HomeMy WebLinkAboutRES NO 202-87RESOLUTION NO. 202-87
A RESOLUTION OF THE COUNCIL OF THE CITY
OF BAKERSFIELD DETERMINING UNPAID ASSESSMENTS
AND PROVIDING FOR ISSUANCE OF BONDS IN
THE MATTER OF CITY OF BAKERSFIELD ASSESSMENT
DISTRICT NO. 87-1
RESOLVED, by the Council of the City of Bakersfield,
California (the "City"), that
WHEREAS, on June 17, 1987, this Council passed and
adopted Resolution of Intention No. 1028 (the "Resolution of
Intention"), as amended, relating to the construction of public
improvements under and pursuant to the provisions of the Munici-
pal Improvement Act of 1913, the Charter, and the Municipal Code
of the City. By said Resolution of Intention, this Council pro-
vided that serial bonds would be issued thereunder pursuant to
the provisions of the Improvement Bond Act of 1915, Division 10
of the Streets and Highways Code of California and reference to
said Resolution of Intention is hereby expressly made for further
particulars;
WHEREAS, notice of the recordation of the assessment
and of the time within which assessments were to be paid in cash
was duly published and mailed in the manner provided by law and
the time so provided for receiving payment of assessments in cash
expired, and a list of the assessments remaining unpaid has been
filed by the Finance Director of the City as the Collection Offi-
cer with the City; and
WHEREAS, this Council duly considered said list and
determined that the same was an accurate statement thereof;
follows:
NOW, THEREFORE, IT IS HEREBY DETERMINED AND ORDERED, as
SECTION 1. Definitions. Unless the context otherwise
requires, the terms defined in this Section 1 shall, for all pur-
poses of this Resolution, have the meanings herein specified and
shall be equally applicable to both the singular and plural forms
of any of the terms herein defined.
"Act" means the Improvement Bond Act of 1915, Division
10 of the Streets and Highways Code of the State of California.
"Agent" means Bank of America National Trust and Sav-
ings Association, the Transfer Agent, Registrar and Paying Agent
designated in Section 6 hereof.
"Bond" or "Bonds" means the Improvement Bonds, City of
Bakersfield Assessment District No. 87-1, issued pursuant to the
Act and this Resolution.
"Bond Date" means the dated date of the Bonds, which is
November 10 , 1987.
"Bond Denomination means the amount of $5,000.00,
which is the minimum amount in which the Bonds may be issued,
except that one Bond may contain the amount of $4,229.00.
"Bond Year" means the twelve month period beginning on
November 10 of each year and ending on November 9 of
the following year, commencing with the period beginning on
November 10 , 1987, and ending on November 9 , 1988.
"Closing Date" means the date upon which there is an
exchange of the Bonds for the proceeds representing the purchase
of the Bonds by the Original Purchaser.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Debt Service" means the scheduled amount of interest
and amortization of principal payable on the Bonds during the
period of computation, excluding amounts scheduled during such
period which relate to principal which has been retired before
the beginning of such period.
"Excess Investment Earnings" has the meaning set forth
in Section 24(b) hereof.
"Excess Investment Earnings Account" means the account
by that name created by, and held by the Treasurer pursuant to,
Section 24(a) hereof~.
amounts:
"Gross Proceeds" means the sum of the following
(i) original proceeds, namely, net amounts (after
payment of all expenses of issuing the Bonds) received
by or for the Issuer as a result of the sale of the
Bonds, excluding original proceeds which become trans-
ferred proceeds (determined in accordance with appli-
cable Regulations) of obligations issued to refund in
whole or in part the Bonds;
(ii) investment proceeds, namely, amounts received
at any time by or for the Issuer, such as interest and
dividends, resulting from the Investment of any origi-
nal proceeds (as referenced in clause (i) above) or
investment proceeds (as referenced in this clause (ii))
in Nonpurpose Obligations, increased by any profits and
decreased (if necessary, below zero) by any losses on
such investments, excluding investment proceeds which
become transferred proceeds (determined in accordance
with applicable Regulations) of obligations issued to
refund in whole or in part the Bonds;
(iii) sinking fund proceeds, namely, amounts,
other than original proceeds or investment proceeds (as
referenced in clauses (i) and (ii) above) of the Bonds,
which are held in the Redemption Fund and any other
fund to the extent that the Issuer reasonably expects
to use such other fund to pay Debt Service on the
Bonds;
(iv) amounts in the Reserve Fund or in any fund
established as a reasonably required reserve or replace-
ment fund;
(v) Investment Property pledged as security for
payment of Debt Service on the Bonds by an ultimate
obligor or a related person or by the Issuer;
(vi) amounts, other than as specified in this
definition, used to pay Debt Service on the Bonds; and
(vii) amounts received as a result of investing
amounts described in this definition.
"Improvement Fund" means the fund established by the
Treasurer into which shall be placed the proceeds received from
the sale of the Bonds, including any premium all pursuant to
Section 10 hereof. '
"Interest Payment Date" means the dates upon which
interest on the Bonds is payable, commencing on March 2, 1988,
and semiannually thereafter on September 2 and March 2 of each
year to maturity.
"Investment Earnings Account" means the account by that
name created by, and held by the Treasurer pursuant to, Section
24(a) hereof.
"Investment Property" means any security (as said term
is defined in section 165(g)(2)(A) or (B) of the Code), obliga-
tion, annuity or investment-type property, excluding, however,
obligations the interest on which is exempt from income tax under
section 103 of the Code.
"Issuance Costs" means all costs and expenses of issu-
ance of the Bonds, including, but not limited to:
(i) underwriters, fees other than those taken in
the form of a discount on the Closing Date;
(ii) counsel fees, including bond counsel, under-
writers' counsel, Issuer's counsel and special tax coun-
sel fees, as well as any other specialized counsel fees
incurred in connection with the borrowing;
(iii) financial advisor fees incurred in connec-
tion with the issuance of the Bonds;
(iv) rating agency fees;
(v) trustee fees and trustee counsel fees;
(vi) paying agent and certifying and authenticat-
ing agent fees related to issuance of the Bonds;
(vii) accountant fees related to issuance of the
Bonds;
(viiil) printing costs of the Bonds and of the pre-
liminary and final official statement;
(ix) publication costs associated with the financ-
ing proceedings; and
(x) costs of engineering and feasibility studies
necessary to the issuance of the Bonds.
"Issuer" means the issuer of the Bonds, which is the
City of Bakersfield, County of Kern, State of California.
"Net Proceeds of the Bonds" means proceeds of the Bonds
received by or for the Issuer on the Closing Date, less amounts
used to pay Issuance Costs and less amounts deposited on the Clos-
ing Date in the Reserve Fund.
"Nonpurpose Obligation" means any Investment Property
which is acquired with the Gross Proceeds of the Bonds and is not
acquired in order to carry out the governmental purpose of the
Bonds.
"Original Purchaser" means the purchaser of the Bonds
from the Issuer on the Closing Date.
"Private Business Use" means use directly in a trade or
business carried on by a natural person or in any activity
carried on by a person other than a natural person, excluding,
however, use by a governmental unit and use as a member of the
general public.
"Project" means the acquisitions and improvements des-
cribed in the Resolution of Intention.
"Purchase Price" for the purpose of computation of the
Yield of the Bonds, as provided in the Code, the term in general,
means the initial offering price to the public (not including
bond houses and brokers, or similar persons or organizations act-
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ing in the capacity of underwriters or wholesalers) at which
price a substantial amount of the Bonds are sold or, if the Bonds
are privately placed, the price paid by the first buyer of the
Bonds or the acquisition cost of the first buyer. The term "Pur-
chase Price", for the purpose of computation of the Yield of Non-
purpose Obligations., means the fair market value of the Nonpur-
pose Obligations on the date of use of Gross Proceeds of the
Bonds for acquisition thereof, or if later, on the date that
Investment Property constituting a Nonpurpose Obligation becomes
a Nonpurpose Obligation of the Bonds.
"Redemption Fund" means the fund established by the
Treasurer into which shall be placed any accrued interest for the
period from the Bond Date to the closing date and all sums re-
ceived from the collection of unpaid assessments and of the inter-
est and penalties thereon, all as provided in Section 11 hereof.
"Redemption Premium" means 3 % of the principal
amount of the Bonds.
"Regulations" means temporary and permanent regulations
promulgated under section 148 of the Code.
"Reserve Fund" means the fund established by the Trea-
surer from the proceeds of the sale of the Bonds in the amount of
$ 82,546.03 , all as provided in Section 18 hereof.
"Treasurer" means the Finance Director, or designee, of
the City of Bakersfield.
"Yield" means that yield which, when used in computing
the present worth of all payments of principal and interest (or
other payments in the case of Nonpurpose Obligations which re-
quire payments in a form not characterized as principal and inter-
est) on a Nonpurpose Obligation or on the Bonds produces an
amount equal to the Purchase Price of such Nonpurpose Obligation
or the Bonds, all computed as prescribed in the Code and, in the
case of variable rate obligations, as further prescribed in Sec-
tion 23 hereof.
SECTION 2. List of Unpaid Assessments. The assess-
ments now remaining unpaid are as shown on said list and on
Exhibit "A" attached hereto and by this reference made a part
hereof; the aggregate amount thereof is $1,179,229; and for a
particular description of the lots or parcels of land bearing the
respective assessment numbers set forth in said list, reference
is hereby made to the assessment and to the diagram recorded in
the office of the Superintendent of Streets of the Issuer after
confirmation thereof by this Council.
SECTION 3. Issuance of Bonds. The Bonds, in the aggre-
gate principal amount of $1,179,229, shall be issued as herein-
after provided upon the security of said unpaid assessments in
accordance with, under and pursuant to the provisions of said
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Resolution of Intention and the proceedings thereunder duly had
and taken. The Bonds shall be issued only in fully registered
form in the amount of the Bond Denomination or any integral multi-
ple thereof, and shall mature in the amounts and on the dates and
at the rates of interest set forth in Exhibit "B" attached hereto
and by this reference made a part hereof. The Bonds shall be
numbered or otherwise identified as determined by the Agent speci-
fied in Section 6 hereof.
SECTION 4. Form of Bonds. The Bonds shall be substan-
tially in the form set forth in Exhibit "C" hereto and hereby
made a part hereof.
SECTION 5.. Payment of Bonds. The Bonds shall bear
interest at the rate or rates determined by this Council at the
time of sale of the Bonds (not to exceed twelve percent (12%) per
annum, or such higher rate of interest as may be authorized by
applicable law at the time of sale of such Bonds), payable on
each interest Payment Date.
Each Bond shall bear interest from the interest payment
date next preceding the date on which it is authenticated and
registered, unless authenticated and registered (1) prior to an
interest payment and after the close of business of the fifteenth
day preceding such interest payment date, in which event it shall
bear interest from such interest payment date, or (ii) prior to
the close of business on the fifteenth day of the month preceding
the first Interest Payment Date, in which event it shall bear
interest from the Bond Date; provided, however, that if at the
time of authentication interest is in default, each Bond shall
bear interest from the date to which interest has been paid.
Each Bond will continue to bear interest after maturity at the
rate stated therein, provided it is presented at maturity and
payment thereof is refused on the sole ground that there is not
sufficient money in the redemption fund with which to pay same;
if it is not presented at maturity, interest thereon will run
only until maturity.
SECTION 6. Designation of Agent. Bank of America
National Trust and Savings Association is hereby designated as
the Transfer Agent, Registrar and Paying Agent (hereinafter the
"Agent"). The principal and redemption premium of the Bonds
shall be payable in lawful money of the United States of America
at the office(s) of the Agent in San Francisco, California, upon
the presentation and surrender of the Bonds as the same become
due and payable. Interest on the Bonds shall be paid to the
registered owner by check or draft mailed to the address entered
in the registry book provided for herein as of the fifteenth (15)
day immediately preceding each Interest Payment Date. The Trea-
surer is hereby authorized and directed to enter into agreements
with the Agent in furtherance of the purposes of this Section.
SECTION 7. Execution. The Bonds shall be executed on
behalf of the Issuer and under its official seal by its Treasurer
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and by its City Clerk, whose signatures shall be reproduced on
the Bonds by engraved, printed or lithographed facsimile thereof,
and the official seal may be placed on the Bonds in like manner;
such signing and sealing shall constitute and be a sufficient and
binding execution of each and every one of the Bonds. The Bonds
shall then be delivered to the Agent for authentication by it.
If any officer whose signature appears on the Bonds
ceases to be such officer before the authentication and delivery
of the Bonds to the purchaser thereof, such signature shall be as
valid as if such officer had remained in office until the authen-
tication and delivery of the Bonds.
SECTION 8. Authentication. Only such of the Bonds as
shall bear thereon a certificate of authentication substantially
in the form below, manually executed by the Agent, shall be valid
or obligatory for any purpose or entitled to the benefits of this
Resolution, and such certificate of the Agent shall be conclusive
evidence that the Bonds so authenticated have been dully executed,
authenticated and delivered hereunder and are entitled to the
benefits of this resolution. The Agent's certificate of authenti-
cation on any Bond shall be deemed to be executed by it if signed
by an authorized officer or signatory of the Agent, but it shall
not be necessary that the same officer or signatory sign the cer-
tificate of authentication on all the Bonds issued hereunder.
[FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION[
This is one of the Bonds described in the Resolution
Determining Unpaid Assessments and Providing for Issuance of
Bonds, which has been registered on
By
Authorized Officer
SECTION 9. Preparation and Delivery of Bonds. The
Treasurer is hereby directed to cause the Bonds to be prepared in
accordance with this resolution and to deliver same upon their
completion and execution to the Agent who shall authenticate and
deliver the Bonds to the purchaser thereof, upon receipt of the
purchase price therefor, and upon the performance of the condi-
tions contained in the accepted offer for the purchase of the
Bonds.
SECTION 10. Improvement Fund. The Treasurer shall
establish the Improvement Fund designated by the name and/or num-
ber of the improvements or assessment district into which shall
be placed the proceeds received from the sale of the Bonds, in-
cluding any premium (except that any interest accrued from the
date of the Bonds to the date of delivery thereof shall be placed
in the Redemption Fund provided for herein). All moneys in the
Improvement Fund shall be withdrawn only upon checks or warrants
of the Issuer and shall be applied exclusively to the payment of
the cost of the acquisitions and/or construction of the improve-
ments described in the proceedings under and pursuant to said
Resolution of Intention, as now or hereafter changed or modified
by appropriate legal proceedings, and all expenses incidental
thereto. Any surplus remaining after payment of all costs and
all legal charges, claims and expenses shall be used as set forth
in said proceedings.
SECTION ll. Redemption Fund. Said Treasurer shall
establish the Redemption Fund designated by the name of the
Bonds, into which shall be placed any accrued interest for the
period from the date of the Bonds to the date of delivery thereof
and all sums received from the collection of unpaid assessments
provided for in Section 12 hereof, and of the interest and penal-
ties thereon. From the Redemption Fund disbursements shall be
made to pay the principal or advance redemption price of the
Bonds and the interest due thereon.
SECTION 12. Collection of Unpaid Assessments. The
unpaid assessments shown on said list, together with the interest
thereon, shall be payable in annual series corresponding in num-
ber to the number of serial maturities of the Bonds issued. An
annual proportion of each unpaid assessment shall be payable in
each year preceding the date of maturity of each of the several
series of Bonds issued, sufficient to pay the Bonds when due, and
such proportion of each unpaid assessment coming due in any year,
together with the annual interest thereon, shall be payable in
the same manner and at the same time and in the same installments
as the general taxes on real property are payable, and become
delinquent at the same times and in the same proportionate
amounts and bear the same proportionate penalties and interest
after delinquency as do the general taxes on real property. All
sums received from the collection of said unpaid assessments and
of the interest and penalties thereon shall be placed in the
Redemption Fund provided for herein.
SECTION 13. Redemption Prior to Maturity. Each Bond,
or any portion thereof in the amount of the Bond Denomination or
any integral multiple thereof, outstanding may be redeemed and
paid in advance of maturity upon any Interest Payment Date in any
year by giving at least 60 days notice and by paying the princi-
pal amount thereof together with the Redemption Premium plus in-
terest to the date of advanced maturity, unless sooner surren-
dered, in which event said interest will be paid to the date of
payment, all in the manner and as provided in the Act.
The Treasurer shall cause to be called for redemption
and retire Bonds upon prepayment of assessments in amounts suffi-
cient therefor, or whenever sufficient surplus funds are avail-
able therefor in the Redemption Fund. In selecting Bonds for
retirement, the lowest numbered Bonds of the various annual matur-
ities shall be chosen pro rata in a manner intended to disturb as
little as possible the relationship of unpaid assessments to
Bonds outstanding.
to the
Bonds.
The provisions of Part 11.1 of the Act are applicable
advance payment of assessments and to the calling of the
SECTION 14. Exchange of Bonds. Any Bond, upon surren-
der thereof at the office of the Agent, together with an assign-
ment duly executed by the registered owner thereof or his attor-
ney or legal representative in such form as shall be satisfactory
to the Agent, may, at the option of such owner, be exchanged for
an aggregate principal amount of Bonds equal to the principal
amount of the Bond so surrendered, and of any authorized denomina-
tion or denominations. The Issuer shall make provision for the
exchange of Bonds at the office of the Agent.
SECTION 15. Negotiability, Registration and Transfer
of Bonds. The Agent shall keep books for the registration, and
for the registration of transfers, of the Bonds as provided in
this resolution which sha~l at all times be open to inspection by
the Issuer. The transfer of any Bond may be registered only upon
such books upon surrender thereof to the Agent together with an
assignment duly executed by the owner or his attorney or legal
representative in such form as shall be satisfactory to the Agent.
Upon any such registration of transfer, the Issuer shall execute
and the Agent shall authenticate and deliver in exchange for such
Bond a new Bond or Bonds registered in the name of the trans-
feree, of any denomination or denominations authorized by this
resolution, and in an aggregate principal amount equal to the
principal amount of such Bond or Bonds so surrendered.
In all cases in which Bonds shall be exchanged, the
Issuer shall execute and the Agent shall authenticate and deliver
at the earliest practicable time Bonds in accordance with the
provisions of this resolution. All Bonds surrendered in any such
exchange or registration of transfer shall forthwith be cancelled
by the Agent. The Issuer or the Agent may make a charge for
every such exchange or registration of transfer of Bonds suffi-
cient to reimburse it for any tax or other governmental charge
required to be paid with respect to such exchange or registration
of transfer, but no other charge shall be made to any owner for
the privilege of exchanging or registering the transfer of Bonds
under the provisions of this resolution. Neither the Issuer nor
the Agent shall be required to make such exchange or registration
9
of transfer of Bonds during the fifteen
preceding any Interest Payment Date.
(15) days immediately
SECTION 16. Ownership of Bonds. The person in whose
name any Bond shall be registered shall be deemed and regarded as
the absolute owner thereof for all purposes and payment of or on
account of the principal, and redemption premium, if any, of any
such Bond, and the interest on any such Bond, shall be made only
to or upon the order of the registered owner thereof or such
owner's legal representative. All such payments shall be valid
and effectual to satisfy and discharge the liability upon such
Bond, including the redemption premium, if any, and interest
thereon to the extent of the sum or sums so paid.
SECTION 1'7. Advances from Available Surplus Funds.
The Issuer shall be the purchaser of property upon which payment
of an annual installment of principal and interest due upon any
of said unpaid assessments is delinquent, in like manner in which
it becomes or may become the purchaser of property sold for the
nonpayment of general taxes, and shall transfer from available
surplus funds into the Redemption Fund for the Bonds, as an ad-
vance recoverable upon sale or redemption of the property, the
amount of the delinquent unpaid assessment installment upon which
said sale is made. The Issuer shall also pay and transfer from
available surplus funds into the Redemption Fund, as an advance
recoverable upon sale or redemption of the property, the amount
of any future delinquent unpaid assessment installments on such
property pending redemption.
SECTION 18. Reserve Fund. Upon receipt of the pro-
ceeds from the sale of the Bonds, the Treasurer shall forthwith
establish the Reserve Fund, which shall be designated by the name
and/or number of the assessment district proceedings. The moneys
in the Reserve Fund shall constitute a trust fund for the benefit
of owners of the Bonds and shall be administered by the Issuer in
accordance with and pursuant to the provisions of Part 16 of the
Act; provided, that proceeds from redemption or sale of the prop-
erties with respect to which payment of delinquent assessments
and interest thereon was paid from the Reserve Fund, shall be
credited to the Reserve Fund; and provided, further, that for the
purposes of providing for reduction of the amount of money in the
Reserve Fund during the term of the Bonds pursuant to Section
8887 of the Act, all proceeds from investment of moneys in the
Reserve Fund shall be credited upon the assessments. In the
event that the crediting of any portion of such proceeds upon
assessments not theretofore paid in full in cash would result in
moneys in the Redemption Fund remaining therein for a period of
more than twelve (12) months, then any portion of such proceeds
which would otherwise remain in the Redemption Fund for a period
of more than twelve (12) months shall be used to call Bonds prior
to their maturity date on the earliest call date next succeeding
the deposit thereof in the Redemption Fund.
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SECTION 19. Covenant to Foreclose. The Issuer hereby
covenants with and for the benefit of the owners of the Bonds
that it will order, and cause to be commenced within 150 days
following the date of delinquency, and thereafter diligently pros-
ecuted, an action in the superior court to foreclose the lien of
any assessment or installment thereof not paid when due, pursuant
to and as provided in Sections 8830 through 8835, inclusive, of
the Act.
SECTION 20. Investment of Funds. Moneys in the Im-
provement Fund, Redemption Fund, and the Reserve Fund shall, when-
ever practicable, be invested Jn legal investments for the Issuer
under applicable law for the moneys held pursuant to this resolu-
tion at the time when any of such moneys are to be invested there-
in. Any income therefrom or interest thereon shall accrue to and
be deposited in the fund from which said moneys were invested,
except as otherwise provided in Section 24 hereof.
SECTION 21. No Arbitrage. The Issuer shall not take,
nor permit nor suffer to be taken by the Treasurer or otherwise,
any action with respect to the Gross Proceeds of the bonds which
if such action had been reasonably expected to have been taken,
or had been deliberately and intentionally taken, on the date of
the issuance of the Bonds would have caused the Bonds to be "arbi-
trage bonds" within the meaning of Section 148 of the Code and
Regulations promulgated thereunder.
SECTION 22. Certificate as to Non-Arbitrage. On the
basis of the facts, estimates and circumstances now in existence
and in existence on the date of issue of the Bonds, as determined
by the Treasurer, the Treasurer is authorized and directed to
certify that it is not expected that the proceeds of said issue
will be used in a manner that would cause such obligations to be
arbitrage bonds. Such certification shall be delivered to the
purchaser of the Bonds at the time of delivery of and payment for
the Bonds.
SECTION 23. Yield Computations for Variable Rate Obli-
gations. For the purpose of Section 24 hereof, the yield on a
Nonpurpose Obligation that consists of variable rate Investment
Property shall be determined as of the date the Nonpurpose Obliga-
tion is acquired and as of the first day of each Bond Year by
assuming that the rate of interest will be weighted average rate
of interest for such Investment Property during the preceding
one-year period (or portion thereof in which the Nonpurpose Obli-
gation was outstanding). With respect to a Nonpurpose Obligation
purchased on its date of issue, the Yield for the first Bond Year
shall be determined by assuming that the rate of interest will be
the initial rate of interest for such Nonpurpose Obligation as
determined under the prescribed formula on such date of issue
(without regard to any fixed rate initially applicable to such
Nonpurpose Obligation).
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SECTION 24.
United States.
Rebate of Excess Investment Earnings to
(a) Creation of Accounts. There is hereby
created, to be held by the Treasurer as separate
accounts distinct from all other funds and accounts
held by the Treasurer under this Resolution, the Invest-
ment Earnings Account and the Excess Investment Earn-
ings Account. All interest earnings and profits on
amounts in all funds and accounts established under
this Resolution, other than interest earnings on the
Redemption Fund and any other funds referenced in sub-
section (c)(5) of this Section 24 if such earnings in
any Bond Year are less than $100,000, shall, upon re-
ceipt by the Treasurer, be deposited in the Investment
Earnings Account. In addition, all interest earnings
and profits on Gross Proceeds in funds held by the
Issuer shall, upon receipt, be paid to the Treasurer
for deposit in the Investment Earnings Account. Annual-
ly, on the last day of each Bond Year or on the preced-
ing business day in the event that such last day is not
a business day, the Treasurer shall transfer from the
Investment Earnings Account to the Excess Investment
Earnings Account for purposes of ultimate rebate to the
United States an amount equal to Excess Investment Earn-
ings, all as more particularly described in this Sec-
tion 24. Following the transfer referenced in the pre-
ceding sentence, the Treasurer shall transfer all
amounts remaining in the Investment Earnings Account to
the Redemption Fund to be used for the payment of Debt
Service on the Bonds on the next interest payment date
and for such purpose. Debt Service due from the Issuer
on such date shall be credited by an amount equal to
the amount so transferred.
(b) Definition of Excess Investment Earnings.
The Issuer shall calculate Excess Investment Earnings
in accordance with this subsection (b) and shall assure
payment of an amount equal to Excess Investment Earn-
ings to the United States in accordance with subsection
(c). The term "Excess Investment Earnings" means an
amount equal to the sum of:
(i) the excess of
(A) the aggregate amount earned from
the date of delivery of the Bonds on all Nonpur-
pose Obligations in which Gross Proceeds of the
Bonds are invested (other than amounts attribu-
table to an excess described in this paragraph
(i)), over
(B) the amount that would have been
earned if the yield on such Nonpurpose Obligations
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(other than amounts attributable to an excess des-
cribed in this paragraph (i)) had been equal to
the yield on the Bonds.
plus (ii) any income attributable to the excess
described in paragraph (i).
(c) Calculation of Excess Investment Earnings.
Prior to the last day of the first Bond Year, the
Issuer shall cause to be calculated, and shall provide
written notice to the Treasurer of, the Excess Invest-
ment Earnings referenced in paragraph (i) of subsection
(a). Thereafter, prior to the last day of each Bond
Year and on the date of the retirement of the Bonds,
the Issuer shall calculate, and shall provide written
notice to the Treasurer of, the amount of Excess Invest-
ment Earnings referenced in paragraphs (i) and (ii) of
subsection (a). Said calculations shall be made or
cause to be made by the Issuer in accordance with the
following:
(1) Except as provided in (2), in determin-
ing the amount described in paragraph (i) (A) of
subsection (a), the aggregate amount earned on
Nonpurpose Obligations shall include (i) all in-
come realized under federal income tax accounting
principles (whether or not the person earning such
income is subject to federal income tax) with
respect to such Nonpurpose Obligations and with
respect to the reinvestment of investment receipts
from such Nonpurpose Obligations (without regard
to the transaction costs incurred in acquiring,
carrying, selling or redeeming such Nonpurpose
Obligations), including, but not limited to, gain
or loss realized on the disposition of such Nonpur-
pose Obligations (without regard to when such
gains are taken into account under Section 453 of
the Code relating to taxable year of inclusion of
gross income), and income under Section 1272 of
the Code (relating to original issue discount) and
(ii) any unrealized gain or loss as of the date of
retirement of the Bonds in the event that any Non-
purpose Obligation is retained after such date.
(2) In determining the amount described in
paragraph (i) of subsection (a), Investment Proper-
ty shall be treated as acquired for its fair mar-
ket value at the time it becomes a Nonpurpose Obli-
gation, so that gain or loss on the disposition of
such Investment Property shall be computed with
reference to such fair market value as its ad-
justed basis.
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(3) In determining the amount described in
paragraph (i)(B) of subsection (b), the yield on
the Bonds shall be determined based on the actual
yield of the Bonds during the period between the
date of the Bonds and the date the computation is
made (with adjustments for discount or premium).
(4) In determining the amount described in
paragraph (ii) of subsection (b), all income attri-
butable to the excess described in paragraph (i)
of subsection (b) must be taken into account,
whether or not that income exceeds the yield on
the Bonds, and no amount may be treated as "nega-
tive arbitrage".
(5) In determining the amount described in
subsection (b), there shall be excluded any amount
earned on any fund or account which is used primar-
ily to achieve a proper matching of revenues and
debt service within each Bond Year and which is
depleted at least once a year except for a reason-
able carryover amount not in excess of the greater
of one year's earnings on such fund or account or
one-twelfth of annual Debt Service as well as
amounts earned on said earnings if the gross earn-
ings on all such funds and accounts for the Bond
year is less than $100,000.
(d) Payments to United States. The ]issuer shall
direct the Treasurer to pay from the Excess Investment
Earnings Account an amount equal to Excess Investment
Earnings to the United States in installments with the
first payment to be made not later than thirty (30)
days after the end of the fifth Bond Year and with sub-
sequent payments to be made not later than five (5)
years after the preceding payment was due. The Issuer
shall assure that each installment is in an amount
equal to at least 90 percent of the Excess Investment
Earnings with respect to the Bonds as of the close of
the computation period. Not later than thirty (30)
days after the retirement of the Bonds, the Issuer
shall pay 100 percent of the theretofore unpaid Excess
Investment Earnings of the Bonds. In the event that
there are any amounts remaining in the Excess Invest-
ment Earnings Account following the payment required by
the preceding sentence, the said amounts may be used
for any lawful purpose of the Issuer. The Issuer shall
remit payments to the United States at the address pre-
scribed by the Regulations as the same may be from time
to time in effect with such reports and statements as
may be prescribed by such regulations. In the event
that, for any reason, amounts in the Excess Investment
Earnings Account are insufficient to make the payments
to the United States which are required by this subsec-
14
tion (d), the Issuer shall assure that such payments
are made to the United States, on a timely basis, from
any funds lawfully available therefor.
(e) Further Obligations of Issuer. The Issuer
shall assure that Excess Investment Earnings are not
paid or disbursed except as required in this Section 24.
To that end the Issuer shall assure that investment
transactions are on an arm's length basis. In the
event that Nonpurpose Obligations consist of certifi-
cates of deposit or investment contracts, investment in
such Nonpurpose Obligations shall be made in accordance
with the procedures described in applicable Regulations
as from time to time in effect.
(f) Maintenance of Records. The Issuer shall
keep, and retain for a period of six (6) years follow-
ing the retirement of the Bonds, records of the determi-
nations made pursuant to this Section 24.
(g) Independent Consultants. In order to provide
for the administration of Section 23 hereof and this
Section 24, the Issuer and the Treasurer may provide
for the employment of independent attorneys, accoun-
tants and consultants compensated on such reasonable
basis as the Issuer or the Treasurer may deem appropri-
ate.
SECTION 25,. No Federal Guarantee. The Issuer shall
take no action nor permit nor suffer any action to be taken if
the result of the same would cause the Bonds to be a federally
guaranteed obligation within the meaning of Section 149(b) of the
Code. Any section reference in this Resolution to the Code shall
be deemed to be and shall refer to any section of similar import
enacted in lieu or in amendment of such section or contained in
any internal revenue code enacted in lieu of the Internal Revenue
Code of 1954.
SECTION 26. Amendment. Without the consent of the
Bondowners, the Issuer hereafter may amend this Resolution to
add, modify or delete provisions if the same is necessary or
desirable, in the opinion of Bond Counsel, to assure the exemp-
tion of interest on the Bonds from Federal income taxation, pro-
vided that the security interest of the bondholders is not
affected thereby.
SECTION 27. Authority of Treasurer. All actions man-
dated by this Resolution to be performed by the Treasurer may be
performed by the designee of thereof or such other official of
the Issuer or independent contractor, contractor or trustee duly
authorized by the City Council of the Issuer to perform such
action or actions in furtherance of all or a specific portion of
the requirements hereof.
15
SECTION 28. Certified Copies. The City Clerk shall
furnish a certified copy of this Resolution to the Treasurer, to
the Agent and to the Auditor of the County of Kern.
SECTION 29.
Private Activity and Private Loan Prohibi-
tions.
(a) Private Activity Prohibition. The Issuer
shall assure that (i) not in excess of ten percent
(10%) of the Net Proceeds of the Bonds are used for a
Private Business Use if, in addition, the payment of
more than ten percent (10%) of the principal or ten
percent (]0%) of the interest due on the Bonds during
the term 'thereof is, under the terms of the Bonds or
any underlying arrangement, directly or indirectly,
secured by any interest in property used or to be used
for a Private Business Use or in payments in respect of
property used or to be used for a Private Business Use
or is to be derived from payments, whether or not to
the Issuer, in respect of property or borrowed money
used or to be used for a Private Business Use; and (ii)
and that, in the event that both (A) in excess of five
percent (5%) of the Net Proceeds of the Bonds are used
for a Private Business Use, and (B) an amount in excess
of five percent (5%) of the principal or five percent
(5%) of the interest due on the Bonds during the term
thereof is, under the terms of the bonds or any underly-
ing arrangement, directly or indirectly, secured by any
interest in property used or to be used for said Pri-
vate Business Use or in payments in respect of property
used or to be used for said Private Business Use or is
to be derived from payments, whether or not to the
Issuer, in respect of property or borrowed money used
or to be used for said Private Business Use, then said
excess over said five percent (5%) of Net Proceeds of
the Bonds used for a Private Business Use shall be used
for a Private Business Use related to the governmental
use of the Project.
(b) Private Loan Prohibition. The Issuer shall
assure that not in excess of the lesser of five percent
(5%) of the Net Proceeds of the Bonds are used, direct-
ly or indirectly, to make or finance loans (other than
loans constituting Nonpurpose Investments or assess-
ments) to persons other than governmental units.
(c) Disbursement Statement. Upon each disburse-
ment of Net Proceeds of the Bonds deposited in the
Improvement Fund, the Treasurer shall prepare and exe-
cute a statement setting forth the portion, if any, of
the Net Proceeds of the Bonds to be used for a Private
Business Use or to make or finance a private loan
(other than a loan constituting a Nonpurpose Investment
or an assessment) and certifying that there has been
16
compliance with subsections (a) and (b) above. Such
statements shall be maintained as a part of the perma-
nent business records of the Issuer pertaining to the
Bonds.
I HEREBY CERTIFY that the foregoing Resolution was
passed and adopted by the Council of the City of Bakersfield at a
regular meeting thereof held on October 21, 1987 , by the
following roll call vote:
AYES: C0d~;$1L,',',[r,?,~ "T. ~,~'tD$ C~S~:~ENSEN SMITH, F, AT~Y, MOORE, DICK[~SOfJ, SALVAGG~0
NOES: COUNCQb~[ ~,~L~_,~, ........ _~. ......
ASSENT: C0U ~C~L~,aEfZ L~L ~S ~,~'
ABSTAINING: COUNCILMEMBErS: ~
APPROVED October 21, 1987
,_
of the Cit
~Y ATTORN~f t,~e Cit~of
CITY CLERK and Ex Officio
Clerk of the Council of the
City of Bakersfield
17