and, in general, means 1he innia! offering P<ice 10 !he pubrlC (no! including bood
houses and bfofe:ers. or similar persons N organizations acting in the capadty of
uodarwrijers or wIIoIesaTerSl at which P<ice a sutJstanfiai amount of !he Bonds are 50<1
or. llhe 80nds are privately placed, !he p<ice paiel ~y Ihe original purchaser of Ihe
Bonds or !he aoqulsi!ioo cost 01 such original purchaser, Tna \erm "Purchase Price," for
!he purpose of computaEon of !he y",)d of Nonpurpose ObflgarlOns, means !he fair
marl<et value 01 !he Nonpurpose Obi'PQaEons on It,e dale 01 use 01 Gross Pmceads for
acquisrtHxi fhereol. 01 if laf6f~ on the date that fnvestment': Propertj constituting a
Noopurpooe Obrogafion becomes a Nonpurpose ObflgaflOO of !he Bonds.
"Oumified Surety Bond" means a surety bond issued by an insur ailCB ctV'!1Pany
raled in !he highesl claims paying calego<)' ~y Moody's and s&p,
-Bating Agepc( means. as of any dafe. eacl1 of 119 fonowiog fating agencies
wIlich!hen malnlalns a raEng on any of Ihe Bonds: <aJ Moody's and (bj S&P.
"BIlcord pale' means, "'nh respect 10 Ihe Selies A Bonds, \he fifteenth (15thl
calendar day of Ihe month immedialely preceding an 1nlereSl Payment Dale or, ... nh
respect 10 any Parny Bonds, any _ dale es1~1Shed in !he appi"ocable Supplemenlal
'lndenlure.
"Bed9!TP'}pO AGC9' Ifll" means me Account by that name estabrisfled and held
by !he Trusfee pu,suanllO Section 4.03.
"Re!!emOOon f'rjce" means, with respect 10 any Bond, Ihe p<inICipal amount
!hereof. plus !he applICable premium, i any, payable upon redemp1ion !hereof pursuant
10 #lis Indenture and the Supplementar Indenture pursuant 10 wllicl1 the same was
issued.
'Bequest oJ IlA Cjty' means a request Tn writing signed by !he City Managet,
Oireciof of Finance or Assistant City Manager oJ !he City, or ~ any OIher offICer of !he
City duly aulhorized by !he Council for !hal purpose.
"Reserve AqXXIO'" means the Account by that name esfablishec:J and l'leld by
II><' Truslee pursuant 10 Section 4.03.
"Besecye ReQuiremenl" means an a moo nt equal 10 the lesser of Maximum
Annual 0e!J( ~rvice or such highs< amount ,nQ( 10 e.ceed len pe,cent (10%) of !he
proceeds of saTe of !he Bonds 10 1I1e InvesEng pubrlC) as may 00 set forth in a
Suwlemenlallndef1ture jlUfsuanilo Section 3.06.
"Raveoqa funsf means ~e Fund by that name aslabflshed and l'leld by the
Director of Finance pursuanllo !he 1983 General Resolution and referred 10 in SecrIOn
4.02.
'l>&f" means S1a nda rd & Poor"s Corporalion, a COfPO!alion duly organized and
exlsfing under and ~ mue of !he laws ollhe Slale 01 New YorI<. and ~s successo.'S or
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assigns, e.cept \t1al I such corpo<alioo ,;t,an be dis-<olve<! Of ftquidaled Of shan no
longer per10rm \he Iunctlons 01 a securhies rafing agency, \hen !he Ie.m "Sap' shan be
deemed to refer to any other nafionany recognized securrties rating ageilCY selected by
tire Citr and approve<! by the Trustee (which shan be under no ~ab<lity by reasco 01
such approval).
"$erial Bonds" means all Bonds other than Term Bonds.
~" wilen used with 'espect 10 tess Ihan all oIlI1e BoOOs. means and reters
10 8" 0( 1he Boo6s 6ethfefOO on Of~nat isslj8I'\Ce in a simuftaneous. \ransaction.
regardless of variations in maturity, interest rale or other provisions, and an~ Bondi
tlrerealter der"ered in fieu of Of substUufioo lor any of such Bonds p!Jfsuant 10 SecfiOfs
2.02(1),2,05,2.06,2,07,2,09 and 7.04-
"Series A Bonds" means tire City 01 Pal<> Alto Vtiltly Revenue Relunding Bonds
1990 Series A. issued and al any Ume Outstanding Ilereuroder •
• ~ Fund \nslan!OAot" means, with respect 10 an'J partkutar date~ the
amount 01 money required by Of P<lrnuanl 10 a Supplemenlal Indenture 10 be paid by
tire City on SUCh dale lOward lIle retirement 01 any particular Term 80ncls prior 10 lIleil
respective stared ma1urilies.
"SaI!!" means lIle Slate 01 calrlomia,
.$ wTemeolal' Ir!c'JAQlI,u" means any 'iI'lMnture. agreement, resofutton or other
instrument ""reafter (My adopted Of e.acute<! by the City in accordance with \he
prOllisTons oIltris Indenture.
"SUrely Bond" means lIle Oti!lt Service Reser,e Surely 8011<1 in Ple principal
amount ollila Reserve RequTremenl calculafed as oIl1le CIosTng Dale issued by Il1e
Insurer pursuant k> llle FlnancTal Guaranlr Agr .... ment
"'Tax CrxJe" means She lnlemaT Revenue Code of 1986, as amended. Any
reference 10 a provlsToo oIlIle Ta. Code s~an include lIle appI'<:able Tax Regula~ons
with respecl k> such provision.
"Tax Beou'afiOOS" means tempDfary and permanent reguTaf~s Pfomufgated
under lI1e Tax Code.
"Term Bonds" means, with respect 10 an)' Pai'l!y 8cn1s-. suet! Parity Oonds wllich
are payable prior 10 lIleir state<! maturtty byoperafiOf 01 Sinlting Fund instanmenlS.
"rruS! Office" means tire principal COIpO<ate Irust office 0I1he Truslee af 33 New
IoIooIgomer} Stree!. 11111 F1oo<, San FrancTsco, CarrlOfnia, 94 t 05, 0< aI socll 01118< Of
adcfrfronat offlces as may be specified 10 !he City by lIle Trustee in writing.
"I.!:lWIIll" means Securily PacifIC NaflOfl81 Bani<, appo<nfed by !he City 10 act as
"ustee ~ereunder pursuanllo SecfIOO 6.01, and ~s assigns Of any other COIpO<arron Of
associarran which may al any time be substituted In lis place, as provided In Seerron
6.01.
~ means lIlat yield wllich, wilen used in computing lIle present wOfIh 01 aR
payments of principat and inferest Eo< other paymenls in 1he case of Nonpurpose
ObIigarroos which require payments in a form no! cflaraClerized as principal and
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interest) on a Nonpurpose Obr~tion 04' on Itle Bonds produces an amount equal to
1he Purchase Price rX such Nonpurpose ~ganon Of the Bonds, as U"le case may be,
an oompute<f as prescribed ill the appfteabie Tax Regulations.
~CTiON 1.02. Bytes of CoostrucflOO All references in lhis ~nture 10
"Artickls," "Sectioos~· and otfter subdivisions afe 10 the C()(tespooding At1ictes~
.sections Of subdivisions of lhrs lndenture~ and the words "herein: "hereof .. •
"IlGreunder: and olIler words of slmllar inport refer 10 this Indenture as a ... hole and
no! to any particular Article, Sectlon Ol subdMsion hereof.
Worcfs of the mascur,ne gender shan be deemad and construed 10 Include
cOtTela~ve "''''00 01 the feminine and neuler genders. Unless the context .han
O!/Ierwise indiCate, 1IIO<d!! imporung the singul", number shan include the plural
number and vice versa, and word!! Importing persons ,han include eo<porations and
associa!ions, i>cludlng pubrlC OOdles, as wea as nalural persons.
SECTION •. 03. Authoritafl9o and Pyrpose pt Sfl riM "Bonds. The Cfty has
relliewe<f aK prooeedings heretofore !a~en relalive 10 1I1e a Ulhorizalion of 1I1e Ser1es A
Bonds and has found, as a resu It of such review, and' hereby finds and delermines thai a_ things, conditions, and acls required by law 10 exist, happen and(o< be perfcrmed
precedenllo and In the iSsuance of the Series A Bonds do exist, have happened and
Ilave been pet10rmed ill we lime, Iorm and manner as required by law. and the City is
00\11' authorized. as an exercise of 1he munic1pal affairs power at the Cfty as a chartered
oly under the constitution and laws 01 the Stale and pursuant 10 the Bond law and
each and every reqJiremenl 01 law , 10 iSsua tile Series A Bond!! in the manner and .
loon provided in lIlis Indenture. Accor(!;ngly. 81e City llaraby aulhorizes 1I1e iSsuance 01
"e Series A Bonds pursuanllO 1I1e Bond Law and tIlis InOOn!ure for tile purpose 01
providing funds 10 relund !he Prior Bonds and 10 pay Costs 01 fssuanca 0I1I1e Series A --SECTION .1.04. Eoua! SecuriIY In consideration 01 Ille accep!ance 01111e
Bonds by 1I1e Owners 1I1ereol. Illi. Indenture shan be deemed 10 be and shaft constttule
a conlract belween the City and 81e Owners from ~me 10 fi me oIlI1e Bonds; and 1/1e
covenants and agreemen1s Ilereln sellor1I1lo be peIformed on bellalf 0I1he City shai
be for 1I1e """al and propo<1ionale benefit. security and prolection 01 an Owners of \he
Bonds wilhoul prelerance, priority 0< distinction as 10 securfty or othenwise 01 any 01 the
Bonds over any 01 the others by reason oIlhe number Ol dal<> tIlereal 0< the time of
sale. execuflOtl or derrvery Ihereof, Ol otherwise for any cause wllatsoever, excapt as
expressly prOVided lterein or herein.
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ARTICLE R
ISSUANCE Of SERIES A BONOS
SECTION 2.01. Terms of Series A Bonds The Series A Bonds aulhotized 1<>
be issued by Ille Cily under and subiect 1<> \he Bond law and the lerms of this
Indenture shan be designaled the "C~y of Palo Ano Uliltty Revenue Refunding Bonds.
1990 Se.r1es A". and shan be issued in 1J1e original principal amount of
_______ Dollars ($_ .. _j.
The Series A Bonds sllan be issued in fuMy registered fOrm wfthout coupons "in
<1enominaflOf1s of $5.000 '" any integral muhiple \hereof. SO Ioog as no Series A Bond
shan have more 1I1an ooe maturity dale. The Series A Bonds shan malure on June 1 In
each of the years and in lite amounls. and shan bear Interest at the rales. as follows:
MafUrity Dale
fJl.IoUJ
Principal
&!!W!ll
Interest Rele
Per Annym
!nleres! on the Series A Bonds shan be payable on each Inlerest Paymer.! Date
10 the person whose name appears on Ihe Sond Regislrafion BooI<s as \he Owner
thereof as of lite Record Dale Immedialely prec.ernng each such Inlerest Pa)'rTlent Dale.
such inlerest 10 be paid by checl< or dra~ of !he Truslee marred 10 lite Owner or. at lite
opliort of any Owner 0: alleas! $1.000.000 aggregate principal amounl 011110 Bonds.
by wire "anofer. at lite address 01 such Owner as l appears on llIe Bond RegislraflOlt
BooI<s. Principal of and premium r~ any) on any Series A Bond shan be paid upon
presenlafion and sooender 1ltereof at !he Trust OffICe 01 the Truslee. SoIh 1lte principal
01 and inleresl and premium (~any) on lIle Series A Bonds shan be payable in lawful
money 01 the United Stales of America.
The Series A Bonds shan be daled August I. 1990 and bear Inlerest from lite
Inlerest Paymen! Date next preceding the dale of au1ltenflCafion Ihereof. unless said
dale of auther1flCBflOrt is 8n Inleresl Payment Dale. in which event such Interest is
payable from such date 01 aulhenflCaflOll. and unless said date of aul!1oo!icafion is
pOor 10 Oecember 1. 1990. in which event such inlerest is payable from August I.
1990; provided. however. \hat I. as of lite dale ~ aulhenficafion of any Series A Bond.
lnI!lfesl!hereon is in delaull. such Senes A Bone! shan bear inlerast from the elale 10
wltich inlerest has prevlously been paid or ma<1e avanallie fO< paymenlllte;eor\ In full.
SECTION 2.02. Rederno!jon pi Se@s A Bonds.
Ca) OQfooat Bet1empfIDO.. The Series A Bonds maturing on or before June 1.
1999. shaR nat be subjeclio op6onal redempflQ(l prior 10 maturity. The Series A Bonds
maluttng on or a~er June I. 2000. shan be subject 10 redempflon prior 10 Ihelr
respecfive maturity dales. al !he opflOn of \he Cily. as a whole. or in part in inverse
order of maturities and by 10{ within a maturity. tom any source of available funds, on
any Inlerest Payment Dale on ()( altar June 1. 1999. al !he following respec!ive
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Aedempnon Prices (expresse<1 as percentages of the principaf amount of She Series A.
Bonds 10 be redeemed), pfus accrued inleresl1l1erecn 10 1110 dale 01 redemplion:
BAdAmpfIQOQa1e S Redemp60n Pricf!$
June 1, 2000 ard December I, 2000 102%
June I, 200 1 ard December I, 2001 10 j %
June 1,2002 ard 1Ilereaner ! 00%
The Cit)' shan be required to give the Trustee wr"ltten nonce of its intention 10
redeem Series A Bonds under 1I1is subooctlon Cal, ard sllan <leposn an amounls
reqJired lor sucll redemplion with Ihe Truslee at leasllorly-five (45) days prior 10 111e
dale ~xed lor sucll redemplion.
(b) SoograJ Maodaloo 8MpmQljon from InsuraoC{! Of Condemnation
PrC!!'fe:fs. The Series A Bonds sflaO also be subject 10 redempflOO as a whole on any
dale, 0< in part 00 any Inlerest Payment ~ale in inv9fS9 orOOr of matU1i1y ard by lot
within a malun1y, 10 1Ile extent of lIle Net Proceeds 01 hazarel insur.nce not used 10
repair 0< rebuild If1e Enterprise or ifle Net Proceeds 01 condemnafion awams receivOO
with respe<:110 !he Enlerprise 10 be used lor such purpose pursuant 10 Secfioos 5.04 or
~.05. at a Reclempfion Price eqJallo 1I1e principal amount of 111e Series A Bonds plus
In!eresI accrued 1Ilereon 10 Ihe dale fixOOIor r~n, wiIhouI premium.
(c) Addilional BondS· Any Parity BonOs lssuOO pursuant 10 Section 3.06 01 thIs
Indenture may be made subject 10 redempfioo prior 10 malUrily, as a wIlo!e or in part, al
SUCll Ume or nmes, ard upon payment of !he principal amoun! l/1ereol ard accruOO
inI ... esI!hereoo pfus such premium or premiums, i any, as may be clelermifled by 1I1e
City in !he appficable Supplemental Inclenlure.
[d) NO!jce of Redemptjon. Unless waivOO by any Owner of 8on<fs 10 be
redeemeel. offiCial nO!jce 01 any redempfioo 01 BoOOs slJan be given, al1l19 expense 01
lIle CHy, by 1119 Trustee by mailing a copy of an offICial redemption nO!jce ~ ~rsl class
maW at Teast 30 days ard no! more IIlan eo days prior \0 lIle dale boo lor redempfioo \0
1119 o.me.. of 111. Bond or Bonds 10 be recleemoo atllle ad<1r!!SS shown 00 !he Boncl
Registration BooI<s or at sucll oIh ... a<ldress as is "misllecl in writing by such Owner \0
fl& Trustee; provided. thai nei1her Dle 'anufB 10 receive such notice IlOf" any immalerlal
delee! In any nof"", shan affect the sufficiency oIlf1e proe<;edi ngs lor Ihe redempfioo of
1119 Bonds.
(e) CooIeots of Noli ce . AI olflCiai notices of redemption sllan be datOO ard
shan stale:
(i] !he redemption dale,
O~ If1e Redemption Price,
Oi~ W Ie ...... !han an Outslanding Bonds are 10 be r_moo, Ihe
ldenUflCali"" (ard. In 1119 case of partial redempUon, 111e respective principal
amounts) oIlf1e Boncls 10 be redeemOO,
Crv) 1I1aI on If1e redemplion elale 1I1e Redemplion Price will become clue
ancl payable wnh respect 10 each such Bond or portioo II1ereof canoo for
redemption. aod 11a1 interest with respect thereto shall cease 10 accrue from
ard aft ... saicl dale, ard
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M 1he pace Of ptaoas where such Bonds are 10 be surrendered Jar
payment of lhe Redemption Price, .. ~ich places of payment may include 1I1e
Trust OffICe of"e Trust"".
(f) !'!!!Mfa of Mooey. /oJ !east forty-five (45) days prio< to any redempf"n date,
1I1e City sha~ depos~ wfth !he Trustee an amoun! 01 money suffICient 10 pay tIle
Redemption Price of an 1116 Bonds '" porIklns of Bonds which are \0 be redeemed on
!hal dale.
fg) Coosequeoc es 01 NofJCft-Official nofice or redemption having been given
as alo<esaid, !he Bonds '" portions of Bonds so \0 be redeemec sha~, on Ille
redemplioo dale, become due and payable al111e Rec!empflO!1 Price \!lerein specified,
and from and after such date [unless 111e City shan cferau~ in !he payment of Ille
Redemplian Price) sud! Bonds ()( pot1ions of Bonds shan cease 10 have interest accrue
!hereon. Upon surrender of such Bonds lor rederilp!ion in accordance wHh said notice,
such Bonds shall be paicl by 1he Trustee at !he Recfempfion Price. Instanmenls of
interest due on '" prTor \0 1he re<lemplian dale sha~ be payable as hereIn prOVided lor
pa)menl of interest Upon surrender lor any partial redempliOn of any BoncI,1here shan
be prepared lor the Own'" a n ..... Bond '" Bonds of 1he same maturity in the amoo nI of
the unpaid principal. All Bonds which have been redeemed shan be cancened and
destroyed bY 1he TruSlee and shan not be re<lefivBred. Ne""", the fa~ure of any Bond
Owner 10 receive any noflCe so maned nor any derect (herein shan affeclihe sufficiency
of 1he proceed1ngs lor re<lemplian of any Bonds nOt 111e cessafioo of accrual of Inlerest
1I1 .. eon.
IIlJ Additional Nonce In addition 10 tIle Io<egolng notice, further noflCe sha! be
gillen bY !he Truslee as set out below, buI 00 clefectln salcf furth'" notice nOt any Ia~ure
10 give an O(any portion of such lurlher noflee shan in any manner defeal Ille
"ffOOtiveness of a cal lor redemption I noIice thereof is gTven 85 above prescribed:
(i) Each further ooflee of redempflOO giVen her8under shan conlaln tIle
Information requTred above lor an offi.::ial noDce of l'lclemption plus W !he
CUSIf> numbers of an Bonds being r6deemed~ (BJ the Slated ir;leresl rale with
respec110 each Bond being redeemed; tel the maturfty date of eac~ Bond
being redeemed; and (OJ any other descriptive Informar,," needed 10 idenMy
accuralely 1he Bonds being redeemed.
Oij EaCh Iur1her notice of re<lempflOf1 shan be ser~ at leas! 35 day.
before 1he re<lemplion dale by regiSlered 0( certified ma~ 0( ""omiglll defivery
service 10 an registered securities deposilexies 1hen in the oosiness of holding
substantial" amounts of instruments of types comprising 1he 8or'ds~ 10 one or
more lntormafion Servlces.
(iiij Each such further ncuce shan be ptb!iSl>ed one Ume Tn a FTnancial
Newspaper. or. I sue" puMcafion is imPfac~jcal Of' unlikely 10 reach a
substantial number of lt1e Owners 0( the Boods, in some other finaociaf
newspaper ()f journal wl'1ictl r9gularT~ carries notices of redempflOn of O(hBf
inslrumenls .lrrul81 \0 1I1e Bonds, such pubrlCafiOf11a be maoo al "'ast 30 clay.
prior Ia 1he date bed lor re<lempflOO.
[N) Upon 1he payment of lIle Redemption Price of the Bonds being
rec!eem8cf, each chec~ '" other Iransfer of funds issued lor .uch pu<pase sha~
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bear the CUSI? number iclcnl.jfying. by issue and maturltjl, lhe 80rds befr.g
~edeemed with U'le proceeds \J such chec1c: Of other transfer.
fi} partial BAOOmption 01 Boods. 10 1he event only a portion of any Bond is
caned lot redemprlOO, Ihe<1 upon surrender 01 such Bond redeemed in part only, the
City shan execute and the Trustee shan authenOcale and denVB< \0 the Own." althe
expense of the City, a new 800d or 8orK!s, cf (he same series and maturity. of
aulho<ized deoominaflOOs In aggregale principal amount equal \0 lI1e unredeemed
po<lion 01 the Bond Of Bonds.
ffi Manner of Redemption Whenever any Bonds are 10 be selected For
redempflOO, the Truslee shan dele,",ine, by loI. the numllers 0I1I1e Bonds \0 Ile
redeemed, and shoO noUIy lI>e City lI1B<eoI,
(It) Purc!Jase pi Bonds in lieu of 800emo!ioo, In lieu of redef1l)1iorl 01 Bonds a.
provided in .uIlsecUon (a] a!love, amounls in the RedempUon Accounl 01 the 0001
Service Fund may also be used and withdrawn by the Trustee al any Cme, upon the
Request of the City filed with the Trustee no talB< than Apri 15 in any year, lot the
purchase 01 Bonds at poIlflC 0< privale sale as and wilen and at SU(;h prices ~nc1uding
b<oIcerege and other charges, but excluding accrued inlerest. which is payablelrom the
Deb( Service Fuod) as the City may in fts discreliorl delermine, but no! \0 exceed 1I1e
prInc~ amounl of SUICh 'Bonds plus the redempUon premium appflCaIJ!e 00 the neX!
ensuing opllonal redempUon dale. The City shan. al the time 01 any such purchase,
pay 10 !lie Truslee for deposil in the Dell! Service Fund the amounl of any deficiency in
SUICh Fund which may be caused by such purchase. All Bonds purchased pursuant 10
this Section shan be cancened
All Bonds redeemed pursuao! 10 this Section and an Boncls purchased by the
City pursuanl 10 this sullsecflOO (k) shan Ile cance1led and destroyed pursuanl 10
Sec1ion 9.09.
Sl'CTION 2.03. form qf Series A Bonds· The Series A Bonds. \he Truslee's
celti6cate of 8ufhenricaflOn. and the assignmen( so. appeal" thereon. shan be
suIlstanfiany in Ille respeceve Iorrns sal fot1h in Exhillil A anachecl herelo and by this
reference incorpofated herefn. wf1h necessary Of' appropriate Yan"aflOOs, omissklns and
Insertions, as pem,lIIed Of required by lIlis Indenture.
Sl'CTION 2.04. Exec!lfiQ!l 01 Series A ~ The Series A Bonds shan Ile
signed in the name and 00 lleI1a" of 1I1e City wtth the manual 0< facsimile signatures of
fts May", and its Director 01 Finance and a!lested by the m anuaf Of lacsimfle Sigt1 alure
qf its City 0eIfc un<ler tile seal of tile City. SocII seal may be in the Iotm 01 a facsi mfle
of the City's sear and shan Ile imprinted 0< Impressed upon the Series A Bonds. The
Senes A Bonds shan lIlen be delivered 10 the Trustee lot auUhen!ica1iorl by it. 10 case
any off""" who shaD have signed any of the Series A Bonds shan cease \0 be such
off""" Ilelore .... Series A Bonds so signed shan have been authenticaled '" delivered
by the Truslee 0< issued by Ille City, sU(;h Series A Bonds may never1t.eI .. s Ile
authenftea!ed, delivered and issued an<!, upon s_ auUhenficafioo. oonvery and issue,
shan Ile as binding upon Ille City as though lIle rovidual who signeclllle same had
conCnued 10 be such off""" qf 1I1e C~y. Afso. any Series A Bond may be signed 00 bella" 0I1Ile CIty by any rollid<JaI who on lIle aclual dale of the execulion of such
Series A Bond shan Ile the proper off""" ahhough 00 the nominal dale or sU(;1t Series
A Bond sucll O'ldividual shan no! have been such officer.
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OnJy such of 1he Series A Bonds as shan bear t"ereon a certificate of
aulhenticaHon in soostanfiany the form sel10rtti in EdHbil A., manuaTly executed by I'he
Truslee, shan be varld '" obfJgalo<y 10< any purpose 0< enlilled 10 the benefits 01 this
Indenture, and stJCh cBf1jflcale of the Trustee s"an be conclusive evidence [hal 1he
Seriss A Bonds $0 authenficated t1ave been duly authenticated and denvered
hereunder and are enlilled 10 !he benefits oI1I1is Inder~ure.
&CTJON 2.05. Transfer gt SeDes A Sonds. MY Series A Sond may, Tn
accordance with its ~rms. be kansferred upon 1he Bond RegfSUdfion BooKs tJy 1tle
person in _hose name iii: ls regTslered, i1 person or by hiS duly authorized attorney.
upon surrender 01 such Series A Sand 10< cancena~on. accompanied by clenvery of a
\Written instrument of transfer in a Jorm approved by the Trustee, du'y execu1ed.
Whenever any SeDes A Sand 811an be su<rendered 10< Iransfer, f1e City shan e'ecllle
and the Trustee stlaN thereupon authenticate and denver 10 fle transferee a new Bond
Ot 80nIds of ike lenor. malurQy and aggregale principal amount No SeDes A Bonds
IIle notice of redemp!ioo 01 whicll has been maned pursua'lllo $ecf>oo 2 .02(d) s~an be
subjecllo Iransler pursua'llio Ihls Sec!ion.
SECTION 2.00. (!!change of Series A BpQds .. SefieS A Bonds may be
e,changed althe Trust 001Ce cA 1I1e Trustee. "" Series A Bonds 0I1I1e same Ie nor and
matu DIy and of oIher authorized denominafions. No Series A Bonds lhe nooca 01
redemption gt whicll nas been maned pursuanllo ~0I1 2·02(dJ s~an be subject 10
excl"lange pursuant k> this Section.
SECTION 2.07. Temporary 8on¢;. The Sands may be issued "'itiany \1
lemporary Io<m a,changeable 10< clefinnive Bonds wllen ready 10< denvery. The
lempo<ary Bonds may be prinled. filhogfap/led 0< typewritten. shan be of such
denomfnatlons as may be determined by the City and may contain s och relerence 10
any of 81e prOvisions of this Indenlure as may be appropriate. Every lemporary Sand
shan be axecllled by !he City and be regislered and aulflenficaled by the Trustee upon
~ same concfrtKlns and., substanfianj' Ihe same manner as f)e definitive Bonds. I
Ihe City issues temporaf)' Bonds, it wiD execute and furnish defLDitive Bonds without
delay. and !hereupon !he lemporary Bonds may be surrendered, 10< cancenafion. In
exchange Iheralo< al G1e Trust Office of !he Trustee, and IIle Truslee shan aulflenUcale
and denver Tn e«flange 10< sucn lemporary Bonds an equal aggregaTe principal
amount of definitive 80nIds gt authorked denominafions. Until so exchanged, IIle
temporary Bonds shan be entitled 10 llle same benefits under &his ;ndeniure as
definili,e Bonds aulflenllca!ed end clerlVered hereunder.
SECTION 2.08. Bond BeWslraf",n Bool!s. The Trustee will keep 0< cause 10 be
kepi at ~s Trust Office sutrlCienl Sond RegistrallOn Books "" !he registrafion and
Irons!er of !he Bonds, whiCh shan al an Urnes during regular business hours be open 10
inspeclion by lila City; and. upon presenlallOn 10< suc~ purpose, !he Truslee shan.
IJOcJer such reasonabfe regufafKlf1s as I: may prescrbe, register {)f Ifansfer Of" cause 10
be registered Of Ifansferred, on said books, Bonds as hereinbefore provided.
SECTtON' 2.00. Bonds Mutnated tpst Qe§1royest or StoTeD-I any Bond shall
becO<ne mu\Jlaleci. IIle City, a! 1I1e expense 0I111e Owner gt said Sond, shaft execllle,
and lI1e Trustee shaA !hereupon alllhe~Cale and denv .... a new Sond of Uke malur~y
and principal amoun! In exchange and subsm~oo 10< !he Sand so mutnaled, but only
upon surrender 10 !he Trustee of the Sond so mlllualed. Every mlllualed 80nId so
SUfTenderecilo IIle Truslee shal be canceRed b~ iI and clerrverecllo, '" upon f1e order
of. 1I1e City. If an~ Sond issued he1eunder shan be los!, destroyed Ot slolen, evidence
of.uch \oss, destrucIIOO Ot theft may be submitted 10 1I1e C~y and !he Truslee and, f
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such evidence be safisfac10ry 10 !hem and indemnity satisfac10ry 10 Ihem shan be
given, the City. at the e'peese 01 the Bond Owner. shan .,ecule. and the Trustee shan
thereupon authenflCllte and denver. a new Bond 01 fike matun1y and principal amounl
in leu 01 and rn S1JIlstftuf"1OO lor the Bond so loS!, dastroyed 0< .!<llen !Or I any such
Bond shan have matured 0< sltal have been called lor redemptiOn. instead 01 issuing a
aubsti!u1e Bond the T ruslee may pay \!le same wllhout SOfTender Ihereol upon receipl
01 indemnity S8Iisfac1oi)' 10 the Truslee). The ~ may require paymen! 01 a reasonable
lee lor each new Bond is&JOd under this Section and 01 the e.penses IffflIoh may be
incurred by the Ci!y and 91. Truslee. My Bond lSsued undet the provisions 01 this
Section in rlOU 01 any Bond a~eged 10 be lost, deslroyed 0< slolen shan oooslftufe an
original con!rac1uaI obrtgalion on the part oIl1le ~ ... hath ... 0< noIthe Bond allegad 10
be loS!, destroyed 0< slolen be at any time enforceable by anyone, and sl\an be equany
a1lCl propo!1iOrlately entitled \0 Ihe benefits 01 llIis IndentuTe .. ith an otlle< Bonds
secured by ..... Indenture.
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AATICLE UI
ISSUE OF SERIES A BONDS; PARIU BONDS
SECTION 3.01. Issuance a! Series A Bonds. Upoo!he execution and clerrvery
0( l1is _e. f1e City sIlan execute and denver Series A Bonds in the aggregat9
principal ame'Jot 0( Dollars ($_ .___ .. J 10 !he Trustee
for autllenflCatioo and defrvery to 1he Original Purchaser Il1ereol upon lhe Request 0(
1he City.
SECTION 3.02. AQpfocaflOO of PlOceeds of Sal. of $eries A Bocds Upoo!he
r~ of payment for lIle Series A Bonds on the aosing Dale. the Truslee sI1a11 apply
1ha proceeds of sale !hereof as 1o!1ows:
Cal The Trustee shan depos~ in Iha Debt Service Fund Ihe amount 0(
$,----
Ill! The Truslee shan deposa in Iha Reserve Aerounl the amount of 5 ____ _
(c) The Trustee shall pay 10 \he Fisca1 Agenl appoinled under lIle Prior
Bond ResoIulion for deposa in the Redemplion Account established pursuanllo
SecIIon 4.0 t {bl of the Prior Bond Resolullon IIlaI porIion al the proceeds of sale
a!!he \990 Series A Bonds, as sIla! be set Io<Ih in a Certilicate of !he City; and
(d) The Trustee shan deposa in lIle Ccst a! Issuance Fund 1I1e
ramainder 0( such proceeds.
SECTtf.JN 3.03. Reserve Acrotlol
(a] On !he Closing Date lila TfUs!ee shan deposft i1Io the Reserve Account an
amount equal 10 !he Reserve Requiremen~ pursuant to Secflon 3.02(b]. An amount
equal 10 lIle Reserve Requirement shan be maintaTned in Iha Reserve Accounl at an
times; any defICiency therein shall be replenished from avanable Net Revenues
pursuant to Seer",n 4.03(5). The Reserve Requiremen! may be increased by any
Supplemenlallndenture es!ablisl1lng any Par1y Bonds purSUl!nllo Secflon 3.06.
!bl In neu of !he requirements a! Secflon 3.02{bl and 3.03(a), the Trustee may
accept on the aosing Dale, In U 0( partial safisfacflOO of lIle Reserve Requirement.
either !he Surely Bond 0( oIhe< Oualified Surety Bond under Sec!ion 4.06(c] 0(. a Iener
of creclil under SecIIon 4.06{bl for !he accoont of !he Reserve Accounl
SECTION 3.04. BtiOOrnotioo of PdQ( Bonds The City hereby determines 10
redeem an oIl1le Prior Bonds pursuanllo SecIion 4.01(b1 althe Prior Booo ResoIufoon.
The FISCal Agent shan give noIice 10 Chemical BanI<, !he paying agent under lIle Prior
Bond Resolution. and The Fup Sank liTn~ed. acflng Jhrough ft. los Angeles Agenc~
(!he 'Sank"), !he let!er of Credll Sank under !he Prior Bond Resolullon W slafing lIle
City's foregoing delerminaflOn 10 redeem !he Prior Bonds and the principal amounl
f1ereof. (Ill slafing!he lacI!hari has received the lunds necessary 10 redeem !he Prior
Bonds In suc~ ~ amount aoo is holding said IundS for !he accounl of !he BanI<.
(q sla~ng ... Inlerest Paymenl Dale on which the Prior Bonds are 10 be redeemed
and InSlrucfing Chemical Sank. as paylng a~ 10 give notice of redempfion pursuanl
10 SecUoo 4.03 of \he Prior Bond ResoIuflOn ano (DJ direcflng Chemical Sank. as
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paying agent, to make a draw on the let1er of Credit 00 1he Business Da), prior \0 said
Interest Paymenl Dale. On said Interest Paymenl Date. Chemical Bank, a~ pajltng
agent. shan app1~ the proceeds 0I111e draw 10 Ihe redemp!ioo 01 1118 Prio< Bonds
described in said notice and 111e Fiscal Agenl shan pay 10 Ihe Sank !rom said
Redemptk>n Accourc by 11:00 a,m, (Pacific Coast Time) 00 the Business Day belore
paymenl under !he Le!!", of Credil!he amounts 10 be drawn on lhe tefT91 01 Credit by
Chemical BanI<. .s pay;ng agent. "" lIle jl<Jrp0se 01 redeeming the Prio< Boods.
Any balance rem a,ning in said RedempVon Account after an oIlhe Prior Boods
have boon cane<! and redeemed shan be paid by 111e Fiscal Agent 10 Ihe [);reclo< 01
Finance "" deposit in 1he Revenue Fund.
SECTION 3,OS, COs! of (ssyance fund. There is hereby created a lund 10 be
known as \he "City 01 Palo AJlo U!llity Revenue Refunding Boods, 1990 Series A. Cost
of Issuance Fund" (!he "Co6I of Issuance Fund"), which Ihe City hereby covenants and
agrees 10 cause 10 be mainlaIned and which shan be held in truSt by !he Trustee, The
mooeys in Ihe Cost 01 fssuaTlCe Fund shan be used in \he man"", provided by law
solely"" the purpose 01 the payment 01 Costs of Issuance upoo recelpl by !he Trustee
01 Requests 0I111e City lIlerefor, 00 or after lIle Closing Dale, Any funds remaining in
1110 Cost 01 Issuance Fund 00 Jan'Ja/) I, 1991, shan be tranSTerred by the Trustee 10
the Deb! Servi!:e Fund
SfCTION 3.06. IsslJa!lCe 01 Parh Bonds_ 1n add100n kllhe Series A Bonds ~
City may. by Supplemen!al Indenture, issue or incur other loans, advances or
indebteooess payable from Ne! Revenues on a parUy with 111e Serles A 80nds 10
provide financing "" \he En!erprise in suen princ1pa1 amount as shan be determined by
\he City, The City may issue or incur any suen Paray 80nds subjecllo !he Ionowing
specifIC conditions wtlictl are hereby made condifions p4'ecedent 10 the issuance and
deliv9/) 01 such Parily Bonds:
{al The City shan be in co"l'flanca wilh an covanan!s set fo<Ih in 1his
Indenture.
[Ill The Net RevBf1ues, calculaled on sound accounVng princlples. and
.>cludlilg any balances in any lund at Ine beginnIng 01 111e period 01
compu!a!ion. as shown by 111e books oIlhe City "" Ihe latest Fiscal Year or an~
more racenl twelve (12) moo\11 period seTec!ed by \he City ending ntoIlOO(e 1han
sixty (60) days prior 10 the adop!ioo of the Supp1e,'Tl9ntal indenIUf9 jl<JlSuant 10
,.nich inslrumenl1ssuing .uc~ Parijy Bonds are issued, as shown by Ihe_
01 !he City,lJIu", a! 1he option 01 the City, any or an 01 !he ~ems hereinafter in Ihis
paragraph designated (i) and Qi}, shan at least equal ooe ~undred twemy-five
percerl (125%) 01 Maximum Annua! Deb! Service, with Maximum Annual Deb!
Service cafculaled on an Bonds 10 be OJIsfanding im medialely subsequent 10
the issuance 01 sue~ Parity 8onds. The items any or an of which may be adOOd
10 sue~ Ne! Revenues"" 1he purpose 01 issuing 0< incufling Panly Bonds
flereu ncJer are the tonowing:
(i) An allawance "" Net Revenues from any acldltions 10 or
improvemenls ()t extenstons of ltle Enterpl"ise 10 be made ~ith the
proceeds 01 suen P anly Bonds, and alsc "" Net Revenues Trom any
such additions, improvements or extenslons which have been made
tom moneys from any source but i1 an~ case whk;h. during all or any
part of such FISCal Year or such twelve (12) monlh period, "'ere not in
service, an jr, an amount equal 10 ninety percent (90%) ollila estimaled
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adcfitiooal average annual Net Revenues 10 be derived from such
aOdilions, improvements and ex:1ensl0rfS for Ihe first thir1~-Sil (36; month
period in which each adOmon.. impwvemen( Of extenskm is fespectlve!y
10 be in ope,.lion. al as shown in She written report of an Independent
Consuftanl engaged by She City;
~i) M allowance for eamings arising from an;-increase in (he
Charges which has become effeelive prlo< 10 \he Incurring of such
addltiooal indebIedness but which, during aB or any part of such Fiscal
Year or such !llielve (12) monlll period. ",as nol in effect, in ao amount
equal 10 the amount by which the Net Revenues would have been
increased l such increase in Charges had been in efleel during She
wlloIe of such Fiscal Year or such !llia!ve (12) month period. an as
shown in lIle ... rillao report of a n Independent Consultant engaged by
It1e City.
Eel The Supplemental Ifldenture pwrong fa< !he Issuance of such
Pa~ Bonds under lIli. Section 3.06 oM" prOliide tIlat
(iJ The proceeds of such Panly Bonds shan be app!iedlo \he
acquTsition. construction. impfoveme nl.. fin anclng Of refi nanc~ng of
ackfrt.ionaI fac1lifies. impfOvemen1s or extenSions 01 exisfing facl1ities
with;n the Enterprise. or otherwise fa< facililies. impfOvements or properlY
which Ihe City determ;nes are of benefit 10 She Enterprise. 0< fa< Ihe
purpose 01 refunding any Bonds in whole or in part. Including an costs
Oncluding COSIs of issuIng such Par~y Bonds aoo including CapnaTIled
inle1'est 00 such Pafily Bonds during any pe<iod which Ihe Cay deems
necessary or advisable] relafing !hereto;
~~ Inlerest 00 such Parity Bonde shan be payable on an Interest
Payment Dale;
(iii) The pri~ of such Party Bonds shan be payable on June
1 "' any year "' which pri.'1C~ is payabre; aoo
M Money (or a raDer of credit as authoriled by Seeroo 4.06~J
or a OuaHied Surety Bond as authorized by Section .·000c» shan be
deposited in Ihe Reserve Account Irom Ihe proceeds of the sal. of such
Parity Bonds or otherwise io increase Ih~ amount on deposit in (he
Aesefv. Account 10 an amount equal to Ihe Reserve Requirement, laking
into aocounllhe Debt Service O~ an Outstanding Bonds Oncluding such
Parity Bonds].
SECTION 3.07. No Md!!io!la! F'rio! lien Bonds. No add'rtiooal Bonds shan be
_ pursuanl 10 the 1983 General Resolution.
SECTION 3.08. yartdltv QI Bonds· The vafidity of Ihe a_lation aoo
Issuance of Ihe Bonds shan no! be affected in any way by any pfOceedings laken by
1he City fa< Ihe acqulsltion 0< ccnstrucr"", of the Projecl. 0< by any contracts made by
Ihe City in connecfoo ihe,ewllh, and Ihe recital contained in 1M Bonds Ihatllle same
are Issued pu<suanllo 11>. Bond I.a ... shan be conclusive .vidence of lIlair .arldlty aoo
of Ihe regularity of hi< issuance.
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ARTICLE rv
REVENUES; fUNDS AND ACCOUNTS
Sf:CTOO 4.01. Pledge ol Reyenues Revenue Fuod.
(a, The CIty hereby Iransfers, place.s a charge cpo", essigns and sels over 10
!he Trustee, fo< Ihe benelil of lIle Owners, lIlat portion of Ihe Net Revenues which Is
necessary 10 pay Ihe princ~aJ Q( Redemption Price of and inlerest on t'1e Boods in any
Fiscal Year,logeI!1er will1 an moneys on <:Iepos~ In lIle Debt Service Fund, and such
po<1kJn of Ihe Net Revenues is hereby irre'iocably JlfedgOO 10 ll1e punclualpaymenl '"
!he principal Q( Redemp!ion Price of and inlerest on the Sonds. The Ne! Revenues
shaft no! be used lor any other purpose whJ1e any of Ihe 8ooc!s remain Outslanding,
except thai out of Net Revenues lhere may be appo!!ioned and paid such sums fo<
sucIl purposes, as are expressly petmitted by Ill,s MlCie. Said pledge shan conslilufe
a firs!, direct and exclusive charge and lien on lIle Net Revenu es lor the payman! of tile
principal Q( Redemption Price of and interest on !he Bonds in accordance wtth the
Ierms Ihereof. subject only 10 !he fien of lIle Prior 800c!s.
(Il] The Net Revenues constnc1e a IrusI fund lor lIle security and paymenl 01 the
principal Q( Redempllon Price of and Werest on the Bonds. The general fund of lila
CIty is no! Nab,., and the credit <J< laxing power of the Ctly is no! pledged fo< lIle
paymOfll of Ihe p<incipal Q( Redemplion Price of and inlerest on Ihe Bonds. The Owner
of lIle Boncls shan no! COmpel !he exercise of Ihe laxing power by the CIty or lIle
Iorfe~ure of As property. The principal or Redemplion Price of and interest on Ihe
Bonds are not a deb( of the City, nor a legal or equnable pledge, charge, lien <J<
encumbrance, l4JOO any of As property, 0< upon any 01 Rs income, receipls, Q( revenues
elCcepllhe Net Revenues of lIle Enterprise.
SECTK>N ".02. 8e ceip( aod QRIlC?fJ! of Revenues. The City {x)'leoants and
agrees thai an Gross Revenues, when and as receiVed, wiD be received and hekI by
the CIty in Irust hereunder and wil be <:IeposIled by the Ctty in Ihe Revenue fund
[whicl1 has l1erefOfore been crea!o;d porsuanllo lIle 1963 General ResoIuflOn and now
.xiSlS in the CIty Treasu<y] and will be accounted lor lhIough and held in lrust in !he
Revenue Fund, and \!Ie cny shaft only have such beneficial righl ()( inlerest in any of
such money as in this Indenture provided. Aft such Gross Revenues shan be
Iransferred, disbursed, anocated and awned sorely 10 lIle uses and purposes
he<einaf\er in 1his Article Sellar!1\, and shan be accounted lor separately and apart from
aO _ money, funds, acoounls Q( other resources of Ihe City.
SECTION 4.03. ES1ahfisfiment of fynds and Accoqnts and Anocafipo of
Reyeoues ThereiO. The DellI Servia! Fund, as • special fund, and !he Redemplion
Accoun! and lIle Reserve Accounl. as special Accoonls !herein. are hereby crealed.
The DellI Service Fund and !he Redemption Account and \!Ie fleseNe Accoun!
\!Ierein shal be held and mainlBined by Ihe Trustee.
An Gross Reven ues shan be held In lrust by the D~ecIo< of Fina nce in the
Revenue Fund and shan be applied, Iransferred, used and withdrawn only lor lIle
porposes hereTnafter au1I>oriled in "'is Article .
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(2j Operating Costs. The Direc10t 01 Finance stlan first pa~ from Ole moneys in
the Revenue fund the budgeted Maintenance arxf Operation Cos!s as such Cos1s
become due and payable.
(3) 1983 Series A Bond pal/llJen!s The Direckl< 01 Finance shan nex! pay and
_ansfer from lhe Revenue Fund 10 Ihe Fiscal Agent for deposilin the Bond Account and
Ille Bond Reserve Account crealed pursuanllo Section 503 oIlhe 1983 General
Resolution such amounts as are necessary 10 saflSfy Ihe requirements 01 said Section
503 in fun.
(4) Deb! Service Fynd, On or before 1I1e second day pri'" 10 each Interes!
Payment Date. beginning November 29, 1990, lhe Direc10r 01 Finance shan \ransfer
from Ihe Revenue Fune! 10 lhe Trustee for deposit in !he Deb( Service Fund (Q an
amount equa110 1Ile aggregate amount 01 inferest \0 become due and payable on an
Outstanding Bonds on !he next sumeoo;ng lnl9fes! Paymen! Date, plus {lQ beginning
May 30, 1991 an amount equal 10 lhe aggregate amounl 01 Principal lnstanmenls
becoming du9 and payable on an Oufsfanding Bonds on the neld succeeding Principal
Insfanment ~ale. AI! inleras! eamings and profits or losses on 11',e investment of
amounts Tn Ihe Deb! Service Fund shall be depooled in or charged 10 Ihe Deb! Service
Fund and applied \0 !he purposes !hereof. No Iransler and deposit need be made in'o
the Debt Servlce Fund' 1he amounl conlained therein.. 1alting info account in vestment
earnings and prOfits, is at least equat 10 the Principal lnslanments or Principal
Instanmenls and inlerest to become 008 on lhe nald !nterest Payment Date ()( Princl>aI
lnstanmenl Dale upon aR Outstanding Bonds.
(S) BfSence ApcoJJnJ After making 1tIe paymenls~ anocafioos and transfers
prOYlded for in soosecflOns (2}. (31, and (4) above, if 1I1e bafance in the Reserve
Account is less lhan Ihe Reserve Requirement. !he deficiency shan be restored by
transfers tom Ole first moneys whicfl become availabTe in Iha Revenue Fund 10 the
TIUSIee for depool in 1I1e Reserve Account such transfers 10 be made no later !han 1I1e
limes prOYlded in Sec!ion 4.09(a).
[6J ~. As long as an 0I1I1e foregoing paymenls, anocafl{)ns and !ransfers
are made at lhe times and in 1he manner set fortI1 above in sullsecf"",s (2} 10 15),
iocJusive, any mone'ys remaining in the Revenue Fund may at any time be treated as
surplus and applied as provided in Sec!ion 4.07.
SECTION 4.04. ApprICllfIO!! of Deb! Se!yjce Fund
(al The Trustee shan wilhdfaw from the Deb! Service Fund, prioc' 10 each
Inl",est Payment Dale, an amount equal 10 1he lnte'est Requirement payable on such
Interest Payment Dale, and shall cause the same to be applied 10 1I1e payment of said
inlerest wilen due and is hereby au!horized ro apply Ihe same \0 1I1e payment 01 such
inlerest by cl1eck or drall (or by wire Ira nsl ... , as 1I1e case may be). as provided in
Section 2,01.
Ihl The Trustee shan .,~hdra., from the Deb! Service Fund, prior 10 each
Principal lnstan menl Date, an amount equal \0 the prinCipal amount of lhe Outstanding
. Serial _, iI any, maturing on said Princ;pallnstanment Date and shan cause !he
same to be applied 10 1I1e payme nI 01 the prinCipal 01 sai<l Bonds ",hen due and is
hereby authorized 10 apply lIle same 10 such payment upon presanlaflon and
surrender of lhe Bonds as !hey become due and pa yabie, as provicled in Sec!ion 2 ,Of.
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tel All withdrawals and transfers under the provisions of subsection (a) or
subsec!ion (1:» of1l1is SocOon sha~ be made not ear~er \J1an ooe (1) day prio< 10 the
1II1erest Payment Date 04' PrincipaJ lnstanmena Date 10 which the), relate, and the
amoonl so withdrawn Of 1ransferred sflart', Cof 1he purposes of this Indenture. be
deemed 10 remain l<1 and be part 01 \J1e approp<iale Account unUi such Inlerest
faymenl Oate or Principallnslanment Oate.
SECTK>N ".OS. AQQncafloo of Besetye Acc9!mf
(a) In Ganeral. !if at ant time U'lere sf1an no( be sufficient amounts in the Debt
Setvtce Fund 10 make payment of Principal [nstanments Of Redemption Price of or
interes! on !he Bonds, \J1e Trustee shan withdraw from the Reserve Accounl aod pay
into the appropriate Fund or Account !he amount 01 the defiCiency. Any amounts in \J1e
Reserve Accounl in e,cess 01 the ReseNe Aequ iremenl {wtIether derived from !nteres!
or gain on inveslments or otherwise) shan. 00 June 2 01 each yea" be paid by the
Trustee 10 lIle Oirector 01 FIIlance l:lr deposft in \J1e Revenue Fuod.
tbI LeUer of Cre<frt 'n Deu 01 making Ihe Reserve Requirement depos~ in
compliance with Socfion. 3.02(bl and 3.03(a) 0< 4.06(c), 0< in sUbstilufloo !he'elo<, 1I1e
Qty may deriver Jo the Trustee an irre .... ocabIe Jetter -of credit Tssued 'by a financiaf
. insfiluflOn having unsecured deb( 001"gaf1OO8 raled in one of the two highest raflng
categories of Moody's aod S&P, in an amoun\, Iogether with mooeys, FadafaT
Secur~jes 0< OJalified Surely Bonds on depos~ In \J1e Reserve Account. equal 10 Ihe
ReseNe Requirement SucIl letter of credil shal ~ave a term no less fIlan three (3)
years. III Teas! one ye ... prio< 10 the stated expiranoo of such letter of cre<fl!, the Cfty
sha. derrver 10 !he Truslee efthBf Ii) a replacemenlleDer of credit. (ii) an extension 01
the leIIer 01 CfEKfrt 10< at teas! an eddllionaT year, or (iiU • Oualiflad Surely Bond. Upon
<lef1VefY of suc~ replacement IeDer of credit. extension oIleDer of credi~ 0< bond, \J1e
Trustee s~a" derIVer \J1e ~ffective TeDer of credillo or upon lIle order of the City. If
!he City s~arr Ialllo deposft a ,eplacement leller of credi!. extensioo ellener 01 credi!. 0<
bond 10iIh file Trustee, lIle City shan immedialely commence 10 make Quarterly deposits
with file Truslee so that an amount equal 10 the Reserve Requirement is 00 deposit In
lIle Reserve Account no later lIlan \J1e Slated expiralion elate 01 the IeUer of credit. If a
It"..nng is made 00 file Te!!er of cre<fl!, the City sllan make suc~ payments as may be
required by the lerms of !he letter of credit 0< any ObrogaflOOs related \J1ereto (l>ut no
less than Quarterty pro rata paymenls) so that Ihe lelter of credit shall. absenlihe
derlV9f) 10 the Trustee of a Ouafmed Surely Bond 0< file deposft in tha Reserve Account
of an amount sufficient 10 increase lIle balance in !he Reserve Accoun! 10 !he ReseNe
Aequiremen!, be reinstated in !he amount of such drawing within one year of file clate
of sucfl drawing.
«:1 Orlalified Surely Bond. In fteu of making the Reserve Requiremenl In
compnance with S€<:fIOOS 3.02(bl and 3.03(a) or 4.06(b), 0< in sUbsmution !here!o<, at
any time and from 'Ume 10 time. the City may deti'oler 10 the Trustee one or mOfe
OJafiflad Surely Bonds. Any such OJaHfied Surety Bond shan provide \J1at file Trustee
is entitled 10 draw &mounts thereunder when required by the provisions of this
Indenlure 10 make !Jansfers !rom the Reserve Account 10 Ihe 0eIJ( Servk;e Fuod in file
evenlof. defICiency in any suc~ account. pr_ that. in any sLJCh event. the Trustee
s.~aft first OWlY 10 any such defICiency III e amoon! eI cash Oncluding cash represenled
by investments) !hen on deposi! in !he Reserve Account
Idl CaM 10 !he Cdy. To file exten! fIlat !he Reserve Requiremenl has been
safisfled by defivery of a leIIer 01 cre<frt under Soc~oo 4.06(1:», a Qualified Surely Bond
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under $ecf1OO: 4.06(c). Of' any combination thereof. any cash or Authorized investments
on <lepos~ in 1IIe Reserve Accoun! sIlan be paid by 1IIe Trustee to t'le City.
{eJ Series A Sonds. In e •• rcise of ~s right 10 provide a auali~ed Surely Bood in
'eu 01 cash lor Ihe Reserve Requiremenl. 1IIe C~y proposes 10 enler inlo the Financial
Guaranty Agreement with !he lnSI.Jfef. pursuant 10 whtch the Insufer shan issue its
Surely Bood in Ihe p<incipal amount oIl11e Reserve Requirement wilh respect 10 1IIe
Series A Boods. In Ihe event lI1alll1e Cily sIlan fa, 10 deposil with Ihe Trustee Ihe fun
amoon! required 10 be deposfted in the Debt Service Fund pursuanllo paragraph (4) 01
SecfIOO •. 03 on Of before the sec<>nd day p<ecedng any Interest Payment Dale, on
sucl1 Inlerest Payment oale lI1e TruSlee shan wfthdraw from !he Reserve Aooount and
.ansfer 10 Ihe Debt Service Fund, 1118 difference between Ihe amount required 10 be
deposlled pursuant 10 paragraph (4) of SectIon 4.03 and Ihe amount ac1uany deposfted
by 1he CIty. In 1h8 even! !!lat 1Ilere shaft no( Ihen be sufficient cash avaRable in Ihe
Reserve Aooounllo !ransfer II1e lui amount of lI1e difference 10 the "",,.rve Acccunl.
before Ihe end o! Ihe third {3(dj Business Day preceding any Inleres! Payment Oale,
U1e TlUslee sl1"" ma~e a demand for paymenl on Ihe Surely 80nd lor Iha amoun( oflhe
defICiency, all in Ihe manner and as provlded in Ihe Surety Bond, and shan depos<1 t'le
amoon! received from Iha Insurer pursuant 10 sucll demand inlo Ihe Debt Service Fund
1I1e difference between the emount required 10 be deposIled pursuant 10 paragraph (4)
of Section (.03 and 1IIe amount actuaMy deposI1ed by lI1e CIty and transferred from lIle
Re1;erve kcounl_
In lIle event Ihallha amount on <lepost in lI1e Reserve Acccu nt shan al anytime
be Tess lI1an lIle Reserve Requirement {and 1I1e amount of any su<:h defICiency is no(
,,,,,resented by II1e Surely Bond 0< by a Qualified Surely 80nd Of a teller 01 credit), lIle
TfUSlee shan p<amplly notify \he CIty of the amount required 10 be dePOSIled lhafein 10
'estore II1e balance 10 the Reserve Requiremenl, SUICh noflCe 10 be given byleTephone.
leIa!ax 0< oll1er Iorm of 1elecommunicaflOO p<om¢y conformed in wrtting.
In the event lhallhe amoon! on deposft in the Reserve Aooounl on lI1e Ih~d (3rdj
Business Day preceding any Inleresl Payment Dale (oll1er Ihan \l1e final Inleresl
Payment Dale) exceeds Ill. Reserve Requirement OncTuding in any such calculation
lie IIlen principal amoun! 01 !fie Surely 80nd and any Ouarlfied Surety Bond, including
any reinstalement of the principal of either thereof Of a lener of credt),lI1e Truslee sIlan,
al the Request of lI1e City, withdraw from Ihe Resenve Account and Ira nsler 10 1I1e
Oirec1of of Fw,ance the amount of investment earnings which are in eKCBSS of the
Reserve Requiremenllor 1Ile dePOSI1 in the Revenue FUnd. Ai. Ihe Requesl of lI1e CIty
tiled 1IIith Ihe Truslee, an amounts in Ihe Reserve Accouni shan eITher raj be credited,
on \he Ihird {3<d) Business Day p<eceding Ihe fonal Inleres! Payment Dale, 10 Ihe
<Ieposi! 1Ilen required 10 be made byll1e City pursuant 10 paragraph (4) of SeCllon 4.03,
0< (bltransferred, on !fie finaTlntereSl Payment Dafe, 10 1I1e CIty 10 be deposiIed in 1I1e
ReseN9 Accounr 9f'ovided flat there shan not ha\l9 occurred and be continuing any
Event of Default NOtwIThstanding the Ioregoing provisions of lI1is paragraph. however.
no amoonls sl1an be withdrawn !mm lIle Reserve Account and transferred 10 Ihe City
pursuant 10 Ihis paragraph du ring any period in 1IIllicll a n Event of Derau~ sl1an have
occorred and be conIn uing hereunder.
In !fie event thai \he Truslee sIla! noIily II1e CIty and Insurer that 1119 amount on
depos~ in Ihe Reserve Accou ill is Tess !han II1e Reserve Requiremenl. Ihe Cijy sIlan
lmme<JateTy wm1Cl<aw from !fie Revenue Fund and transfer 10 \he Trustee for deposn in
1he Reserve Account an amoun~ of money necessary 10 maintain the Reserve
Requiremenl in the Reserve Accoun~ P4"Ovided that amounts required 10 be 1ransferred
to She Reserve Account Shan first be used 10 reimbufse the Insurer tor amounts drawn
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on the Surely Bond {thereby reinstating the principal amount of the Surety Bond, as
provided in the Su.rety Bond) and shan then be used to reprenish eny cash porftOo"l of
the Reserve Requirement No such 1fansfer and deposit need be made to O1e Reserve
Accoont so long as there 5"an be on deposit therein a sum at least equal 10 the
ResSfYe Requireme.lI.
SECT ION .t.00. AnprlCatiQO of RedemPtipn ACcount. On or before the date
wIlich is at leasllorty-five (45) days prjO< 10 any Interest Payment Dale on wIlieh Series
A Bonds are subject 10 reclemptioo pursuant 10 Section 2.02(.) 0< on wIlieh any Paray
Bonds are sullject to opflanal redemption pursuant 10 tlle provisions 01 the
Supplemental Indenture authorizing such Parity Bonds. the Director of Finance sflan
Iransfer fram Ihe Revenue Fund 10 !he Trustee lor c:fepa<la in the Reclempflon Account
an amoun! at least aquaTIa the Redemption Price (excluding accrued inlerest, ",hieh is
payable from Ille Deb( Service Fund) of such Bonds 10 be redeemed an such intereS!
Payment Date. In ad<f~ion. Ille Direclaf 01 Finance shan Iransl ... 10 the Trustee lor
deposit in !he Re<!empflon Account an amounts required 10 recleem any Series A
Bonds which are subIeello reclempflon pu<suan[ 10 Section 2.02 (b) and any Parfty
Bonds which are subject 10 redemption pursuant 10 any sImilar provision of the
Supplemental Indenture authorizing such Parity Bonds. when and as such amoun!s
become avaITabl<!. Amounts In lIle Reclempflon Account shan be applied by lIle
Trustee soTely lor !he PU!pOSe 01 paying the ReclemplJon Price of Series A Bonds 10 be
redeema<! pursuantla Sections 2.02 (oj or (bl and Ia pay !he ptJrchase ",ice in !he
same manner and subject Of' the sa me limitation as purchasers of Bond's under SecrtOO
2.02(1<) or !he Redemptioo Price of any Parity Bonds 10 be redeemed pursuanl 10
s&nn ... ",OIIisions of 1I1e Supplemenlal Indenture aulhorizing such Par~y Bonds. • after
an of the Bonds fiave been paid 01' deemed '10 ha .... e been pai<t there are moneys
remaining in !he Reclemp!ion Account, such moneys shan be Iranslerred by 1I1e Trustee
Ia II>e Direclaf 01 Fonance lor c:fepa<l~ in !he Revenue Fund.
seCTION 4.07. ~. Moneys remaining in Ihe Revenue Fund after making
"" payments. anocations and Irans!ers p'avided lor in subsecflOns (2), (3). (4). and {Sl
01 SectIoo 4.03 s~an be applied by !he Direclaf of Finance as auillorized by !he c~y
<:harte<.
SECTION 4.08. lnYestmeols. An moneys in Ihe Revenue Fund may be inv~ed
by !he City fram time 10 time in any AL!!llO<ized Inves!menls. All moneys in !he Debt
Service Fum! and Cos! of lssuance Fund shan be invested by the Trustee solely in
Authofized lnves!men!s. as direeled pursuanlla a Request 01 !he City. In Itle absence
of any suc~ Request oIlhe City. Ihe Trustee may (OOt shan 00( be required Ial invest
any sucl1 moneys Tn FeeleraT $ecurnies. <It in money mar1<et funds ",hose investments
are restricled 10 Federal Securnies. seTeeled by !he Trustee .... ~icn by lIleir lerms
maJure prior 10 !he dare on which such moneys are required Ia be paid out hereunder.
Obl"lgaflOns purcnased as an Investment 01 mooeys in any Fund 0< Accoun! shaD l>6
deemed 10 be part of sU(;n Fund 0< Account, and an in!erest or gain derived from Ille
investment of amounls In any of !he Funds or Accounts established hereunder shan be
c:fepa<l~ed in the Fund 0< Accounllrom wIlicn such investment was made; and shan be
accounted lor and SWlied as ",ov1cle<l1n Section 4.04(c) (with respec! 10 !he Debt
Service Fund) and Section 4.05(a) (wtth respect Ia the Reserve Account). Fo<
purposes of acquiring any investrn~ls hereunder. !he Trustee may commingle !unds
hel<f by i hereunder with Ille wriUen apprOl/al oIlhe City. The Truslee may act as
principal 0< agent In Ihe acquisition 01 any investment The Tru5lee shan Incur no
labinty for losses arising from any fl'Vestmenls made pursuanlla Ih'is Sectioo+
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SECTtQN 4.09. Vatya[Kl!1' Investments.
fa) Mefbpd of Va!lIafion and frequency of valuation.. \n computing She amount
in any Fund or Account AUll>a<ized In_nts sha:1 be valued at the loWer of the 00S!
or the market p<ice, exolusive of accrued Interes!. With respecllo an Funds &nd
J\ccoonlS, valualiOn sha. OCCut an""any, exoepl in the event 01 a withdrawallrom lI1e
Reserve Account. w~",e"""" so<:urHie. s~an be valued immedlately alter such
wI1M<awal , amounts 00 depoo~ in !he Reserve AOOOOnl shan. al any time, be less
It,an the Reserve Requiremen~ such defICiency shan be made up from the first
avenable moneys r~ved after malling \he requlred deposits 10 Ihe Deb! Service
Fund (iJ over a period 01 no! more !tIan four (4) months, in four (4) soIJ5tanfiany equal
paymenls. in lIle even! such defICiency resu"s from a decrease in !he marl<et value 01
Ihe Authorized Investments 00 deposiI in lIle Reserve Accounl or U'l over a period 01
no!morelllan twelve ll2) months, 1n lwelva (12) .ubslanliany equal payments, in 1110
even! sucll def<¢lency rasuft. torn a withdrawal torn """" Aooounl.
(b] Investment 01 AmQunts Bepresanfing Apcrued Interest and Capitanzed
I!lWmiI-1\11 amourm reprasenling llOONed and capilaTIzed merest shan be held by tie
Trustee in the DellI Service Fund, pleclged solely 10 the payment 01 inlerest on !he
Bonds and invested only In Feeleral Securities maturTng al su<:l1 times and In such
amounls as are """""""'Y 10 mato1l tie lnIares! paY"'enls 10 whi<:h !hey are plecIged.
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AATICt.E V
COVENANTS OF THE CITY; SPECIAL TAX COVENANTS
SECTION 5.01. Punctual Payment ComoJlaoce Wrth QoclJrnents
{a) The City shan puncluan~ payor cause 10 be paid lIle interas! and p<incipal
10 become clue with resped 10 aa 01 the Bonds in .lra ccnformily w~h the lerms 01 the
Bonds and 01 this Indenture. and ",ill fai!ht~n~ ooserve and parlor'" an of the
conditions. covenants aJ"ld requjreme~s of 1th~ li,c'-e.~'Z"'UTo and aM Supplemental
Indentures.
tbi The City harelly ccvenanfs 10 pay or 10 cause 10 be paid Vmely 10 or on
baha" oItha Insurer aa amounts payable 10 or on beha" of the Insurer pursuant 10 the
FUlancTaI Guara~ Agreement Q( any oIher apprtcabla documenl In addition. the City
shan not prepay the Seria. A 8on<fs or discharge this Indenture unless an amounts
then payable 10 ()( on behalf of !he insurer pursuant 10 ~e Financial Guaranty
Agreement or an~ _ applicable documenl hava been paid if' fun.
S€CTK>N 5.02. Agajnst Eocymhcaoees. The e1l)' wiD not ffiOl1gage or
otherwise encumber. pledge or place any charge upon Ihe Enterprise or any part
Ihefeof. or upon any of the Net Revenues, e;c:cepl. as provided in the lndenlure;
p<ovided, however, lI1at nothing In this Section 5.02 nor elsewflere In this Indenture
s~al be construed 10 prevenlthe City from entering into Iong-Ierm contracts 10 finance
supplies d water~ .9BS .. or electric energy, payments under which are accounted for as
Maintenance and Operation Costs under the <lGfinilio" lI1ereo! in Section 1.01.
SECTION 5.03. DiscfJarge of ClaIms lhe City ccvenants lila! in or<let 10 ,""y
preserve and protect the pOor~y and security 01 the Bonds the Cdy sMn pay from the
Net Revenues and discllarge an lawfuf claims for labof'. materials and suppUes
furnished for or in connection with II1e Enterprise which, I unpaid. may beccme a fien
or charge upon II1e Net Revenues prior or superior 10 the rl8l1 of lhe Bonds and impair
the secunly 01 the Bonds. The City shan also pay from the Net Revenues an taxes and
assessments Of ot.hof governmental charges fawfuny lellied or assessed upon Of in
respect <i lI1e Entarprise or upon any part thereof or upon any of the Net Revenues
therefrom.
SECTION 5.04_ AcqqIsition Conslrucfioo or 5nanclog of an, Proiect and
JrooroyeQJAnIS 10 1hA Enlerprjse. The Crty wiJ acquire .. COflstruct. -Of finance any PJoject.
as defined in a Supplemental Indenture, and lmjl<ovemenllo the Enterprise 10 be
financed with lI1e jl<oceeds 01 any Party Bonds with an practicable dispatch. and such
Project and Improvement wil be made in an expeditious manner and Wl cooformft)' IPIHh
Taws so as 10 ccrnpIeI9 the same as soon as possible.
SECTION 5.05. Maintenance and Orlf:rafiPD of En\cunrjse in Efficient and
Ecooom1cm Manner. The City covenanls and agrees 10 maintain and operate tne
Enterprise in an efficient and economical manner and 10 operate. maintain and
preserve the Enterprise in good repair and wor1<ing order.
seCTKlN 5.06. Against Sate· Eminent Domain.
(a) The C4!y will noI sen, lease or othe""ise dispose 01 the Enterp<i.a or any
partthereo! essential 10 the prOjler operalion althe Enlerprise Of 10 lI1e maintenance 01
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!he Net Revenues B)lCep( as herein expressly permitted. The Cdy wfll not erfler into any
1ease or agreement which impairs the operafioo of the Eflterprise Of any part thereof
necessary 10 secure adequate Net Revenues Joe the payment of the interest on and
I"incipal 0< Redemption Price, t any, on lIle Bonds,O< wI1ich would otherwise impair
Itle rights of the HoIdefs with respect 10 lIle Net Revenues 0< Ille operafoon of Ihe
Enlerprise. Any real 0< persona! P'operty which has bec-ome no.HJperafrve 0< which is
001 reeded 10< 111 •• _01 8IlcI proper opBfalioo of tile Enlerp:-ise, 0< any mal~rial 0<
B<j\Jipmenl which has worn oo~ may be sold at no! Jess Ihan 1M market value Ihereof
withouI ~. consent of the Holders I such sale will no! reduce Net Revenues and , an
of !he Net Proceeds of such sale are depo",1ed in 1I1e Reveoue FUnd.
fDl If an 0< any part of lIle Enterp'ise shan be ta~en by eminent domain
I"oceedings, lIle Net Proceeds reaITzed by the City lIlerefrom sIla" be depos~ed by lIle
City with the Trustee "' a special lund in trust and appITed by the Cny 10 !he cos! of
acquiring 0< oonstruding 0< financ01g Impr""ements 10 lhe Enterprise I W lIle City first
secures and tiles with 1I1e Truslee a Certificate of lhe Gny showing [i) lhe esfimaled loss
In annual Ne! Revenue ... any, su!fBled, 0< \0 be suffered, by Ihe City by reason of
such emTnenJ domain I"oceed!ngs, OQ a genera! deSlcription of !he Improyemants 10
the Enterprise then proposed \0 be acquired 0< constructed by lhe City from such Net
Proceeds, and OiO an esfimate oIlIle addilional Net Revenues 10 be derived from soch
Improvements; and (8) lIle Trustee, OIl Ihe basis of such CertifICate of !he C~y,
determines lIlat SlOCh additional Net Revenues will sufflclenVy offset Ihe loss of Net
Revenues, resurting from such eminent domain p'oceedings so that the ability of the
City 10 meet Is obijgafions h8feundJer wiD nol be subslanfiany Impaired, ",~jch
delerminaflOn sMB be final and conclusive. Ithe foregoing conditions a'e ~ Ihe
City sIlaR !hen prompVy proceed .,ilh 1I1e acqo isitioo 0< construc!ion 0< financing of
such Imp<ovemenls stllstanfiaRy in accordance 101M soch Ce<tificate of Ihe City and
payments !hereto< sIlan be made b\' !he Truslee frO<n such Net Proceeds and from
oIhar moneys oIlIJe City Ia...runy avanabla Iherelo<. and any baTance of such Net
Proceeds no! rB<j\Jlred b\' fie Gny for Ihe purposes aloresaid shan be depooled in 1I1e
Revenue Fund. I !he Io<egof"g condnions are no! ~ IIJen such Net P'oceeds sIlan
be applied bY !he Trustee 1"0 rala 10 Ihe redemption 0< purchase of IIJe Bonds of each
Series lIlen OuIstar,ding in Ihe propO<1ion which Ihe principal amounl of l11e
Outstanding Bonds of each Series bears \0 Ihe aggregate p<incipa! amount of an
BonOs IIJen Outstanding. IIlhe Truslee is unable 10 purcha .. 0< redeem BonOs in
amounts sufliclenllo e.haus!lhe avanable moneys anceable 10 each such Serres. 1!le
remainder of SlOCh moneys for each such Series shan be held in trust by IIJe Trustee
and applied \0 1I1e payment of lIle BonOs 01 such Series as lIle same become due b\'
IIJew lerms, and, pending socll appI"lC8!ion. such remaining mooeys may be invested b\'
IIJe Trustee in Ihe manner p'ov1ded Tn Section 4.08 10< !he investment of moneys in lIle
Bond Reserve Accoont.
SECTION 5.07. tnour.nee. The City covenanls 1IIat. shan at an times maintain
such insurance on the Enferprise as is customarily maTntained with respect to woos
and P'operfies of lil<e charac!er against accidenllo, loss 01 0< damage 10 soch ~ 0<
I"operfles. I any useful part of lIle Enterprise shan be damaged 0< destroyed, socll
part sIlan be resto<ed 10 use. The Net Proceeds 01 msurance against accidenllo or
deslrucfion of Ihe pIlys1cal Enterprise shan be usad for repairing or rebundlng Ihe
damaged or destroyed portions oIlhe Enlerprise, (10 IIJe extent !hat such repair 0<
rebunding is determined by the City 10 be useful 0< of continuing vaTue 10 1I1e
Enterprisel and 10 the extant no! so appfled, shan be applied \0 the rede~ of the
OJtstandng Bonds Issued on a pro rata basis, and for ouch purpose shan be paid inlo
lhe Redemption Accoont.
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A.''i StICh insurance shan be in the form or pofic.ies ()( contracts tor insurance
with insurers cJ 9OO<l standing and s!1an be payable 10 !he C~y, Of m.y be in 1/10 iorm 01
self-insurance by !he City. The City shan es!ab~sh such fund Of funds Of raseNes as
are necessary 10 pro.ooe for ils share 01 any such sen-insurance. The City shan file Of
cause 10 be filed wilh !he Trustee, annuany within one hundrecll\llanty (120) days altet
!he close 01 each FISCal Year, 0 Certiflcale 01 the City (a) settingfor!l1 a cIescf:;AlOn in
reasonable dela~ 01 tile insuranee lIlen in eReeI. including any se"-<"suranee lund,
malnfaiNe<l po<su ani 10 the requirements 01 tIlis Section, !bI stating Illal tile Cily is !hen
in compliance ';11M tha requirements of lIlis Sec!ion, and (1)) staflng whelhe< during til.
preceding Fiscal Year any toss has been 1ncurred with respect 10 lIle Enterprise and, •
so, tile amounl 01 Net Proceeds 01 insurance, including lIle Net Proceeds of any sen
insurance fund, covering such loss and specilying the reasonable and necessary costs
01 repair, recons1ruc!ion Of replacemenllllereal.
Sl:CTiON 5.08. Bllw.rn. and A!;rounts The City covenants lIlall .. ~a~ ~eep
"'opel booI<s 01 recortl and accounts 01 tile Eme'llrise, separate frOfn al othef recortls
000 accounts, in whfcll compIeta ancl correct entries s!1an be made 01 an transactIOns
re!a1ing 10 !he Enterprise. Said booI<s shan, upon reasonable requesl, be subjecllo the
inspec!ion of tile Ownens 01 not less lIlan ten percent (10%) of the Outstanding Bonda
Of tile!< representafives authorized i'1 wrifing.
The City """enonts lIlat II will C<!use tile l:IOoI<s and BCCOOf1ls of tile Enla""ise 10
be a_ed annuany by an Inclepenclen! Certified Pub[oc ACCOIJnta nt ancl will make
avanable for inspection by lIle Bone! Owners at Ille Trust Off"," cJ tile Trustee, upon
reasonable request. a copy of lIle report of suco Inclependent Certified Public
Accounlant
The City covenanlS thaI II wil cause 10 be prepared annuany, not more IIlan one
hunclred ergoly (ISO! days alter lI1e close of each Fiscal Yea<, as a part oils regufar
aMual fjnanrJar reporl. a summar)' statement showing the amount of Gross ReY'9oues
and lIle amount 01 an other funds conecled whfco are required 10 be pTedged 0<
ofherwise made avaIlabia as security for payment of ",incipal of and inlerest on the
Bonc!s, lIle disbursements ITOfn !he Gross Aevenues and other funds in reasonable
delait. ancl a general statement of the ~n aOOa! and physical oon<Ii!io<1 of the EnlB>p<ise.
The City shan bnisn a copy of the stalemenllo tile TrUSlee, and upon written reques!,
10 any Bone! Owns<.
seCT.ION 5,09. protection 01 $6cldV and Bgbls of Owners The City will
preserve and prOlect the security of fl. Bonc!s and !he rights 01 1M Owners, and will
warranl and clefencl tIleir rights agalnst an claims and demands 01 an persons. FfOm
encl alter !he saTe ancl clerN8ry of any Parily Bonds by the City, suc1J Parny Bonds shan
be 'ncontest_ by l1e City.
SECTtON 5.10. Agaiost Competltive faciIitjes. The Oty will not acquire.
construct. operate Of ma!ntatn any system or utiftty within the service area of the City
thai would be competitive with !he Enterprise.
Sl:CTION 5.11. pavrnenl pi Taxes E1c The City wia pay and discnarge an
taxes. assessments and orhef governmentaf cha rges wh~h may hereafter be lawfuny
IrnpooecI upon tile Enle""ise 0< any part tIlereal '" upon any Aevenues wnen lI1e same
$I1al become clu6. The City ",;I duly observe and conform w~h an vand requIrements
pi any governmental authority reTative 10 the Enle",,;se Of any part "areal, and "'ill
oompfy with an requirements with respect 10 any stare or federal grants receiv9d 10
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assist in pa~ing for the costs of the acquisNJon. construction Of' financing of any
Improvements to the Enterprise.
SECTION 5.12. BalAS and Charges. The City shan fix. p'escribe, revise aod
roIec1 CIlarges during each FISCal Year which (loget!ler with alher funds accumulaled
from Gross Revenues and wOich are IawMy avanable to lI1e City 10< payment 01 any 01
lhe following amounts during such FISCal Year) are al least su1flOien~ after making
alk)wances for confingencies and error i1 the estimates, 10 pay the tonowiTlQ amounts
in 1I1e following e<00r. .
fa) an Mainlenaoce and Operaflon Costs eslimaled by the City 10
become ~e and payable in such FISCal Year,
!bl !he principal 01 aod Interest 011 the ()JIstandtng Bonds becoming due
and payable during such FIsca! YBaf. including the ReclempflOn Price 01 Term
Boodssubjec11o Sinking Fund instenment rede~ eluring SlJCh FISCal Year,
(c) an _ payments requirec110r compliance with this Indenture and
\he instruments pursuant to which any Par~y Bonds shan have been lssue<t,
and
Idl aD payments requirec1 to meet any alJler obI"l9alions of 1I1e City which
are charges, nens, encumbrances upon or payable from the Gross Revenues or
the Net Revenues.
In a<ld+tion. 1Ile City shaft fix. prescribe. revise and oonect CIlarges ~r1ng eaell
FISCal Year which are sufticienllo yield Net Revenues, at least equal to one Oundrec1
!wenly-~ve pereenl (125%J 01 the amounts payable under the p'ocedir.g clause (b! in
sucll FISCal Year. .
SECTION 5. JS. Np prjofjly !or Addjtooj!l ObI"oga!jons. The City covenants 1I1al
no addilional boods Of ether obIIgalions soan be issuec1 Of incurrec1 having any priority
In paymenl 01 prtncipal Of interest OUI 01 !he Net Revenues aver !he Bonds. Nothing in
1I1Is '"'<lenlure shaft prohibit or impair the au!lKdy 01 the City to Issue bonds Of oIiher
oMgafK>l1s secured by a lien on Gross Reven ues Of Net Re .... enues wl'l fch is
subordinaTe \0 !he fien estabiishec1 hereunder, upon suclllerms and in such princ~a!
amounls as 1I1e City may determine.
SECTION S.I4, No Arb!Irage. The City shan not lake, nor perm~ nor suffer to
be labn any acflOl1 with respect to lIle proceec1s 01 an y 01 !he Bonds ",Oleh would
<:ausec1 any 01 .... Bonds to be 'artltrage boOOs' within the meaning of Ihe Tax Coc1e.
SECTION 5.1 S. Information B!looQ The Direclo< of Finance is hereby directed
to assure the finng 01 an information report 10< the Sieries A Boods in compliance wIth
Secfion 149 [e) of !he Tax Coc1e.
~CTION 5.16. Prjlfflte Business Use limjtafiQn. Not more than 1eo percent
(10%) 0I1I1e Net proceeds 01 !he Series" Bonds sIlan be usec1 in a manner which
1O/OIJld cause !he Series " Bonds to become 'P'iVale aclivily boOOs' under and within
the meaning of SectIoo 141 (al 01 !he Tax Coc1e.
SECTION 5.17. prjyat9loan ljm~afion. NO! mo<e!han 1iveperceol[5%) oflhe
Net proceec1s 01 !he Series" Bonds shan be usec1. cfirecliy or indi recliy. to make or
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ina""" a 10M (GfIler "an loans conslilu1;ng """purpose OO"gaUons or a,sass"",n"'1
10 petsoos otl\er \han state or lOcal government "nn •.
SECTION ~. 18. """"ra! Gllarantee Probibition. Tile Cily .han no! lake any
8CtIoo or permft or ..-any ~on 10 be lakall I \he resu~ of t!le same would be 10
cause any c( Ill. Series A Bonds 10 be -_rally guaranteed" ~In lhe meaning of
sec60n 149[bl of 1119 Tax 0xIe.
SECTION S.1 9. NOM"1QIicaljQ!l 10 To.allte &1m None of the proviSions c(
Sections 5.09 10 S.13. Inclusive. sbaR oWly \0 Bonds \he interest on wbicb is no!
sut>jecl1O exciuSion from \1'0$8 Income under apprlCab!e fecl&ral ~. laX laws and
regulalfons.
SECTION 5.20. fYrfhor ASSHrsrtOft$ The ~ win adop(. maKe~ eJfecute and
dellver any and an such further reso/lJflOOs. Instruments and as&uraOC9$ as may be
reasonably """,,saar)' or proper 10 carry out 1I1e inlenllon or \0 facilitate \he
perfoonance c( lIliS Indenture, and 101 \J\e beller assuriflg and confirmlng unl0 !he
o..nem 01 \he Bonds IIle rig/I1s and berlef11s prov1<le<l in \J\is Indenture.
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ARTICLE VI
THE TRUSTEE
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SECTION 6.01. Apooin!merJ! o! Trustee Securay Pacific NaTional Bank in San
Francisco. California. a national banl<ing associaflOO organized and existing under and
by '<i"ue rA lIle laws rA lIle Un~ed Stales 0( America. Is hereby appoinled Trustee by
!he City for Ihe purpose 0( reeeivin" a" moneys required 10 ba deposiIed "~h !he
Trustee hereunder and 10 allocate, use and apply lIle same as provided in 1/1Is
Indenture. The City ~ees,..at it wiD maintain a TI"Jst9EI having a corporare trust offICe
i'l San francisco. Califomia. w11h a combined capitaT and surplus of at least One
HU11(!red MilflOn Dollars (SIOO.OOO,OOO), and S<.Jbjed 10 supervision 0< examination by
lede<aI 0< Stale authorily. so long as any Bonds are Outstanding . .If such bani< 0< trust
company publishes a report rA coodlIion at Iedst annuany pursuant 10 law or 10 !he
requlremenfs 0( any supervising 0< exaonining aulhO<fty above referred 10, !hen for !he
purpose of IIlis Section 5.01 fle combined capital and surplus rA such bani< 0< Ifust
company shan be cleemed to be fts CO<nbined capilal and surplus as set forth in its mosl
recent report 0( condition SO published.
The Trusfee is hereby aulhorizec! 10 pay Ihe Bonds when dufy presenfed for
paymen! a! maturfty, or on redemption 0< purchase plio< Ie> maturily. and 10 cancel aft
Bonds upon payment !hererA. The Trustee shan keep ace'" ate r8CO<ds rA an 'unds
administered by • and of all Bonds paid and discharged.
SECTION 8.02. Aoceplarq rA Trus!s. The Trustee hereby accepIS!he trusts
impoSed upon • by IIlis_lure, and agrees 10 perform said trusts, but only upon and
OIlblecl to !he following express lem15 and corxmioos:
(oJ The Trustee, prior 10 !he OCCUffen<:e 0( an even! 0( Defaun and alter
curing rA all Events 01 Default which may Mve occurred, underta1<es 10 pefform
such dufies and only such dufies as are speciftCaRy set forth in lIlis Indenture. In
case an Event rA oafau! hereunder has occurred (w~ich has noI been cured 0<
waiYedjlhe Trustee may exerCise such oIlhe righl. and powers vested in I by
this tndenrure~ and shan use the same deg rae of care and skill in [heir el{ercrse~
as a pruden' and reasonable man would exercise Of use under t"he
ci"rcumstancas in 'the condUct of his o .... n affairs.
Ebl The Trustee may .xecole any rA Ihe IfuSf. or polliers hereof and
perform Ihe dufias required rA I hereunder by 0< Ihroug~ anomeys, a\!Snts, 0<
recetvers bu! shan be answerable for Ihe selection 0111'.& same In acco<dance
with !he standard specified above, and shan be enUlied 10 advice rA counsel
concerning all maners of trust and ~s Ilu1y her.undo<.
(c) The Trustee shaR nOi be responSlble for any racnal herein, 0< in Ill.
Borrds, or for any rA lIle suw1emenfs thereto or instrumenTs of lurther
assurance, or lor Ihe sufficiency rA !he securny for !he Bonds issued hereunder
0< ifllended 10 be secured here!)y and Ihe Trustee s~aR no! be bound 10
ascertain or inquire as 10 the observance or performance 0( any covenants.
conditions 0< agreemenf. on !he pari rA I'le Ctty ~Sf9u_r_ The Trustee shan
not be responsible Of' liable Jor any k)ss suffered in connection With any
lnvestmenl oIlunds ma<Ie by • in 8DCO<dan<:e .,~ SacliO<1 4.08.
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td) The Trustee sflan not be accountable for 1he use of an y proceedS of
sale oflt1a 80nds derivered tlereuodef. The Trustee may become ttle O\IIner of
/?(''ld$ secured hereby wfth the same rights whicf1 iI .... ould have if not the
Trus1ge; may acquire and dispose 01 oIher bonds or evidence 01 indebte<loess
oI1he City wIII11he same rigIlIlIl would have i M were not !he Trustee; and may
act a. a deposnary lor and permn any 01 ft. offic",. or direclor. IG act as a
member 01,0< ir. any other capa<;ny with respect IG, any committee ""med 10
proted 1he righls 01 Oo>ners 01 BondS. ,.halller or not such committee shan
represent the Owners oIlhe majorily in principal amount of Ihe Bonds Ihen
OJtstanding_
(el In 1he absence 01 bad fanh on its part. 1he Trustee shan be PlOtected
in dng upon any no!ice, request. coosent, certiflCale. order. affidavit, letter,
Ielegr8m or 0111", paper or documen! beneved by 110 be genuine and OOfred
aod 10 have been signed or sent by IIle proper person or persons_ N1 y aclion
lal<en or omitted 10 be \a~en by 1he Truslee In good laith ano wKtIou! negrogenoe
pursuant \0 this Indenture upon lIle r9q!JesI or au1l1orny or coosen! 01 any
persoo w!lo al the time 01 ma~in9 such request or glvlng sucll authorny or
consenl Is the o..ner 01 any Bond, shan be concluslve and binding upon an
lulure Owners of the same Bond and upon Bonds issued in e,cllange 1herefor
or in place 1hereol The Trustee shan no! be bouod 10 recognize any persoo as
an Owner 01 any 80nd or \0 \a~e any action at his request unless Ihe ownership
of SUCII Bond by 8ucI1 person shan be reflected on the Bond RegistrarlOfl Books.
(I) M I<> lIle Elxislence or nIOfl-existence 01 any fact or .e 10 \he
sufficiency or vardty of any instrument. paper or proceeding. lIle Trustee shan
be en!illed 10 rely upon a Cel!i!icate of the City as sufficienl evidence 01 the facts
lIlereio OOf1\ained and prio< 10 the cccurrence 01 an Event 01 D6faun hereunder
01 which Ihe Truslee ~as been given notlce or Is deemed \0 Mve notice. as
p<ovided in Section 6.02(hl herec/, shaN also be at liberty 10 accept a sim~ar
certificale 10 \he effecl Ihat any particular dea nng. Iran saction or action is
necessary or expedient. but may at Is discretion secure such furtller evidence
deemed by • 10 be necessary or advisa!lle, but shan in no case be bound 10
secure \he same. The Truslee may accep! a Certificale of 1he City \0 "" e!fecl
"at an authorizaflOfl in Ihe loon 1herein sal 10<111 has been ac:IopIed by the City,
as oonclusive evidence Ihat such authorization has been c1u1y adopled and is in
fUllorce aod effect
(g] Tha permissive rigtll oIlhe Trustee \0 do lI1ingo enumerated In flis
Indenture shan no! be COOslrued as a duly aod • shan not be ansvl91abTe lor
other Ihan Is negrogence or wnlful defaull The immunities aod e,cep1ions from
~""'li!y 0I1Ile Truslee shan extend 10 ft. OfflC9fS, direcl","" employees and
agents.
(hi Tha Trustee shaft nol be required 10 lake nor",e or be deemed 10
have notice 01 any Even! 01 Oelau~ hereunder e,cepI failure by !he City \0 make
any of 1he payments \0 !he Trustee required \0 be made by t1e City pursuant
hereto or lailure by the C~y 10 file wnh Ihe Trustee any document r9q!Jired by
lIlis IndemJre \0 be so filed subsequenllo \he issuance 01 "" 8on<Is, unless \he
Trustee shall be specificaRy notified in ",riling of such delaun by !he City or by
fle Owners of al least twenty-five percent (25%) in aggregale PfincTpa! amount
oIlhe Bonds Ihen CMstanding and an no!ices or o!her instruments r9q!Jired by
lhiS Indenlure 10 be derrV9red \0 Ihe Trustee must. in order \0 be effective, be
<lefJYered at "" Trust Office 01 \he Trustee, and In !he absence 01 such nor.., so
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denvered 1tle Trustee may condusively assume 11".ere is no Event of Defaurt
hereunder except as aforesaid.
(i) AI. any .. "'" an reasonable times !he TruOlee. and its duly aulhorized
agents. atlOfneys. experts, engineers, accountants and represenlatTves. shan
have the nghlfuny 10 inspectlhe Enlerp<iSe. including an boo~s, papers and
records 01 !he Cdy pertaining 10 the Enlerp<ise and the Bonds. and 10 laKe such
memOfanda tom and with regard thereto as may be desi'ed but wtlich is not
pri\l1leged by slalute or by law.
ID The Trustee shan not be r.,quired 10 give any bond or surely In
respe<:l of!he execu!ion 0I1he said trusts and powers or olher"i,se in respect 01
Ihe p<emises.
(1<) Nolwfthstanding anything elsewhere in Ihis Indenlure wdh respect 10
111e execuftonol any Bonds, the withdrawal 01 any cash, the release of any
property, or any ac!ion whatsDev", .... ithin 111e puMew 01 thiS lndenlure, Ihe
Trustee Shan have 111e rtglll, but shan not be required, 10 c!emand any showings,
certmcales. opinions, appraisals Of' other infOfmaflOn. Of corpcyate acflOO or
evidence 1h91000, as may be deemed desirable lor the PU!pOse 01 establishing
the right oItl1e Cdy 10 !he execufion 01 any Bonds, !he wilhclrawal 01 any cash, or
!he taking 01 eny oIhst action by 111e Trustee.
(1l Before laking the action refarred 10 in SecUon 8.03 the Truslee may
require that a satisractory indemn~y bond be furnished lor Ihe reimbursement 01
an expenses 10 whICh • may be po! and 10 prated I against an iability, excepl
fiab<T~y which is adjudicaled 10 nave resu ~ed from ijs negr.gence or wnlful
delaul in connecflOO .(~ any such action.
(m) AI moneys rece,ved by 1110 Trustee Shall. unbl used or "pprled or
invested as here,n prOvlded. be ~eld in Irus! lor the purposes lor whi<:h lhey
were received but need noI be segregaled from olller fu nds excepllo the extent
required by law. The Trustee shan noI be und91 any !aMtty lor inlerest on any
moneys received hereunder except such as may be ag reed upon.
S€CTION 6.03. Em Charges and Expenses 0( !oJslee. The Tr~~ shaJ! be
entitled 10 payment and reImbursement lor reasonable lees lor fts services rendered
hereunder and an advances, coonse1 lees ~ncluding expenses) and other expenses
reasonably and necessarily made or incurred by !he Trustee in connec~on wdh such
services. 4>00 the occurrence of an Even! 01 Delau" hereunder, but onfy upon an
Even! 01 Oelault. !he Truslee shan have a firs( fien with right 01 payment I"'ior 10
payment 01 any Bond upon the amounts held hereunder lor the foregoing fees, charges
and expenses incurred by • respec!Nefy.
~CTION 6.04_ Notice 10 Bood Owners of oelaun If an Event 01 eerau"
~","under occu<. wfth respeG110 any Bonds, oI",hlCh !he Truslee ~as been gi· .... n or is
deemed 10 have no!ice, as provided in Section 6.02(h) hereol. then the Truslee shan
I"'ompIIy give wrillen nor"", !here'" by first-class ma~ 10 Ihe Own", 01 each such Bond,
unless suctJ Event 01 Deraun shan have been cured before 111e giving 01 such no!ice;
1"'-, Iloweve<. !hal unfess suc~ Even! of Deraun consists 01 the lrulure by the City
10 maT<e any paymenl when due, Ihe Truslee may eled noIlo give such noUce I and so
long as the Trustee Tn good faith determines thai • is in !he best interests 01 the Bond
OItmers noIlo give such notice.
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SECTION 6.OS. intervention bv Trustee. in any judicial Pfoceeding 10 ..,rijch t1le
City is a party whiCh.. In :he opnion of Ihe Trustee and jts cO' .. msel, has a substantia!
bearing on 1he inlerests of Owners of any of the Bonds, the Trus:ee may intervene on
behalf fA such Bond Owners. and subject 10 SecflOn 6.02 m Mreof. sllan do so if
requested in wr~ing by ... Owner. 01 at IeasI twenty-five percenl (3%) in aggregate
principal amounl 01 such Bonds I!1en Outstandi ng.
SECTION 6.06. Removal of Trustee The Owne .. 01 a majorny in aggregate
principal amoon! oIlhe Outstanding Bonds may at any time, and the City may so tong
as no evenl of Oefauft shan 'have occurred and Itlen be cootinuing. may remove the
Trustee inffiany appointed, and any succeS5O( thereto. by an instrument Of -concurrent
instruments in writing defivered to Ihe Trustee, whereupon Ihe City or sllch Owners. as
fle case may be, shan 8pp<jnt a stJCCe5S()(' Of successors 'thereto; provided that any
s~ successor shan be a bank Of trust company meefing 1tJe requkemen!s set forth in
Seclion 6.01 hereol
SECTION 6.07. Rastgoafign by TDlslee. The Trustee and any succeSSQ(
Trustee may at any fime resign by giving thirty (301 <lays' written nofice b~ registered or
certified man 1<> I!1e City. Upon receiving such notice 01 resignaVon, the City shan
prornp!l~ appoinl a SIJOGeSSOf Trustee. Any resignation Of removal of Ihe Trustee and
appointment of a soccessor Trustee shall become effective upon acceptarlCe of
appoil1fmenl by 1Ile successo< Trustee. tJpon sucll acceptance, Ihe City shan cause
notice I!1ereollO be given by first eTass man 10 the 80nd Owners at IMir respective
__ eo set Iorth on Ihe Bond Regislrafion 600«s.
SECTK)N 6.08. Agrintmenl g( SUCNS''Y TrYstee In the evenl rJ 1he removal
or resignaflOl1 0I1Ile Trustee pursuanllO Sections 6.06 or 6.07, respectlvely, the City
sllaR prompGy appoinl a successor Truslee. In the evenllhe City sllan for any reason
whalsoev8f fan 10 appoinl a successor Trustee within ninety (9Oj days following Ille
Oerovery 10 1Ile Trustee 0I1!1e instrument clescribed in $e..."!ior1 6.06 ()( W1Thin ninety (9Oj
days following 1Ile receip! 01 nofice by Ihe City pursuan!1O Sec!lon 6.07, the Truslee
may apply 10 a court 01 competent jurisdiction for 1M appointmen! 01 a succeSSO<
Trustee meeting I!1e requir""",nlS 01 Sec!loo 6.011lereol. Any sucll successor Trustee
appointed by slK:h ~ourt shan become ,he succesS(\(' Trustee l'1e.reunder
nolwithstandiog any acflon by Ihe City purporting 10 appoint a succesS()( Truslee
following I!1e e,pi<'ation of sucll ninely-<lay period.
SECTION 6.09. Merger ()( ConSQ{ldaflQ[, Any company into wllich Ihe Trustee
may be merged or converted ()( which I may be consolklafed or any company resulling
from any mer9E"' .. conversion Of' consolldatioo 10 which it shan be a par1)' Of' any
company 10 which I!1e Trustee may sea ()( transfer an Of soostanfian~ an 011 CO<pOrafe
,"uS! business. provide<llhaf such company shan be efogible under Sec!lon 601, shan
be the successor 10 I!1e Trustee and vested wilh an o1lhe lifIe 10 1Ile trust estate and aR
of 1he trusts, powers, discreflOns. immunities, priVIleges and an other matters as was its
predecessor, withoullhe e'ecuflOO or fili."1Q 01 any paper or furIher act. anything herein
10 I!1e contrary notwithstanding.
SECTION 6.10, eoocacoing any $stl"!'ift§sor Trustee. Every successor Trustee
appoinled hereunder shen e,..,ute, acknowledge and derIVer 10 ~s predecessor and
also 10 Ihe City an instrum",,! in wr~jng accepling such appointmenillereunder and
Ihereupon such suooessor, wiIhout any furlher act. deed ()( conveyance. shan become
IuDy vesled wilh a~ Ihe eslates, properf_. rlghls, powers, trusts, dutles and obIigaflOl1s
01 ~s predecessors; but such predecessor sllan, neverlheless. 00 Ihe Reqoesl d the
aty. Of' ~ its successor, execute and denV61 an instrument transferring io &uch
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successor a~ \fle estales. p<operIies, rights, powe rs and Ifo sts of s och p,edecesso<
heleunder, and every predecesSOf Trustee shan denver an securities and moneys held
by" as !he Tws!ee hereunder to 1ts SUCC8$SO(+ Should any "instrument in writing from
1Ile City be required by any successo< Trustee for more My and ca~ainly vasfing Tn
such successo< \fle estate, rights, powers ancl clufies hereby vesled 0< intendec! \0 be
vested in the predecesso<, any and a~ such instrumenls In writing shan, on reques~ be
e'eculec!. acknow1e<lged ane! clefl\lered by the City.
SECTION 6.1 L Amnjn!menl of Co-Trustee, • is 1I1e purpose of thi. 1roc!enlure
Ihalthere shan be no violatioo of any law of any jurisdiction Onc!uding particularly the
lalll of 1Ile Statel clen ying or restncting lIle right of banking corporatioos 01 associaflOflS
to transact buSiness as Trustee in such jurjsdk:f~n. • is recognized thai to the case of
iffgaflOn under 1his 1roc!enlure, and in particular In case of Ihe enforcement of the rights
of the Trustee on clef BUll. 0< In the case !he Truslee deems that by reason 01 any
prasenl 0< IufiJTe Taw of any jur1S<f1Cf1OO I may not exercise any of !he po.""5, rights or
remedies herein granted 10 the Trustee or hold lijla \0 the p<operlies, In lruSl. as lIerein
granted, 0< laKe any other acf>on which may be c!eslrable or necessary In connec1ion
therewith. I may be necessary \hal \he Trustee appoint an addilional individual 01
Inslilufion as a separate 01 co-truslee. The following provisions of this Sectioo 6.11 are
adopIed 10 these ends.
In 1I1e event that the Trustee appoinls an additional indivldu al 01 Inst~Ufion as a
separate 01 co-truSlee, each and every remec!y, power, right. daim, clemand, cause of
action, immunity. eslale, lijle, interest and len expressed 0< Inlendec! by this 1roc!entura
10 be e,erCised by 0< vested in 01 oonveyed \0 the Trustee with TespecIlherelo shan be
e,ercisable by and veSI In sucIl separate or co-trustee but only 10 the e,len! necessary
10 enable such separate Of co-trustee 10 exercise such powers, rigtlts and remedies.
ane! evel) covenant ane! obIigaflOO necessal) 10 the exercise thereof by sucIl separale
01 co-!ruslee shan run \0 and be enforceable by e~er of !hem.
Should any Instrument in writing 1rO<n the C~ be required by \he sepafata
!ruslee 01 co-trustee SO aWOin1ed by !he Trustee for more My and cer1ain!y ves~ng in
and conflfl11ing 10 • soch properties, rights, powers, !rusts, duties and obrogaUons, any
ane! an SUCh Instruments in .... mng shaR, on requeSl. be executed, ac1<nIOw1e<Iged and
derlVered by Ille City. In case any separate truslee or co-!rustee, 01 a successo< 10
erther, shall become incapable of acting. resign (Y. be removed. an Ihe es1ates,
properties, rights, powers, trusts, duties ane! obr>gaflOf1s of such separale trustee 01 co
lruslee, so far as permilled by law, shan ves! .., and be e'ercised by \!le Truslee unlil
!he appoinlmef1l of a ne .. Irust"" 0< suocessor 10 sucl1 separate trustee 0< co-trustee.
SECTION 6.12. Indemnjfjcafipn' Limned Llabmtv of TrySlee The Ctty shan
indemnify and hold Ile Trustee harmiess from and against an claims, losses~ costs,
e'penses. lablHies and clamagas incfudlng lega! fees and e'penses arising frO<n ~
exercise and performance 01 its duties hereunder. No pmvioion in this Indenture shaU
req>Jire the Trustee io risk 0< e'pend ns own funds or olhelwise lncu< any financial
llabl~ hereunder ~. sMn have reasonable groonds for believing Tepayment of SUCh
lunds or ac!equale fndemnny against such Iabilq 0< risk Is not assured 10.. The
Trustee shan no!. be Iable lor any acflOn laken <>r omitted \0 be taken by I In
aOCCloanee wiIh \he direclioo of a majo<fty 01 !he Owners of the p<1ncIpaI amount of
Bonds Outstanding relarlng \0 \he ~me, melhod and place of conducfing any
proceeding Of' remedy available to the Trustee under this Indenlure.
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ARTICLE VM
MOOlfICATK>N AND AMENDMENT OF THE INDENTURE
SlOCTK>N 7.01. Amendmenl by Consen! o! Bond Owners. This Indenture and
lI1e righls and oorogalioos oIl11e City and of the Owners of !he Bonds may be modified
Of amended et any time by a Supplementallndenture which shan become binding
wilen "" _en consent 01 the Owner. a majority in aggregafe p<inCipal amoool of !he
Bonds !hen OJIslanding exclusive of BoOOs disqualified as provided in Section 7.03
hereof, are filed .,tth!he Trustee. No such modiflCalioo 0< amendment shan Cal exlend
lila maluray of Of reduce the inlerest rale on any Bond 0< oIhe,..,ise aner Of impair IIle
oorogafion d !he City 10 pay lhe principal. inlerest 0< reclempfion pramiums al!he U.".
and place and at the rale and in IIle currency provided !herein of any Bond _1I1e
express written consent 01 !he Owner 01 such Bond, (,".-l ,educe 1M percentage 01
Bonds required for !he ..,n1len consent 10 any such amendment 0< rnodilica!iion, Of !C}
_ Is written oonsenllhereto, mocfity any of lI1.e rights 0< obIigaflOns 01 the Trustee.
SlOCTK>N 7.02. Amendment Without Consen! 01 BqmlhQ!ders. This Indenture
and !he rights and obIigafions 01 !he City and of Ihe Owners 0I1Ile Bonds may also be
modified Of amended aI any Ume by a Supplemental Indenture which shan become
binding upon adoption. wi!l1out consen! of any Bond Own",., buI only 10 the exlenl
permilled by law and only for anyone 0< mo<e 01 the Iono,,"ng ptJrposes-
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(al 10 add 10 !he covenants and ag<eements 0I11le City in this tndenlure
contained, other covenants aoct agreements thereafter to be observed. Of 11)
limit Of surrender an If r1gfTts or power hereln reserved to ()( confen'ed tJPOO the
City; or
ibl 10 make such provisions for the ptJrp058 of curing any ambiguity, or
of curing, cooecfing ex supplemenfing any defecfive provis1on contained in lIlis
Indenture, 0< i1 any other respect whalsoever as !he City may deem necessary
Of' desirable 1 provided under any circumstances (hat such modificafions Of'
amendments shan no! aclvereel)' affeclllla interests 01 !he Owners 0I111e Bonds;
(c) 10 provide for lIle issuance of any Parlly Bonds, and 10 j:l<ovide IIle
terms and conditions under which such Parity Bends may be issued, including
buI no! ~mfted 10 li1e eslabiishmOOl of special funds and accounls relaflng 10
such Pa~ Bends and any o!her prOY!sfons ,elanng sclely 10 such Pa~ Bonds,
subjecllO and in accordance wiIh !he provisions 01 Secfion 3.06; or
«!J 10 amend Bny provision hereof relating 10 !he Tax Code, 10 Bny
extenl whatsoever but only if and 10 !he exlent such emendmenl ",m no!
adversely affect 1I1e exernprlOO from federal fnccxne taxafion of interest on any 01
the Bonds, in the opinion 01 Bond Counsel.
SlOCTION 7.03. DjsoIJaijfied Bonds Bonds owned 0< held by ex for the eocoon!
of !he City !I>UI e>eluding Bonds held in any employees' refiremenl fund) shan no! be
• deemed Outstanding for !he PUrplOSS 01 any consenl ex o!her ecfion 0< any ca1culaflOl1
of Outsta:lding Bends in !his arlic1e provided for, ar.d shan no! be entitled 10 consent 10,
0< lake any ofher ac!ioo in !his article provided lex.
~CTION 7.04.. Endoo;AmBOr Of BeglaGf!ment of 800ds After Amec.;Sment
Alter !he e"ec~ve dale 01 any ecfion laken a. harBinabove provided, !he Cltj may
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determine thai O1e Bonds shaD bear a flotaUon,. by endorsement in Jotm approved by
1fle City, as 10 such acfion, and in 1I1al case upon demand 0I111e O>wner of any Bond
CMstanding al socIl effrive dale and presenlatioo 01 N •. Bond lot 1I1at purpose at !he
Trust Office of !he Truslee, a suHabie notafion as 10 such aclion shan be made on such
Bond. • 1110 City shaft so determine, new Bonds so modified as, il !he opinion 01 1Ile
City, shal be necessary 10 cooloon 10 such Bond Owners' aofiOO shan be prepared and
.xecu!ed, and in 11181 case upon demand of 1110 Owner of any Bond CMs!anding at
su¢ll effaclive dale sucfl ne ... Bonds shan be exchanged al 1I1e Trust Office of Ill<.
Ttuotee. wilOOuI COSIIo each Bood O>wner, lot Bonds 1I1en OJIS!anding, upon surrender
01 such OJIstanding Bonds.
SECTION 7.05. AmeadmAn! by Mutua! Consent Tile provisions of lIlis Ar!icIe
V~ shan not prevenl any Bond Owner from accep!ing any amAndmenl as 10 the
parliculaf Bond held by him, provided Ihal due notation !hereof Is made on su¢ll Bond.
SECTION 7.06. Insurer Consent Nol ... iths!andlng 111. foregoing, no
amandmenllo any substantive provisiOn 0I1I1e Indenture may be made ","hout Ihe
prior _en coosenl 01 !he [nsurer, such conaent not 10 be unreasonably withheld.
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ARTICt.E YIII
EVENTS OF DEFAULT AND REMEDIES OF SOND OWNERS
SECTION 8.01. events of [)ef!lYPf and Acce!mafjoo of Maturities The Jonowing
avenls s~an be Evools 01 Oefa"~ hereuncler:
{aj Oela"~ in the due and p.mclual payman! oUhe principal 01 any 800d
when and as the same sMP. beoome due and payable, w~ether at maM~y a.
therein expressed, by p<oceedings 10< redemproo, by eleelaraflon or OIheNiise;
(bl Oelau~ in the ooe and pun<llual paymenl 01 any instaTImeni 01 interest
on any Bond when and as such in1erest instanmen[ s~an become dYe and
payable;
Ie) Delaun by the City in !he observance 01 any of !he covenants,
agreements or conditions on its part in this lnOOnlufe Of' in any Supplemental
Indenture or in !he 80nds contained, and su<:ll <lefaun shan ~ave con~nued 10<
a period 01 Sixty (601 days after the Cny sflan Mve been given noflCe in writing
01 sucll <lelauft by the Trustee; or
!<Il The fifing by the City 01 a petilion or answer seeKing recrganizaflOn or
arrangemenl under the federal ban1<ruplcy laws or any other appflCable law 01
the Unfted Stales of AmeriCa, or i a court 01 compelent jurisd"lCflon shan
approve a petition. filed wilh or witl>out the consent 01 !he City, seeking
reorganlzaflon under the _ra! ban~ruplcy laws or any "tiler appflCabla law 01
the lInned SlateS 01 America, or f, under the p<evisions 01 any oIher law for \he
refief or aid 01 debtors, any court 01 compeIent JurisOlcflOO shan assume custody
or cor!rol 01 the Cdy or 01 the whole or any subslanflal part of ~s property.
Upon the ooctmeoce and during the conUnuance of any Event of Oefauft. the
Trustee may, and upon written nOflce from !he Owners 01 a majOr~y In aggregate
prirq,aI amounl 01 the Bonds althe time Outstanding shall, declare \he principal 01 an
01 !he 8oodo then Outstanding, and the Interest accrued !hereoo. 10 be due and
payable immediately, and upon any such eleela'aflon the same shan become and shan
be inmediately due and payab~e, an)1hing in (his Indenture Of' in the Bonds contained
10 the oontra~ noIWfIhstanding. This provision. oo..ever, is subject 10 the con<IiIion that
if, aI any time after !he principal 01 \he Bonds shan have been so eleelaroo due and
payable and belore any judgment or eleeree lor the payment of !he moneys due shan
~ave been obtained or entered, the City shan <IeposiI. wM !he Trustee a sum sufficient
10 pay an 01 the princ\1al of and Inlerest on !he Bonds llaving come due prior 10 such
decTarafion.., with interest on such overdue principar and irlterest caTcu'afed af the fate
01 Inlerest per annum then borne by the Outstanding Sonds, a nd the reasonabfe
expenses of !he Trustee, and.ny and an olher delauns known 10 lJ1e Trustee (other
than In the payment 01 the p<incipal 01 and interest on the Bonds having come due and
payable solely by reason 01 such <leclaraflonl sha n have been ma<le good or ""red 10
the saflslacflon 01 \he Trustee or p<ovision deemed by the Truslee 10 be adequate shan
~ave been mat1e therefor, then. and ... every such case, the Owners 01 a majorny in
agg<egafe pr'.ncipal amounl oIlIle Bonds at !he time Outstanding may, by wrilIen nof.,.
10 the Cdy and 10 the Trustee. on bella" 01 the Owners 01 an 01 the OuISlanding Bonds,
rescind and annut suc'h d6clarafKWl ana: Its consequences. Ho ... ever~ no sucn
rescission and annulmenl shan eKlendlo or shan affect any subSeq<Jent delauft, or
shall impair Of' eJ:tlaust any righl: or power COI'lSEJqJent 1hereon.
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SECTION 8.02. ApoIlcation of Funds Uoon Acce1erafoo, An amounts received
by the Truslee pursuant 10 any right given or acUon laken by Ihe Truslee under 1I1e
ptovisioils oIlhis Indenture shan be applied by the Trustee irl1l1e lollo\lling order upon
presentation oIl1le several Bonds, and !he siamping Ihereon of the amounl of the
paymenl i only partiany paid, or upon Ihe surrer:d&; :-,ait:\A if funy paid ,;.
Ei!.IL 10 lIle payment of 1I1e costs and expenses <JIlhe Trustee ane! of
Bond o..ners In declaring such Even! 01 Delau1l. lnclu<fing reasonable
COOl'<Iosation \0 lIleir agents, attorneys and counsel, and 10 lIle payment of the
costs and expenses of the Trus1ee~ • any. in carrying out 1he provisioos oIlhis
Arlicle VIII. including reasonable compensation 10 its agents, attomeys and
counsel; and
~, 10 the payment oIlhe whole amounlthen owing and unpaid
upon lI1e Bonds for inlerest and principal. wijh interest on such over"ue
amounts 10 the axlen! permitled by Taw atll1e fate o! inlerestll1en borne by 1I1e
outstanding Bonds, and in case such moneys shan be insuffICient 10 pay In fIJI
lite \IIOOls amount so OWing end unpaid upon the Bonds. IIten 10 1118 payment of
such Interes\, principal and interest on overdue amounts without preference or
priority among such In!erest. principal and interest on OIIer,,"e amounts fll1ably
in P'oportion tJ lI1e aggregate 01 such interest. principal and interest on over<lue
amounts.
SECTION 803. OIher BemWes' 8jgIJts o! Bond Owners. Upon lI1e occurrence
01 an Event of Default, lite Trustee may pursue any av"nable remooy, irl addition 10 the
femedy specified in Section 8.01. al law or in equity 10 enforce the payment 01 lite
principal of. premIum. r any. and inleres! on the Outstanding Bonds, ane! to enforoe any
rights of the Trustee under or with respect \0 this InclenlUre.
I an Event of Delaun shal have occurred ane! be conDouing and I requested so
10 do by !he o..ners of alleast twenty-riV8 percent (25%) In aggregale principal amounl
01 Outstandl"9 Bonds and inc!ernnifiec! as pmvided in Section 6.02 (ll, the Trustee shaP.
be obr'9a1ed tJ exercise such one or more of 1I1e rights end powers conferred by this
Article VIII. as the Trustee, being a<Msec! by ooonse!. shaN <leem most expedient in Ille
interests oIllle Bond 0..08"'.
No femedy by \he tel ms of this IncienlUre conferred upon Of reserve:! 10 !he
Trustee (0< tJ Ille Bone! o..nersJ is inlended 10 be exclusive 01 any oll1er remedy, bu!
each and every such remedy shan be cumura~ve and shan be In adcf~ion 10 any oIher
remedy given 10 \IIe Trustee 0< 10 \IIe Boo<! o..ne", hereunder or now Of heres!! ...
exisling al ra .. Of in equfty.
No <leiay or omission 10 exerCiSe any right Of power accruing upon any Event of
Oelauft shan "'pair any such riglll or pewer Of sflan be construec! 10 be a waNe< '" any
suell Even! 01 Defau~ or a<Xj<Jiesoaooe therein; such rlghl or po .. er may be exerciseel
from time 10 time as often as may be """mec! axpeclient
SECTION 8.04. POWl!! o! Im!!lae!g Conlrg! Prnceec!lngs. In the event 1I1alllle
Trustee. upon the happening 01 an EV8f1( 01 Delault, shan have taken any action. by
ju<flCial proceedngs Of olher\llise. pursuant 10 ns duties hereun""', whell1er upon b
own discretion or upon the request 01 the o..ners 01 a major~y In principal amount of
Ihe Bonds then OuIsIandllll), i shan have !uK po ....... in Ille exercise 01 ils discretion for'
the best inlerests 01 lila o..ners 01 lI1e Bonds, with respect 10 !he ~tinuanca,
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discontinuance, withdrawal, compromise, settlement Of other disposar ~ such actbf1;
provided, however, that the TruS1ee stlan not. uniess 11iere no kmgef continues an
E'lJenlof DefBlult. discontinue, withdraw, compromise Of' settle, Of'" atJ:erwise dispose of
any ~tigafion pending at law 0< in equ~y, iI at tile time lIlere has been filed "'ilh I a
wnllen request signed by Ille Owners of a majo<ay in principal amounl of the
Oulstal"l<1ing Bonds here LInder opposing such ~sconflnuan{;e. withdf'alAlaf,
compromise, settlemenl 0< oth", disposal of $U¢/1 filigaflon. My suit. action 0<
procooding which any Owner of Bonds shan have Ille right 10 bring \0 enforce any r;glll
0< lemOOy hereunder may be brought by lIle TOJSlee for Ihe equal benefit and
protection of an Owners of Bonds similarly situated and the Trustee is hereby
appointed (and !he successive respec~ve Owne,. of !he Bonds Issued hereunder. br
laking and holding lIle same, shan be oonclusively deemed so \0 have appointed it) lIle
!rue and lawt'uI attorney-ln-fact of 1he respective Owners 01 !he Bonds !o< lIle purpose of
bringing any such sui!, action or proceeding and \0 do and perform any and al aels
and Illings for and on be~an of !he ,espec1ive Owners 0I1he Bonds as a class 0<
classes, as may be nscassary Of' acIYisabTe in the op{nion of (he Trus1ee as Buell
aIIorney-in-Iact.
SECTION 8.05. Amjotmenl of 8ecAiVf!tS. LP>n Ihe occurrence of an Evenl of
Delauft hereunder, and upon Ille firang 01 a su~ 0< other commencemenl of judicia!
proceedings 10 enlorce the rigI1ls of !he Trustee and 0I1he Bond Owners under Illis
Indenlure, the Trustee shan be en~ed, as a malter 01 righI. \0 the appointment of a
recetver 0( receivers of the Net Reven ues and other amounts predged t..areundef ~
peodjng such proceedings, with such powers as the court ma1<ing such appointment
shan CO(lfer.
SECTION 8.00. Npg-Walyer. Nothing in 1/1is Article VlIT or in any other
ptovision oIlllrs In<fenlure, 0< In lIle Bonds, shan afleet 0< Impair lIle cbftgation 0I1he
CHy, which Ts absolute and unconditional, 10 pay tI\e Interest on and prlncipaf 01 !he
Bonds \0 !he respective Owners of lIle Bonds al !he respective dates 01 maturily, as
herein provided, out 01 the Net Revenues and olller moneys he rein pledged for sUCh
payment
A waiver 01 any delaun 0< breach 01 duly or contract by lIle Trustee or any Bond
Owners shaft not allecl any subsequent defauft or breach 01 duty or oonlracl. 0< impair
any righls or remedies on any such subsequent delau" or breach. No delay 0<
omission of the Trustee 0( any Owner of any of the Bonds 10 exercise any right or
power accruing upon any c1efauft stlan impair arLy such right or power or shan be
construed 10 be a waiver of any such default Of an acquiescence lt1ere~n; and every
power and remedy conferre<! upon the Trustee Of Bond Owners by the Bond lallt or by
t'Js Arlicle VIII may be enforced and exercised from ume 10 ~me and as often as s!lan
be deemed expedent by !he Trustee 0< the Bond Owners, as the case may be.
I a sui\, action 0< proceeding 10 enforce any fighl 0< exercise any remedy Is
abandoned 0< determinOO acNersely to Ille Bond Owners, Ille City and the Bond
Own",s shan be reslored \0 lheir former positions, rights and remedies as I such sui!,
action '" proceeding had not been broog/lt 0< "'ken.
SECTION 8.07. Bjgbts and Remedies o! Bood Ownelli. No Owner 01 any BoOO
issued hereuncler shan have lIle right to institu1e any sui!, ac~on 0< proceeding at law
0< i1 eqully, for any remedy under 0< upon !his Indenlure, unless [aJ such Owner shaR
f'Iave Pfeviousry given 10 fle Truslee written notice of Ihe occurrence 01 an Evenl of
Default; lbllhe Owners o! a majo<ay i\ agg'B9ale principal amount 01 an Ille BoOOs
then Outstanding shan have made ""rtten request upon 11\e Trustee 10 exercise 111e
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PQWBfS oofeinbefora wanted Of" \0 institute such actiQ('t.. suit Of proceeding in its own
name~ te} said Owners shan have tendered to the Trustee in.cfemt'lity reasol1sbf}l
a~Bbfe 10 the Trustee against Ihe ccsts~ 8)(penses and liabilities to be incurred in
compIIancewi!h such request; and !dl 1he Trust6e shan have refused '" amined 10
comply with such r~ for a pe<iOd 0( slxty (60) <la~s after such .. ri\1en request shan
llave been received by, a nd said \8OOer 0( lndemnfty shan have been macle 10, the r...-.
Such notificaflon, raques1, lender 0( Indemnity and refuSal ()( O<nission are
herelly declared, In every case, 10 Ile c:ooditioos prececlenl 10 the exerelse by any
Owner 0( Bonds 01 any ramedy hereunder; Illeing uOOerslood and Intended !hal no
one '" more Own .... 01 Bonds shan have any right in any manner wIlatever by his '"
lhelr acIion 10 enforce any right under IIlls Indenture, •• capt in th8 manner Mraln
provlded, and thai an proceedings at !aw or In equity 10 enforce any provision 01 lIlis
Indenture shan be inslilllied, had and maintained in 1he ma~ herein provided and
for \he "",aI benef4 01 III Owners 01 1I1e OutsIanding Bonds.
The righI 01 any Owner 01 any Bond 10 receive payment 01 the princlpaT 01 and
Interest and premium (If any) on such Bond s, herein provided '" 10 InstlMe sun for 1I1a
enforcement 01 any sueh pa.}menl, shan not Ile Impaired or affected wilhOulllle wrinen
oonsenI 01 such Owner, nor..nhstending the foregoing provision. 01 this Sec!iorr or any
<>!her provision 01 this 1ncIentlJre.
SECTION 8.08. TeqnlnAfjQn of prllCeAl'fing~+ L1 caSe She Trustee shan naVB
procoocled 10 enforce any riglll under lIlia Indentu,e by \he appoinlmenl of a receiver or
0IhefWiSe. and such proceedings shan have been disconfjnued '" abandoned for any
reason, or shan have been determined adversely, \Ilen and in f1Very such case, the
City, IIle Trustee and the Bond Owners sha. Ile resfored 10 \heflformer posiuons and
rights hereunder, rll8peclive1y, wftIr regard 10 !he property sutljed 10 this inden1ure, and
aR rigIlIs, remedies and powers 01 the TruS1ee sh .. oonfinue as f no such proceedings
had been laken.
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AATlCt.I IX
MISCELLANEOUS
SECTION 9"01. Umj!ed Uablljty g{ CW. Nolwilhstanding anylfling in litis
Indenture eontalnec\. ... e City ""aft noI be required 10 atNan<:e any moneys dellved
t-cm IWlY 80Ufce "'Income oIher lItan II>e Net Revenues for lite payment g{:he principal
<it or _881 on lite Bonds, or any p<emlums :JjlOO lite redempl'lOI1 lItereof. or for ....
performance of any covenan!e ~Ofeln contained (excep! 10 lite extent any SUCh
_ are .",,988Iy payable ~r.undet from lite Gross Revenues). T~ City may,
,-"" advance tunds for any 8uc11 purpose, P<Oyided \Ila! SUCh funds are deIived
ton a IOUfC8 legally avalTallle for such purpose and may be used by lite City for SUCh
~ wiIhouI i1curTIng 1ndebtednesa.
SECTION 9.02. Ben. g{ IrxlenllJrt blmW Ip parties Nothing In lIlis
_ ... expill888d or irfllIled, Is 1nIende<! 10 g1va 10 any person OIher lItan II>e City,
"" T"-ancI .... Owners g{ Ihe 800ds, any r1p1rt, rem6c!Y or claim under or Ily
reaeon of Ills Indenture. Any covenan!8, 8!!pulaflOl18, promises or agreernen!8 in "is
lndonIu'e corrIat1e<I by ancI on beNd <it \I1e City ""an be for Ihe sole and exclusive
beneII <it ... T_ ancI "" Owners 0( lite Bonds"
SECTION 11.03. Q!acl!arge oIlndenllJre .. "" City s~aR pay and discharge any
or ell of tie OuIsIanding Bonde in anyone or more 01 \I1e foIIowfng ways:
(8) by wei and INly paying or cau81ng 10 be paid lIle pflncTpa/ g{ and
r.!e<881 ancI premium (If any) on SUCh Bonds, sa ancI ~en lite same become
ciJe ancI payable;
(Ill by depoeiIing wttI1lhe Truolse, in INs!. at or before maturty, money
wIIidI, IOg8Ulef wttI1 !he avan_ amounts lIten on deposit In lite Iuods and
accounfI ~ purauanllO litis Indenture, 18 funy sufficient 10 pay SUCh
Bonds, Inckdng aJ prIncIpaf, t'IIer881 and rec!empDon premiums; or
(e} Ily depoeIIlng with a qualified escrow ~oIc!e" In trus!. Fade"!
Seeurllk>t In IUCh amount aa lite City (verilled by an Independent c.r1lfied
I'I.ClfIe AccounIanI) sIlen delOfmlne will, Iog~er wl1h lI1e Werts! 10 _rue
!hereon ancI avaJ!ab/e moneya lIten on depo8~ In lite Funds and Acoounts
.. blIoIIed pur_ 10 "ill 1nderrtura, be funy 1uff'K:1enl 10 pay and dlscllarge
tile In<MbIedneaa on auch Bondi (inK:ludl ng an prlnclpel, Int.,est and
tadelliJll!oo i pr"""""J 81 or bliloo.flaIr reepec:tlve tnalurlly del";
..., r ftICII BoncSt .. e to b<!I ladeemed pfIor to lite matu,ay Iheraof notice of aucI1
redempllon IIIaI lie •• been mailed putluanl 10 SeC!lon 2.02[d) or prolllslon
, 1I *") to "" T.-than have been made lot toe mamng 01 suclo noIice, Ihen. II
lie ~ of fie CIty, III1d noIwiIhllanding "81 any of IUch Bonds ""aft no! have
IINII ........... ecI for payment. IINI pleclge of Ilia Nel Rev."".. and alit ... funds
p\WIded lot t\ "II Indenture wIlh reapecl to such Bonds, and an ot>oer pecuniaI)'
oM9*"iI 0('" CIty under thfIlndenIu,. wttI1 raspecllO an such Bonds, wI ceasa
..., 1Io",,*-, aoapI only !he cobIIgetIon of !he City 10 payor causa 10 b<!I paid to II>e "'"*' of ....", BoncSt no! eo I<lrrendarecl and paid an sums due llie'eon from
_ HI ..,.,. lot IUch pu<poM as atota,ald, and all expenses and costs 01 ...
TMfee. HoIIce of IUch aIecGon that! oe lied ..ttto lIoe Truolee.
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Any 1unds therea"er held by the Trustee~ which are not required fot said
purposes, shan be paid eve: 10 the City.
Refunding bonds may be iSSued at any time .. ..-rthoul regard 10 w!le1!1er an Event
Gf Default exists,
SECTtON 9.04. Successor (, Deemed [ncJpded in ,6." Befereoces 10
pr9dftc9S59'_ Whenever in this lndenture 01' anJl Supplementaf lndenlure either Iha
City Is named 0< referred 10, suc~ rererence shan be <1eemed 10 O>clude !he successor
10 !he pow"", duties and functions, w~h respect 10 1I1e management. admlntstraMn
and control 0( 1I1e aflalrs oIlhe City, thai are presenCy ves1ed in 1I1e Ctly, and an the
covenants~ agreements and prO\lisfoos contaTned in flis Indenture by or 00 behalf of
Ihe City sIlan !lind and Tn ure 10 1I1e benefit 01 its successors whell1 Of so expressed 0<
not
seCTION 9.05. Contan! 0( Cer!ifica'ftS EV9l)l certifICate with respect 10
comprl8.nce ",ijh a condition or covenant prevlded for Tn !his Indenture shan include (a)
a Slalemen! lila! Ille person or persons making or giving such certificale have read
suet! covenant or cooditlon and the definitions haTern relaflog U'lereto; ~ a bflef
statement as 10 the nalure and scope of Ile examinafion Of investigation upon whrch
!lie sratements or opinions contained in such carti1ica1. are based; (cJ a statemenl1ha~
in !lie opinion 0( lIle sfllners, !hey have made or caused 10 be made such exam maflOn
0< lnvestigatioo as Is necessary 10 enable lI1em 10 e'",ess an .,rormed opinion as 10
wllel!1er 0< no! such covenant or condilion has been comprlOd with; and (d) a statemenl
as 10 whether* in the opinion of 111e slgners, sum cond"ffK>n Of' covenant has been
COf14lIIed wUh.
Any suell cartifica!e made 0< given by an orocer 0( "'e City may be based.
insofar as i relates 10 legal maners, upon a car1i!ica!e CJ( opiniOn 0( 0< representarlOns
by counsel. unless such officer knows (hal the cartiflcate CJ( opinioo or representations
with respect 10 the mailers upon which his certifICate maybe based,as afo<.said,ar.
erroneous~ or in the eXSfcise of reasonabfe care should have knovm Shat 111e same
were Sfroneous. Any such certifICate Of opinion or repl"esenfafion made or given by
counser may be based. insofar as i relates 10 factual matters, on informaPon with
raspec! 10 which is ., !he possession 0( 1I1a City, upon the cartiflCale or opinion 0( or
represenlaf"",. by an ofIIcer C!( oflicars 0( lI1e City, unless sucI1 counsel knows (hallhe
certiflC.ale 0< opinion 0< representaVoos Il'ith respec110 111. matlers upon which his
carti1ica1e, opirUoo 0< represanlaf"", may be based, as aforesaicj, are erroneous. or in
tfle ellercise or reasonable care should have known 1hal1he same were erroneous.
SECTION 9.06. EmcyflQo of OOcyments by Bood Owners, Any request.
consent 0< oIhe< Instrument requked by lilts Indenture 10 be signed and e'ocUled by
Bond Ow"",. may be., any number 0( concurrent writings 0( substan~a~y sim,lar !&nO<
and may be signed or execufed by SUCh Bond Owners in person 0< by agenl or agenls
clu!y appointed in writing. Ploof 0( !he execution 0( any such request. coosenl 0< _
Inslrumenl 0< 0( a writing appointing any sucI1 agent. sflan be suffocienl for any purpose
0/ !INs Indenlur. and shan be conclusive in favor ollila Trusree and 0( the City f made
in 111. manner p<0IIided '" lhis Sec!ion 9.0S.
The lac! and dale 0( Ihe e'ecution by any petSOO 0I9ny sueh request. consent
or oll1er instrumenl 0< writing may be proved by !he aflidav~ 0( a witness 0( sueh
execuroon 0< by the certiflCal. 0( any no!ary pubrlC 0< oll1er off,"", 0( any )urisdic!ion.
au1hortzed by !he law. thereof 10 lake acknowfedgmenls 0( <leeds, certifying 1I1alll1.
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person signing SUCh request. consenl Of other instrument Of" writing acknowrecSged 10-
him 1l\e execution tot1oreof.
The ownership 01 Sonds shan be !"ollided by the Bond Reg1slratiOil Books.
MY l~ """""'" '" vote oIlhe <Hner 01 any Bone! sl\an bind every Mure
<Hner 01 the same Bond """!he Owner 01 any Bond issued in exchange therefor ()( in
lieu theleol. in respect 01 anything done or suffered 10 be done by the Trustee ()( !he
Cily In pursuance 01 sucI1 request, conS<!nt or vole.
In determining whether 11'Ie Owners of the requiSile aggregate pfinc~a' amount
of 80nds have concurred in an'J demand, request, c:fir&cfion. consent or waiver under
lIlis Indenture. Bonds which are owned 0< held by 0< 10< lI1e aceou nJ oIlIle City !bUt
excluding Bonds held In any employees' r.~rement fund) shan be disregarded and
deemed 00110 be Outstanding 10< the purpose 01 any such de1ermina~oo. provlded.
however. IIlaIIO<"e purpose 01 de1emnining wIle!het the Truslee s~an be protected In
reTying on any sucIl demand. request, direc!ion, consent or waiver. only Bonds wIlic~
Ihe Trustee 1<nows 10 be so owned '" held s~an be disregarded
In leu 01 obfaining any demand. request. di recflOn, oorsenl '" waiver In writing,
Ihe Trustee may can and hold a meeting oIl1le Bond Owners upon such no!ice and In
aCCOfdanca with such rufes and OOf'igations as (he Trustee considers faTr and
reasonable"" tie purpose 01 oIlIaining any such action.
Sl:CTICN 9.07. WaiVer 01 persona! Ljl!bilil)!. No officer. agenJ or employee 01
Ihe City shan be individuany or personany !abla 10< the paymenl of the inlerest on '"
principaJ 01 !he Bonds; but nothing Mre!n conlained s~an refieve any such offioe<.
agenI or employee from Ihe performance 01 any offICial duly provided by la",_
SECTION 9.08. Pamal Inyancfity~ It anyone or more ol1he covenants Of
agroomenls. 0< porIions 1I>.,eoI, provided in tliS Indenture on 1I1e part 01 !he City (or of
the Trus1ee) 10 be pertormed s~O\Jld be conlrary 10 ra .... tIlen such covenant 0<
covenants. suell agreement or agreemenrs. or such poroons Ihereof. shan be nun and
void ane! shan be deemed separable from 1I1e remaining covenanls and agreemenls or
porIions Ihereof and shan in no way .necllhe va[Kfrty of 1I1is Indenture", 0I1he Bonds;
but !he Bond o.rners shan relain an 0gI11s and benefits accorded 10 Ihem under !he
Bond law or any Olher appflCallle provisions 0I1a.... The Cily hereby declares 1ha11
would ~ave entered info Illis Indenture and each and ev",¥ other seclion, paragmp/l,
SubcflVis~ sentence~ clause and phrase 'hereof and IIIould 'have authOrized Ule
issuance of the Bonds pufsuant 'herelo irrespecti .... e of the fad that anyone or more
secrlOns. paragraplls, subdivisions, senlences, cia uses or phrases oIlI1is Indenture or
the appncafion 1hereol 10 any person Of circumstance may be l'Ield 10 be
ui)cooslituflOllat. unenlO<caabie or irwaM.
Sl:CTK:lN 9.09. Des!rucflOO of Cencened Bond:;. Wllenever in this Indenture
provision is made 10< the surrender 10 the City 01 any Bonds ~ich have been paid or
eancened pufwanllo the provisions of lhis lndentuT8, the Trustee shaft dest10y sucll
Bonds and Iumisl1lo the City a certifica!e 01 such destrucflOn.
Sl:CHON 11.10. Funds and AcoounlS Any Fund or Aocount required by tlis
Indenlure 10 be estaNished and mainlained by 1I1e C~y 0< 1M Tru&!ee may be
eslabrlSMd and maintained In 1I1e accou nnng records of tile Cily ()( !he Trustee, as !he
case may be. either as • Fund '" an Accoun~ and may, 10< the purpose 01 such records,
any audits tIlereof and any reports or stalements wi!h respect thereto, be Ireafed either
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as a Fund or as an Account All such records with respect 10-an SLich Funds aoo
h:counIs lleld by D>e City sl1an at an times be maintained in accordance wrth generany
accepted accounting p"inciples and an such records wrth respect 10 an such Funds and
Accounts hold by !he Trustee shan be at an times maintaioed in aC<:Ofdance wilh
indust<y p<adices; In each case wrth we regard lor tho p"otectioo 0I1he security r:J the
aooos and 1he rlghlS 01 INert 0.._ 'Itlereol.
SeCTION 9.11. Notices. An~ notice, reques!. complain!. demand,
oommunlcaflOO 0< OI/ler paper shan be 8uffICienny given and shaN be deemed 9'ven
Vtl1ef1 delivered 0< mailed by regislered or certified man, postage p"apaicl, or sent by
1elagam, addressed as JoIIaws: r 10 the City, 10 City 01 Palo AIIo, City Han, 250
Hamillon Avenue, Palo Mo, car~ornia 9430 I, A!tention: Director r:J Finance; and if 10
the Trustee, 10 the Trust OffICe. The City and the Trustee may designata any further 0<
different ac!dresses 10 whlcl1 subsequenI noticeS. certificales 0( othar ccmmunlCatlons
s/lan be sent.
seCTION 9.12. Uncra;med Moneys. Anything in this Indenture 10'" conIrary
_hstanding, any mIOOBys hald by the Trustee in lruSl lor \I1e payment and
discharge 01 anj of .... Borlds whfeh remain unclaime:t lor two (2) years afte< the date
when suc11 8000s haVe become duo and payable, eitt ... at their slated maturity dates
at by can lor earfoe< redemp!ion. f SUCII monays were lle1d by \I1e Trustee at such dale,
0( lor two (2} years after the dete r:J deposit r:J such moneys , depo5l1ed with \I1e
Trustee art", said date wilen Buch Borlds t>eccme due and payabre, shan, at tile
Requesl althe City. be repaid by \I1e Trustee 10 the City. as h absolute p<oparty and
tree from trust. and the Trustee shan thereupon be relaaSled and dlsc11arged wrth
respecllhereto and tile aooo Owners sha! i0oi< only 10 IDe City lor tf1e payment r:J such
Bonds; provided, howev"" that before being required 10 ma~e any 5IUCl1 paymenllo \I1e
City, tf1e Trustee shall. at Ihe e'pense r:J 1I1e City, cause 10 be maPed 10 IDe Own .... of
an sueh SOOds, at 1I1e" respective addresses appearing on \119 SOOd Registration
Sool<s, 2 notice that said moIleys remain unclaimed and IDaI. aft", a clale named in
said nonce. whlcl1 date shan not be less IDan 1I1irly (30) days after the date r:J mafing r:J
such notice, tile balance r:J suc11 moneys then unclaimed ... ilI be re1urned 10 lhe City.
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IN WITNfSS WHE~OF, 1I1e CITY OF PALO ALTO has causOO Ihis Indenture 10
be signed in lis name by fts Mayor and ft. seal 10 be affixed hereon and alIesled by ft.
City Clerk. and Securfty Paciflc NalionaJ Bank, in toI<en 01 Is accoplance oIlhe \rust
trooled hereundef, !las caused this Indontura 10 be signed in ~s OJ<?O<a!e name by iIs
()Ificer identified below, al as 0I1I1e day and year ftrst above _art
(SEAl!
AIIest
BI_~~~~~~ __
City CIeri< 01 tle City 01
Palo Afto, california
CITY OF PALO At TO
BI __ ~~~~~.-__
Mayor 0I1I1e City 01
Palo Afto, california
SEOJRITV PACiFIC NATIONAL -
SANK
By _____ _..-:-=-:-_
Assistanl VICe Presidenl
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EXHlsn -14.-
fORM Of BOND
UNITED STATES OF AMERICA
STATE OF CAlIFORNU\
COUNTY OF SANTA ClARA
CITY OF PALO ALTO
o
UTILITY REVENUE REfUNDING BOND
1990 SERIES A
00. __
INTE~TRATE
$_-----
MAD Jfl!IY WE PATED DATE ~
REG1STERED OWNER:
PRINCIPAL AMOUNT: OOLlARS
I.Inder and by Yirlue of Chapler 12.28 of Tille 12 of Ihe Palo Me Municipal Code
{Ille "Codei. and Article 9 (commencing wijh Se<;~on 53550) and Article 11
(commencing wijh Secfion 535801 of Chapter 3 of Part I of Division 2 of Tille 5 of 1I1e
Governmenr Code of !he Slale (coIIecfrvely,lIle "Bond Law"). 1I1e City of Palo Aile [lhe
"City"). a municipal eo<p<>ra!ion operafing under a freeholders' charier in Ill. County of
Santo Clara, Slale of eafrfomia, "" value received will (subject 10 any right of prior
redemption hereinafter prOYlded for). on It1e Malurijy Date specified above, pay 10 111.
Regislersd Owner named above, or regislered assigns, [lIle 'Owner;, Ille Principal
AmolroI staled above. in lawful money of !he UnlIed SIal .. of Amer!ca, and pay inferest _eon in like lawful money from fle Interest Paymeill Date (as hereinafter defined)
nell! preceding !he dale of authenrocarlOO of lIli. Bond (unless (i) 1I1i. Bond is
aU1TlenfiCaled on an Interest Paymenl Dale, In which event. sha" bear interest from
sucl1 cIa1e of au1henllca1ion, 01 ['11h1o Bond is ault1enticaled prior 10 December I, 1990,
In which evenl I shan bear In!erest from lIle Daled Dale slaled above; prevlcled,
however, 1I1a1 f al!he time of euthen1icalion of !hiS Bond, Inlerest 10 In derau~ on "is
Sond. Ills Bond shal bear In!erest from It1e ln1erest Paymenl Dale 10 which ln1erest has
previously been paid or made avanable "" paymenl on IIlls 80ndj "nm paymenl cA
such Principal AmounIin ful!, al!he Interest Rale per annum staled above, payable on
June I and Decembe< I In each year, commencing Decembe< I. 1990 (each an
"1nteresl Payment Dalo"). calculated on lIle basis of a _y year w.-nprised 01
1woIvo ~y monIIlS. Princ1Jal hereof and premium, f any, uPOn earty re<lempf;oo
hereof are payable at It1e corporale frust office of Secur~y PacifIC Naroonal Bank (the
"Trustee"). In San FranciscG, Canromia. inleresl hereon Oncluding !he final meres!
A·f
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paymenl upon marur~y or earlier redemplion) is payable by check or dralt 0( !he
Trustee mailed to the Owner at the Owner~s address as I: appears on the registration
books mainlained by 1I1e Trustee as o(!he close 01 business on 1119 Ofteenth (15th) day
oflhe monlh next preceding .uc~ Inleres! Paymenl Dara. or ., such oIher acldress as
the Owmet may have tiled with !he Trustee for 11181 pu!poSe.
This Bond is one 0( a duly auIhoriz ed Issue of 8onc!s of !he City desigoaled as
~s urrty Revenue Bo."lds" [the "-"j Issued and 10 be issued in various series
undef and pursuant 10 Ihe cMller 0( 1I1e City and 1I1e Bond law 8 nd under and
pursuant 10 an Indenlure of Trust (the "Indenture, by and between 1I1e City and 1I1e
Truslee. daled as 0( August I, 1990. and approved by Ihe C~y by ResolutIon No.
__ • aOOpIed by 1I1e Council 0( !he City on • 1990 (!he "Re .. ,M;""1-
This Bond is one 01 a setfes of Bonds of various maturities deslgnated as ·Utility
Revenue FI&lun<1ing Bonds, 1990 Series A" (the "1990 SeOes A Bonds"), Issued. in fle
al19<egala prlnclpa! a"""JoI of S • an of fika I.....,.. (e,cept for such
variation. i any. as may be required 10 design_Ie varying numbers, malurilies.1n19res!
rales Of redemption prOYIslons}. and Issued under 1I1e Indenlure. Copies 0( 1I1e
Indeolure are on 61e at 1I1e of!ioe of !he City CklrI< and 81111e above-menlioned office of
!he Trustee and reference to the Indenture and any and an supplemenls 1I1erelo and
mOOl1icaflOf1s and am9OOm&oIs lIlereof and 10 \he Bond law Is macle for a clescription
0( lie Iem1s on ~ich !he 1990 Series A Bonds are Issued. !he provisions "'tlh regard
10 1I1e nalure and extan! of 1119 Net Revenues. as Ihat larm Is clefined in Ihe Indenlure.
and !he rights 011119 Owars of!he 1990 Series A Bonds. .... 1I1e lerms 0I1he Indenlure
and 1I1e Bond law are hereby incorpofaled herein and constitute a contract between
!he City and lIle Owner from ~me 10 fime of 1I1is 1990 Series A 8on<!, and 10 an 1I1e
provision. !hereof 1119 Owner 0( 1I1is 1990 Series A Bond. by acceptance h..-eof.
consenls and eg<ees. Each taker and subsequent Ow ... hereof shan have r8COlJrse
10 al of !he proVisiOns 0I111e Bond law and !he In<lenlU .. and shan be bound by an 01
\he lerms and condiIionS !hereof.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
BOND SET FORTH ON THE REVERSE HEREOF. WHICH FURTHER PROVISIONS OF
THIS BOND SHAll. FOR All PUfIPOSES. HAVE THE SAME EFFECT AS IF SH
FORTH IN THIS PlACE .
• Is hereby certified 11181 an 01 !he 1I1ings. con<f<lions and aClS required 10 exist. 10
have MPPened or 10 have been performed precedent 10 and In 1I1e iss<Jance 0( 1I1is
Bond <10 exist. have MPPened or have been pelformed OJ rue and regular fime and
manner as required by lila laws 01 !lle Stale 01 CaliJomla and 1I1a! the amounl 0( Ihls
Bon<!. loge1her wi1l1 an 0111 ... Indeb!edness 0( lila CitY. <Ioes not exceed any nmft
prescribed by any laws altha Stale of carlfomia. and Is not in excess 0I1I1e amoun! of
. Bonds pormilled to be Issued undef \he Indenture.
This Bond shan not become vand' or obIIgalory for any purpose or be entitled 10
1I1e _ of the IndenIUre until !he oertilicale 01 a tJ!henVCaflOn and registrafion
I1e<eoo shan have been sigoed by an authorized officer oIlhe Trustee.
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IN WITNESS WHEREOF, 1118 City 01 PaTo Ana has caused \I1js 1990 Series A.
-Bond 10 be executed in tis name and on itS behalf with tJ1e manual Of facsimile
signalur. 01 iIs Mayor and ~s seal 10 be reproduced hereon and attested by ,..., manu at
'" lacs1mn. Signature oils City CIeri<, an as 01111. ___ day of ____ ~ ~_~~_,
19_,
CITY OF PALO ALTO
A.TIESl:
(FORM OF TRUSTEE'S CERTIFICA IE OF AUTHENTICATION)
This is one 01111. Sooc!s c1esctibed in lila wilhin-mentiooed Resolu!ions~
A·3
SECURITY PAClFIC NATIONAl
BANK
as Trustee
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(FORM OF REVERS!: SlOE OF ALL BONOS)
The 1990 Serie. A Bonds have Deen Issued by lila Council 10< It1e purpose 01
refunding an oIlIle O<J1Slanding Utility A<lvenue Bonds, 1985 Series A Adjuslable,
Convertible, Exlendable SecuriUes·J.~Ssm. lnclOOng an COSIS 01 Tssuance and
Incidental eKpenS6S in connecftOfl therewith, 'lllhIcl"1 Viere rssued 10 prOVk:fe funds for
tie acquisition and constructiOn: of additions, bebermenls, extensions or imp!'ovemenls
10 an Enlerprlse consisting 01 the water, sewer, gas and eIec1ric systems oIlIle City.
The 1990 Serie. A BoodS .re special obIigafions oIlhe City and are payable, as 10
Inleces! thereon. principal lIlereof and any premiums upon lIle redempfion 01 any
lI1eteol, from Ihe net _es 01 the Enle<prise as redefined In It1e Resolufoon and the
Inden!ure 10 !ncIude II1e .urfaca and 8lorm water system 01 lIle City (which net
revenues. as more par1icula~y redefined In !he A<lsoMion and lIle Indenture are
IIlere.n and herein called lI1e "Net Revenues.,. AI oIlIle Bonds are I>QU any secured bY
a pledge 01. and charge and ~en upon. an 0I1Ile Net Revenues, subjed only 10 the prior
!!en oIlIle pledge given 10 secure Ih<I outstanding City 01 Palo AIIo Utility A<lvenue
Bonds, 1983 Series A. and IIle Net Revenues constittJ1e a IrUstlund 10< lI1e security and
paymenl oIlhe :rnterest on and prinCipal 01 an re<femption premiums, i any, on an 0I1he
Bonds. _naf series 01 Bonds payable torn II1e Net A<lvenues may be Issued on a
parly with lIle 1990 Series A Bonds oIlIIi. aulllorized issue. but only subject 10 lila
COfl<itions and Im~8IiOn. conlained rn lIle 1ncIen!ure.
The _res! 0<1 and p<lncipa! 01 and redemp60n premiums, f any, on II1e Bonds
are payable solely from lIle Net flevenues pledged 10< lIIe paymenllhereol, and the
City is no! obIigafed 10 pay lhe Bonds e.cap! from the Net Revenues. The general fund
oIlIle City is nol Rabie, am! II1e fuD fai!f1 and crlKft or laxing power 0I1he City Is 1101
pledgOO,lo< IIle payment 0I1I1e inlerest on or principal 01 or redempfion p<emiums, I
any. 00 the Bonds. The Bon<!s are no! secured bY a legal or equitable pledge 01. or
charge. roen or encumbrance upon. any 0I1he properly 0I1fle City or any 01 h income
or rece4JIs. excap! Ihe Net _nues.
The City oovenants lIla~ so long as a"y 0I1he Bonds are outstanding, I will fix,
prescrbe and collect rates. fees and charges n conne<:Iion with the services, fadlmes,
water. gas and electric energy furnlsl1ec! by lI1e Enlerprise so as 10 ~ield Nel Revenues
at least equaTIO Ifle amounts lI1eteof prescrlbed b~ Ihe Indenlur. and su l!icienllo pay
Ihe :rnterest on and principal 01 and redemption p<emiums, I any, on lIle _ in
accordance w~ II1e provisions 0I1fle Indenture.
The 1990 Series A Bonds are subject 10 redemplion on any inlerest payment
date withou1 premium onder the circumstances prescribed and as provided' in the
Indenture. althe op6on oIlIle City, a. a wIlOIe or in part, Ihrougllthe app!iCa!ion 01 net
proceeds oIinsOfanee and eminon domain proceedings.
Booc!s maturing on Of before June f, 1999, are no! otherwise subject 10 opfiooal
redempliOn p<ior 10 malurly. Bonds maturing on or aner June 1.2000, are subject 10
redempfoon prior 10 their respecti'le maluril~ dales, BIllie option 01 the City, as a whole,
or rn part In inll9fS8 order 01 malurities and by 101 within a Iflatur~, from any SOUrce 01
avaITabie fuods, 00 any lnIerest Payment Dare on or aner June I, 1999, a' Ifle following
respective redemptioo priCes !e.p<essed as percentages oIlIle principal amount oIlhe
Bonds 10 be redeernedl, plus accrued Interest II1ereon 10 the date 01 redemption:
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8ftdemoljoo Dale
June I, 1999 and Decembet I. 1999
June " 2IlOO and DecembE!1 1.2IlOO
June 1,2001 and 1I1ereefta<
RedAmptjoo price
102%
101%
100%
As provided in 1I1e t1denIura, notice 01 redemption SIlan be maned by first class
mail no less !I1an 1I1lrty {3OJ nor mo<e Ihan olxty (6Ol days pflO< 10 \he redelT'¢oo dale
10 the respecfive owner 01 any Bonds clesigoaled for redemption at their address
appearing on the Bond regislration booI<s maintained by the Trustee, I>Jt fa~urelo mal
or 10 recelva such noOee, or any defect In the notice 80 maned, SIlan no! affecl lila
sullicTency 01 the proceeds lor redemplior>-
If Ihis Bond is called lor rederrplion and payment is duly ptovided Iherefor as
specified rn the Indenture, 1n1a<9SlshaJ cease 10 accrue hereon from end after Ihe dale
bed lor rOOemp6or.
The 1990 Serles A Bonds ara issuable as tufty regiSlered Bonds, wit/IouI
<XllIjlOns. in danorninafions 01 $5,000 or any ln1egral mu ~iple Ihereof. Subject 10 Ihe
imitations and conditions and upon payment 01 the c~arges, i any, as ptovided in 1I1e
Indenlur., Bonds may be excMnged for a like 8jjgregafe principal anneu", 01 1990
Sellas A BoncIs 01 olI1er authorized denominations and 0I111e same malurity. .
This Bond is transferable by Ihe Owner hereof, in person. or by his al!Omey duly
authorized in writing, at said oIfice 0I1he Truslee in San Francisco, California, but only
In 1I1e manna< and subject 10 the fimnalions ptovlded In the Indenlur., and upon
surren<!e< and cancellation 011111. Bond. ~ registration 01 such Iransf ... a new Bond
. or Bonds, 01 any aulhorlzed denomination or denorninatiooa, for the same aggrege!e
ptlnc~ amoonl and oIlhe same ma1urty wm be Issued 10 "e Iransferee In exchange
herefor.
The Cfty and the Trustee may \rea! 1I1e Owner I1<!reoI as lIle atxsolute Owner
hereof lor al purposes. and 1I1e Cl1y and 1he TNslee shaW no! be affecled by any notice
10 1I1e contrary.
The Indenture may be ameoded witIIouIlhe consent altha Owners 0I1he Bonds
10 1he extenl set forIh Tn Ihe lnden!ur8.
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ABBRc'ltATI(~~
Tha folio,"" ol: abbrevIations, wilen use<! In l1a Inscripllon on !he lace of !he
","n Bond, s~a! be construed as flough they "'era ... ,;tten 0..1ln fun 8¢G()fdlng 10 "po _ fa .... or ,egulB!ions:
TEN COM
TENENT
JTTEN
as lenants In oommon
as len.."" by "" oolltaUes
as JoinllenanlS wi1h rigIlI 0(
_ill and no! as lenants In common
UNIF GIFT MIN ACT -Cuslodlan
ICus!) (Minor}
uncIer UnIform GJIIa 10 MirlOfS Act
(State)
AOOTIONAl ABSREVlA TIONS 1M Y ALSO BE lISEO THOUGH NOT IN THE LIST
Al!C>I£
ASSIGNMENT
For yalue _ tile undersigned hereby sens. assigns and Iranslo'. unto
.,-...,._"..,,-,-~-=-_ (Name. Ackfress and Tax ldenlllicalion or Social Security
Numbe< of Assignee) tile wlthin-reglslered Bond and hareby Irrevocably conSllMe{s]
and appoInt{s] attomoy, 10 Iransfer the
same 00 flo bond regislra!IOO l>ool<3 of tile Trustee with lui po_ 0( sullsti1u!ion In lIlo
premises.
Oalo<l,
Signafufe Guaranteed:
Nora: Signafure(8) must be gua'anteed
by a member firm d tile New YOIl< StocI<
Excflange or a comm8fCial bani< or lrust
COfTllBny. -
Noro: The 8ignolu'8(5) on thiS
Assignment must correspond iii'" the
namo{s] 8S wrillen on the face of tho
within Bond In every parllcular. withool
anerafion or enlargament or any change
wI1aIsoover.
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s'rONE &. YOUNGBEHG
DRAFT
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CiI, COUOC~
C".Y (>{ p.J() Ntl)
250 Hamilton Avenue
Palo Aho,CA 94301
RE: Offer lO Purcnase $ _ Par Value CiI)' of Palo .. 'Ul0
Utility Revenue Refunding Bonds 1990 Series A
(Santa Oara County, California}
Memhers of tlle City Council:
Pursuant: '0 discussions with bond counsel and our investlgatioo and analysis. 0{ she
c:aptK)ned 0000 Issue, Stone &:. Youngberg (the "Um!el.'Virilc.", hereby offers 'to purchase an of
S:UCR bon&; subjet."1 ~ the f:onowing conditions.:
L The boncls shaI1 be issued pursuant 10 the chaner of me Ciry and the provisions of
Cbaprec 12.2,s (commencing ",itb $et.-tion 12.28.(HO)~ ofrbe Palo Alto Municipal Code,
1o.gether with Ankle 9 (commencing with Se<.:uoo 53550) and Article I [ (commencing
with $ec;ioa 53580) of Chapter 3 of Part I of Division 2 of Title 5 of the Government
Code of the Stale of California (the "State")' an as in ef"..ect on the CJOSing Date (the
"Bond L.aw"). andpUTSuant 'to the terms and conditions of the Indenture of Trust by and
between the C"1ty of Palo Alto and Securif}' PacifIC National Bank,. .as trustee (the
"Trustee", dated Au&"sz I. 1990 (the "lndentu","~
2. Tbe bonds shall be issued in denominations of $5,000 oc in inlegral multiples ther~of as
may be requested by the UndeNtlriter,
3. All bonds shall be issued in registered fonn in accordance with insttu<:tions 10 be
determined by the Underwriter pdOf" to closing:. The Cgy shall reta"ln S«uril)l Pacif"1C
National Bank as TrYst~e, Registrar and Paying Agent
" lbe bonds snan be dated August J~ 1990 and be delivered on Of" about August _.1990
Of such other date as mutually agreed upon by the UIlderwrlt~r and the City {the
"(K~in~ I>dle"). .
5. The bonds shaIl mature 00 June J in tach of the years and in the-amounts and sha!l bear
inte rest at the rates set fonh on tll~ anacbe d maturity scheduJe marked Exhibit A
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C'lly Council
CK) of Palo Alto
__ ,1990
Page 2
6. The puoclutse pri<% slWl be $ __ (which is • discount of O.95%~ plus a<crued
inleRst. if appIi<:ab~. and shan be paid in fuD upon delivery !Q us of 1he bonds. I'll
addition to the above discounI: compens.atio~ City shaD reimburse Under"o.lrriter for any
out-of-state travel made in connection with the financing and approved in advance: by
City; any Joan ftts associated .... ilh immedia.tely available funds; any printing expenses
fO{ the securities and official statements, and mailing and shipping costs associated
with [be official' statements incuned on behalf of City,. any third party compoter
charges incurred, any charges made by the rating agencies, bood insurers~ and
California Municipal Statistics, Inc. Soch charges shan be payable by City whether or
nor: bonds are sold
1. The City will deliver 10 the Underwriter at closing in forms sUitable to the: Underwriter:
(.a) The approving legal opinlon of Jones HaIl Hill. &. White, A Professional La.,.,'
Corporation,. San Francisco, California. Bond Counsel. TIle legal opinion shaD 'be
printed on the bonds at DO charge 10 us.
(o} A. [lo--IitigatwQ certi6cate of the Cit'y_
It The obligations olllle Underwriter 10 accept Oem'cry of and pay fO( the bond5 on me
Closing Date shaD be subject. at the opinion of lbe Underwriter 10 the fonowing
additional conditions:
(if) At the Closing Date. the Indenture and any other appticable agreements shari be in
CuD force and effect,. and shaD noc: have been amended. mod"lfied or supplemented
except as may have been agreed in writing by the Underwriter, and there shall
have been taken in connection the:re~I:it.~ with doL issuance of the bonds and ,lith
ihe transactions confemplated thereby and by this purchase offer, an such actions
as, in the opinIon of Bond Counsel, shaH be necess ary and appropriate.
(b) Between cbe date thereof and l:he Dosing Date, the market price or mari:e1abiliJy
of the bood'S at the inirial" off-ering prices shaii oot llave been materially adversely
aff.ef:red,. in lhe judgmeru of the Und~'riter (e .... idenced by a written notice 10 the
Cit)' tenninating the obligation of the UndeI'A'rUers 10 accept delivery of and pay
fQf" the bonds) by .r-ea.<,QC 0( any of the f{}no\\'ing:
(I) Legislation enacted (oc reso!utffiG passed) by the Congress of the United
States of America Of a decision rendered by 2 court eSlabIisbed under ArtjcTe
fn ofrhe Constitution oftl1e United States of America or by £he TuCoun of
[he United Stat~s of America. or an order. ruling, regulation (final, temporary
OJ' proposed). press rele.a.c;.e or other form of notice issued O£ made by Of on
behalf of t1le Treasury Department or the ImemaI Revenue Service of the
United Stales of America.. v.'ith the p~ or effect, dlrectIy Of' indlJ'e .... r-.. :. 0f
imposin~ federal income taxatioo upoo the interest as "ould be recei .... ed D'\i
the o,,"'oers of the bonds; ..
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(2) Legislation enacted (~r resolution
passedJ by the Congress of the United states
of America.,. or an order., decree .o·r injunction
isued by any court of competent jurisdiction,
or an order.,. ruling, requlation (final.,.
temporary or proposedJ, press release or
other fo·rm of notice issued or made by or on
behalf of the Securities a~ Exchange
commission, or any other qovernmental agency
baving jurisdiction of the subject matter, to
the effect that obligations of the general
character of the bonds, or the bonds.,.
includinq other requirements of the
Securities Act of 19)), as amended or that
the issuance.,. offering or sale of obligations
of the qeneral cbaracter of the bonds, or of
the bonds., including any or all underwriting
arrangements., as contemplated bereby or by
the Official Statement or othe",ise is 'C,r
would be in violation of the federal
securities laws as amended and then in
effect;
{l) Any amendment to the Federal or
califo,rnia constitution or action by any
Federal or California court, legislative
body. reg·ulatory body or other authority
materially adversely affecting the tax status
of the City, its property, income, securities
(o~ interest thereon), validility or
enforceability of the revenues securing the
bonds or as contemplated by the Indenture and
the Official Statement;
{.} Any event occurring, or information
becoming known after the date hereof ~bicb,
in the judgment of the UnderlolTiter makes
untrue or misleading in any material respect
any statement or information contained in the
Official Statement concerning the city or the
refunding to be achieved vith the proceed$ of
the bonds; or
(5) The withdrawal or downgrading of any
rating of any securities of the City by a
national municipal bond rating agency.
9. The Cit.y 'has previously provided the Under.'riter
with a copy of its (Prelimil'laz-y) Official St.atement
dated _____________ • As of its date, the Preliminary
Official Stat~ment ~as -deemed final-by the Iss~er
for purpos-Es of SEC Rule 1~2-12'b} ell.
The City shall deliver or cause to be delivered to
the Undervriter~ promptly after its acceptance
hereof, an e~ecuted copy of the Official S~atement
relatir,g to the Bands, substantially in the form of
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che prelimG:)ry Official Statement dat~July ___ •
1990 (the ·Preli.ina~y Official Statement-), with
~nly such changes therein as shall have been
accepted by the Undenrriter (the Official statement
relating to the Bonds~ including the cover paqe and
all appendices the~eto. being herein referred to as
the ·Official statement-}r to be delivered no later
than seven (1) BUsiness Oays following the date of
execution hereof in sufficient tilQe and numbers to
permit the Underwriter to comply 'With Rule 15c2-12
of the securities and Exchange Commission (the
WRule-}r and approved for distribution by
resolution of the City.
The City authorizes the use of copies of the
Official Statement in connection with the public
offering and sale of the Bonds. The City bereby
ratifies the prior distribution by the Underwriter
of the Preliminary Official statement as -near
final-fo~ purposes of the Rule.
The Underwriter shall pay its own out-of-pocket and
other expenses [other than out-of-state travel and otber
expenses indicated in paragraph S above}r including
assignment of CUSIPs, and any advertising expenses in
connection with ttle public offering of the bonds ..
The City shall pay from the proceeds of the bonds all
costs and expenses customarily paid therefrom. includi~ the
cos~ of printing the bonds. ~he Preliminary Officia1
statement and the final Official Statement and any o,ther
documents. the fees and expenses of its legal counsel, bond
counsel~ accountants, arcbitects. enqineers~ and of any other
experts or consultants retained by the City in connection
~itb the financinqr all in accordance yith the Under~riting
Agreement dated April 16 r 19'90.
Respectfully submitted
STONE , YOUNGBERG
Ed~ard G. Schilling
Accepted t_his __________________ ~ _____ day of
By;
Emily-Harrison, Finance-Director
city of Palo Alto
1990
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Coty Couoci
C~y of Palo Aha
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
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2002
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2004
2005
2006
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EXHIBfTA
CIT'{ 01' PALO ALTO
Ul1LlTY REVENUE UFUND!NG BONDS
1990 S1!R.IES A
(SANTA CLARA 0XJNfY. CAUPORMA)
Principal
s
$--_.
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___ .1990
Page 5
Interest
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AOOENDUM NO. _4_
TO THE AGREEMENT B1 AND BETWEEN THE CITIES OF
MOUNTAIN VIEW, LOS ALTOS .. AND PALO ALTO
WHEREAS, the cities of Mount.ain View, Los Altos, and Palo
Alto, California have entered into that certain agr~ement dated
OctOber 10, 1968, as the Same bas been amended from time to time;
and
WHEREAS,. the parties are currently each payiTl9 their
proportionate share of the 1983-utility Revenue and Refunding
Bonds,. 19B~ Series AI Utility Revenue Bonds, 1985 series A
(adjustable.. convertible.. extendable security--ACES 5m) to the
extent that proceeds of such bond is~ue were used for the improve
ment of the palo Alto Regional Water Quality Control Plant: and
WHERF~, the city of Palo Alto intends to issue the Palo
Alto utility Revenue Refunding Bonds, 1990 Series AI and each party
'Will continue to pay its proportionate share of the debt service of
said bonds;
NOW, THEREFORE, the parties agree as follows:
SECTION 1. All costs, principal and interest associated
vlth the utility Revenue RefurAinq Bonds, 1990 Series A, will be
shared, on a proportional basis, by each party, according to the
attached Exhibit A, -which is hereby incorporated by this reference.
All such costs associated with the Issue shall be paid £rom the
bond proceeds. Included in these issuance costs are the ncrmal
costs associated with a revenue bond issue, including all associat
ed legal fees., underwriters discou...e:, printing. and application for
rating agency revie..... Specifically exempted .fr.:Jm this inclusion in
the issuance costs are any costs incurred by the city of Palo Alto
in association with any formal rating age~y presentation, -whether
associated ~ith this or any other bond issue4 The City of Palo
Alto agrees to be solely responsible for all expenses related to
such formal rating presentations.
SECTJ,:ON 2 -ANNUAL FEES
All parties agree that all annual fees associated with
the 1990 utility ReVenue Refunding Bonds Series A -will be sh~red on
the same proportional basis as principal payments are made as sb-own
in Exhibit A attacbed hereto. These fees -will be reflected in the
Annual Regional Water Quality Control Plant Budget and billed to
each party quarterly~
~~I9N J -INTEREST EARNINGS
Interest earnings on any funds held by Palo Al to in
relation to the Bonds, if any. shall be credited to each party in
the proportion as principal payments are made as ShQWD on Exhib
it A.
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SECTION .( -___ J~~EBT ~_ERVICE RESERVES
The parties agree that any debt service reserve l if anYr
will be held by a fidIJ<ciary selected by the City of Palo Alto.
Interest earned on any such reserve~ if any~ vill be paid to the
city of Palo Alto ~ho will in turn allocate a proportionate a~ount
to each party based on proportionate shares of each part.' reflected
in Exhibit A.. The schedule of debt service will be att,,';hed to the.:
original of this aqree:::nent by Palo Alto after ex~C" .. tic>n by the
Parties ..
SECTION 5 -COVENANT A~_~NTS
Each pal:ty agrees that its proportionate share of the
debt service hereunder shall be paid out of the Net Revenues ~f its
"qastewater Enterprise Fund or such fund desiqnation as it shall use
to account for proceeds from wastewater Collection and service
Rates in its jurisdiction. Each party shall recommend and adopt
rates adequate to generate net revenues necessary to meet its
p,roport ionate share of" the debt 001 igat ion hereunder.. except tba t.
not-hinq shall commit any reveaues of any party beyond those
available in their respective vastewa'ter enterprise funds.
The billing of the Cities by the City of Palo Alto for
all debt payments shall include in the Harch and October billings
t.he following:
(a) The total annual -debt. service r~quirement", principal
and interest", will be included in the annual budqet forecast..
(b) The City of Hoo.ntain View will be billed for the
debt service .on a semiannual basis", -with the March and Octo....~r
billinqs.
ecl The expenses of the Regional Water Quality control
Plant (RWQCP).
{d) Account balances and the balance of out.standing
principal owed by each party.
Ce) The allocation of the interest on the reserve
funds[s) to each party's annual debt service requirement.
sEcrroN 1 -AUDITOR' 5 OPINION
Falo Al to wi 11 take reasonable steps to ensure that
interest earnings if any. and billings made to each party in
accordance yith the -Basic Agreement-shall be accounted for and
included in the City's Annual Audit, wherein the Annual Auditor's
Opinion Letter shall include the fOllowing:
(al A final reconciliation of annual debt service
requirements annually", including interest earned on debt service
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reserves# will be illustrated in the Ann,ual Auditor's Report 'With
any adjustments a~arinq in the next quarterly Billinq~
(b) Total debt service reserve, if any~
(c) Total interest earned on the debt service reserve,
if any ~
SEcrION 8 -EARLY CALL PROVISI~f'9R MOUNTAIN VIEW
The City of .Mountain View shall have the unilateral right
to payoff all or any portion of its share of the 1990 util ity
Refonding Revenue Bonds in aooordance with the followinq:
{a} If Mountain View wisbes to retire all or any portion
of its share of the 19'90 Bonds after the first optional call date#
it shall pay to Palo Alto an amount whiCh represents the principal
being paid off,. the redemption premium, if any, and interest to the
call date which shall be the next subsequent call date occurring at
least 60 days after the payment~
(b) If Mountain View wishes to retire all or any portion
of its share of the 1990 Bonds p,rior to the first optional call
date, it shall pay to Palo Alto. an amount 'Which represents the
principal being paid off, the redempt.ion premium# if any# and
interest to the call date. The payment shall be in the form of
full faith and c.redit obligations of the U.5. Government the amount
of which shall be calculated to ~atch the required Mountain Vie~
share of scheduled debt service payments until the next call date.
The yield on the securities in ~hich the Mountain View payment is
being made sball not exceed the 8038G Yield on the 1990 Revenue
Refunding Bonds.
ee} The Bonds to be called shall be determined by the
City of Palo Alto at its sole discretion~
ATTEST: CITY OF PALO ALTO
City Clerk
By:
APPROVED AS TO FORM:
Its:
City Attorney
ATTEST: CITY OF MOUNTAIN VIEW
City Clerk
By: ------
APPROVE!) AS TO FORK:
Its:
city Attorney
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ATTEST:
City -Clerk
APPROVED AS TO FORK;
city Attorney
ACB: 07JOJJ90 :kp
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CITY OF LOS ALTOS
By:
Its:
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