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HomeMy WebLinkAboutRES NO 148-87RESOLUTION NO. 14R-~7 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. 87-2 RESOLVED, by the Council of the City of Bakersfield, California (the "City"), that WHEREAS, on May 6, 1987, this Council passed and adopted Resolution of Intention No. 1026 (the "Resolution of In- tention"), 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 s~id Resolution of Intention, this Council pro- vided that serial bonds would be issued thereunder pursuant to the p~ovisions of the Improvement Bond Act of 1915, Division 10 of the S~reets and Highways Code of California ~nd reference to said R,'s~lution of Intention is hereby expressly made for further partic.~[ars; 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, ERLFORE, IT IS }{EREBY DETERMINED AND ORDERED, as SECTION 1. Definitions. Unless the context Qtherwise 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 H~gbways Code of the State of California. "~A~qent" 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. 87-2, issued pursuant to the Act and this Resolution. "Bond Date" means the dated date of the Bonds, which is August 17, 1987. "Bond Denomination.. means which is the~-~in-~um~ ~ .... the amount of $5,000.00, LL ~ 'H WhiCh the Bonds may be issued, except ~mat one Bond may contain the amount of $1,000.00. "Bond Year" means the twelve month period beginning on August 17 of ea~-h~ear and ending on August 16 of the following year, commencing with the period beginning on August 17, 1987, and ending on August 16, 1988. "Closiq~ 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 Earning- has the meaning set forth in Section ~4(-~of. by that Section amounts: "Excess Investment Ear~ Account" means the account name created by, and held by the Treasurer pursuant to, 24(a) hereof.. "Gross Proceeds" means the sum of the following (J) 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 2 with applicable Regulations) of obligations issued to refund in whole or in part the Bonds; (iiJ) sinking fund proceeds, namely, amounts, other than original pt~oceeds 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 replace- ment fund, or Treasurer the sale Section (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. "I~rovement Fund" means the fund established by into w~{ ~ha~ be placed the proceeds received the from of the Bonds, including any premium, all pursuant to 10 hereof. ~n~e~r_est Payment Date" means the dates upon which interest on the Bon~ is payable, commencing on March 2, 1988, and semiannually thereafter on September 2 and March 2 of each year to maturity. "Investment .Earn_~_~ Account means the account by that name created by, and held by t~-~ T~surer pursuant to, Section 24(a) hereof. "Investment. Prop~_rty" 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, inclu~ing bond Counsel, under- writers, counsel, Issuer's counsel and special tax coun- sel fees, incurred in Connection with the borrowing; (iiJ) financial advisor fees incurred 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; as well as any other specialized counsel fees in Connec- (vii:[) 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. ssuer means the issuer of the Bonds, which is the City of Bake-~-~fi~ld, County of Kern, State of California. .Ne~ ~ L~L 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. "N-~°npur_~2_q~ Obligation" means any Investm which is acquired with the Gros~ pro~ ...... ~nt Property acquired in order te ~ ..... - ..... o u~ ~ne ~on~s and is not Bonds. ~ uut the governmental purpose of the "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. cribed in "Pr_~ect" means the acquisitions and improvements des- the ResOlution of Intention. "Purchase Price" for the Yield of the Bonds, as provided in means the initial offering price bond houses and brokers, or similar purpose of computation of the the Code, the term in general, to the public (not including persons or organizations act- 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 ~- * - L~ fund established by the Treasurer into whic~-~ai~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. "~edemption Premium" means 3% of the principal amount of the Bonds. "Regulations', means temporary and permanent regulations promulgated-~der 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 $175,770, all as provided in Section 18 hereof. "Treasurer" means the Finance Director or designee, of the City of Bakersfield. , ~Yiel~' the -resen ~ means that yzeld which, when used in co ~ worth oi all ~a~me ........ mputing - - ~ ~ ~ u~ 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 $2,511,000; 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 $2,511,000, 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 5 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 du~. and payable. ~ ~ ~ ~rb~k terest on the Bonds shall be paid to the ~ e ~ ~d d~aft mailed to the address entered i i P or herein as of the fifteenth (lq) day immediately preceding each Interest Payment Date. The Tl'ea- 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 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 duly 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 tificate of authentication on all the Bonds issued hereunder.cer- [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. 7 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 is 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 ]2. 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 Jn 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- 8 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. The provisions of Part 11.1 of the Act to the advance payment of assessments and to the Bonds. are applicable calling of the SECTION JL4. 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 shall 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 of transfer of Bonds during the fifteen (15) days immediately preceding any Interest Payment Date. 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 17. 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, tha~ 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, aJl 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. 1 0 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 th,~, s~Jperior court to foreclose the lien of any assessment or installm~,nt thereof not paid when due, pursuant to and as provided in S~'c~ ions 8830 through 8835, inclusive, of the Act. SECTION 20. Investment of Funds. Moneys in the Im- provement Fund, }~edemption Fund, and the Reserve Fund shakl, when- ever practicable, be invested in legal investments for the Issuer under applicable law for the moneys held pursuant to this resolu- tion at the time wh~n any of such moneys are to be i~]vested there- in. Any ~ncome th~refrom or interest thereon shall ac~-~rue 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 T~easurer 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 c~rcumstances now in existence and in existence on the date of issue of the Bonds, as determined by the Treasurer, the Treasure~ ~s authorized and directed to certify that it is not expected that the proceeds of said issue will be used in ~ manner ~hal w,~uld cause such obligations to be arbitrage bonds. Such c~, t~cation 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 Nonpurpos~ 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- gat}on 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 (w~thout regard to any fixed rate initially applicable to such Nonpurpose Obligation). 1 1 SECTION 24. Rebate of Excess Investment Earnings to United States. (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- meDt 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, alJL as more particularly described in this Sec- tion 24. Following the transfer referenced in the pre- ced~ir~g sentence, the Treasurer shall transfer all amour~ts 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 sha~l 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 1 2 (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- meDt 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. 1 3 (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 ir~come 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, a;~d 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 Borld year is less than $100,000. (d) Payments to United States. The Issuer shaJl 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 tl~e Excess Investment Earnings with respect to the Bonds as of the close of the computation period. Not later than thi. rty (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- 1 4 tion (di~, 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 'lime 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 Reso],ution 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. i 5 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. tions. SECTION 29. Private Activity and Private Loan Prohibi- (a) Priva__te 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 (10%) 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 ]Dercent (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 /ssuer, in respect of property or borrowed money used or to be used for said Private Business Use, then sa~d 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 ~-onds 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 1 6 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 Auqust ~ 1987 , by the following roll call vote: ¥~ COUNC~I~y' i~i~ C~LDS C~Rt ' NOE~ CO; ;',;~':LI,~E~,~! ~ F,,3 Clerk of the Council of the City of Bakersfield APPROVED __ A~gus% 12, ~9'87 MAYOR of the City of Ba'~ersfield TORNEY of the City of Bakersfield 1 7 EXHIBIT "A" CITY OF BAKERSFIELD ASSESSMENT DISTRICT NO. 87-2 Maturity Due 9/2 Principal Amount Interest Rate 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 $ 101,000 110,000 115,000 125,000 130,000 140,000 150,000 155,000 170,000 180,000 195,000 210,000 225,000 245,000 260,000 5 00% 5 50% 5 75% 6 00% 6 25% 6 50% 6 75% 7 00% 7 25% 7 50% 7 70% 7 80% 7 90% 7 90% 7 90% EXHIBIT "A" MODIFIED ENG INEEIt' S REPORT EXHIBIT 'a' CITY OF BAKERSFIELD ASSESSNENT DISTRICT NO. 87-2 - ACQUISITION OF GATEWAY INDUSTRIAL PARK PUBLIC IHPROVE~ENTS (TENTATIVE PARCEL HAP MO. 7744) Assessment HumbeF Assessor*s · Psrcel'Humbe~ ssessment Number 1 ?N 167-010-08-00-3 ASSESSNENT'ROLL Confirmed Ovuer Preliminary to Na~e/Address Assessment Assessment Tenneco Realty Development Corp. c/o Gerald R. Jones, Tax Dept. P.O. Box 9380 Bakersfield CA 93389 $2,823,000.00 $2,511,000.00 UNITED STATES OF AMERICA STATE OF CALIFORNIA CITY OF BAKERSFIELD ASSESSMENT DISTRICT NO. 87-2 INTEREST RATE MATURITY DATE ORIGINAL ISSUE DATE CUSIP REGISTERED OWNER: PRINCIPAL SUM: DOLLARS Under and by virtue of the Improvement Bond Act of 1915, Division 10 of the Streets and Highways Code (the "Act"), the CITY OF BAKERSFIELD (the "City"), State of California, will on the maturity date specified above out of the redemption fund for the payment of the bonds issued upon the assessments made for the acquisitions, work and improvements more fully described in Resolution of Intention No. 1026, passed by the City Council of the City of Bakersfield on the 6th day of May, 1987, pay to the registered owner hereof, or registered assigns, on the maturity date stated above, the principal sum shown hereon in lawful money of the United States of America and in like manner pay interest from the interest ]payment date next preceding the date on which this Bond is authenticated, unless this Bond is authentigated and registered as of an interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated and registered prior to March 2, 1988. In which event it shall bear interest from its date until payment of such principal sum shall have been discharged, at the rate per annum above. Interest is payable commencing on March 2, 1988, and semiannually thereafter on March 2 and September 2 of each year to maturity. Both the principal hereof and redemption pre- mium hereon are payable at the office of the Finance Director, or its successor, as Transfer Agent, Registrar and Paying Agent (the "Agent") in Bakersfield, California, and the interest hereon is payable by check .or draft mailed to the owner hereof at the owner's address as it appears on the registration books of the Agent, or at such address as may have been filed with the Agent Exhibit "C" C 1 for that purpose, as of the fifteenth day immediately preceding each interest payment date. This Bond is one issued by the City under the Resolu- tion of Issuance in the aggregate principal amount of TWO MILLION FIVE HUNDRED ELEVEN THOUSAND DOLLARS ($2,511,000) for the purpose of providing means for paying for the improvements and acquisi- tions described in said proceedings, and is secured by the moneys in said redemption fund and by the unpaid portion of said assess- ments made for the payment of said improvements and acquisitions, and, including principal and interest, is payable exclusively out of said fund. This Bond is transferable by the registered owner here- of, in person or by the owner's attorney duly authorized in writ- ing at said office of the Agent, subject to the terms and condi- tions provided in the Resolution of Issuance, including the pay- ment of certain charges, if any, upon surrender and cancel]ation of this Bond. Upon such transfer, a new registered Bond or Bol]ds, of any authorized denomi~.ation or denominations, of the s~me matu~ |ty, I~or the same aggregate principal amount, will be issued to the transferee in exchange therefor. Bonds shall be registered only in the vidual (including joint owners), a corporation, a trust. name of an indi- a partnership or Neither the City nor the Agent shall be required to make such exchange or registration of t~ansfer of Bonds during the fifteen (15) days immediately preceding any March 2 or Septem- ber 2. The City and the Agent may treat the owner hereof as the absolute owner for all purposes, and the City and the Agent shall not be affected by any notice to the contrary. This Bond or any portion of it in the amount of $5,000 or any integral multiple thereof, may be redeemed and paid in advance of maturity upon the 2nd day of March or September in any year by giving at ]east 60 days' notice by registered mail to the registered owner hereof at such owner's address as ~t appears on the registration books of the Agent and by paying the principal and accrued interest together with a premium equal to 3 percentum of the principal. This Bond will continue to bear interest after maturity at the rate shown above provided ~t is presented at maturity and payment thereof is refused upon the sole ground that there are not sufficient moneys in said redemption fund with which to pay same. If it is not presented at maturity, interest thereon will run until maturity. This Bond shall not be entitled to any benefit under the Act or the Resolution Determining Unpaid Assessments and Pro- Exhibit "C" C - 2 riding for the Issuance of Bonds (the "Resolution of Issuance"), or become valid or obligatory for any purpose until the certifi- cate of authentication and registration hereon endorsed shall have been dated and signed by the Agent. IN WITNESS WHEREOF, the CITY OF BAKERSFIELD has caused this Bond to be signed in facsimile by the Finance Director of said City and by its City Clerk and has caused its corporate seal to be affixed hereon all as of CITY OF BAKERSFIELD, CALIFORNIA CITY CLERK FINANCE DIRECTOR (SEAL) CERTIFICATE OF AUTHENTICATION AND REGISTRATION This is a Bond representative of the Bonds described in the within-mentioned Resolution of Issuance, which has been regis- tered on Finance Director of the City of Bakersfield, Agent By Authorized Officer LEGAL OPINION I hereby certify that the following is a correct copy of the signed legal opinion of Richard H. Hatgrove, Attorney at Law, Bakersfield, California, addressed to the City Council of Exhibit "C" C - 3 the City of Bakersfield, and on file in my office, dated the date of delivery and payment for the Bonds therein described. City Clerk RICHARD H. HARGROVE Attorney at Law Suite 411 2220 Tulare Street Fresno, California 93721 City Council City of Bakersfield 1501 Truxtun Avenue Bakersfield, CA 93301 City of Bakersfield Improvement Bonds Assessment District No. 87-2 Members of the City Council: We have acted as Bond Counsel in connection with the issuance by the City of Bakersfield, (the "City") of $2,511,000 aggregate principal amount of Improvement Bonds City of Bakers- field, Assessment District No. 87-2, (the "Bonds"), dated August 17, 1987, pursuant to the Municipal Improvement Act of 1913 and the Improvement Bond Act of 1915 relative to certain improvements in that certain assessment district in the City, which proceed- ings were initiated under Resolution of Intention No. 1026 duly adopted by the City Council on May 6, 1987, and relative to the issuance of the Bonds in said proceedings, which Bonds were issued pursuant to the Charter, the Municipal Code, and the Reso- lution of Issuance duly adopted by the City Council of the City on August 12, 1987, (the "Resolution"). In such connection, we have examined the Resolutions and certificates of the City and others as to certain factual matters, and such other documents and matters deemed necessary by us to render the opinions set forth herein, although in doing so we have not undertaken to verify independently the accuracy of the factual matters represented, warranted or certified therein, and we have assumed the genuineness of all signatures thereto. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or events occurr- ing after the date hereof, and we have neither undertaken to determine whether any such actions or events are taken or occur nor to inform any person thereof. Furthermore, we have assumed compliance with all covenants contained in the Resolution of Issu- Exhibit "C" C - 4 ance, including (without ].imitation) covenants compliance with which is necessary to assure that future actions or events will not cause interest on the Bonds to be included in gross income for Federal income tax purposes. In addition, we call attention to the fact that the rights and obligations under the Bonds and the Resolution of Issuance are subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting credi- tors' rights, to the application of equitable principles and to the exercise of judicial discretion in appropriate cases. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The City has lawful authority for the issuance of the Bonds, and the Bonds constitute legal, valid and binding obli- gations of the City payable solely from the revenues to the ex- tent specified in the Resolution; provided, that we express no opinion upon the plans, specifications, maps, profiles, drawings and other engineering features of the proceedings and our opinion upon the regularity of the proceedings otherwise is based upon the assumption that all engineering details are correct. 2. The Resolution has been duly and legally adopted and constitutes the valid, legal and binding obligation of the City. 3. The Bonds are secured by the moneys in the redemp- tion fund created pursuant to the Resolution and by the revenues of the enterprise, and the City is not obligated to pay the prin- cipal of or interest on the Bonds except from the moneys in said redemption fund, and neither the City nor any officer thereof Js otherwise liable for such payment. 4. Interest on the Bonds is excluded from gross income for Federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended, and is exempt from California personal income taxes. Interest on the Bonds is not a specific preference item for purposes of the Federal individual or corpo- rate alternative minimum taxes, although we observe that interest on the Bonds is included in adjusted net book income and.adjusted current earnings in calculating corporate alternative minimum taxable income. We express no opinion regarding other Federal income tax consequences related to the accrual or receipt of in- terest on the Bonds. Respectfully submitted, Richard H. Hatgrove Exhibit "C" C - 5 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration hereof with full power of substitution in the premises. Dated: NOTICE: The signature to this assignment must correspond with the name as it appears on the face of the within Bond in every partic- ular, without alteration or en- largement or any change whatso- ever. Exhibit "C" C - 6 STONE &YOUNGBERG MEMBERS: PACIFIC STOCK EXCHANGE August 12, 1987 The Honorable Members of the City Council of the City of BaKersfield 650 Merchant Street Bakersfield, CA 95688 Re: Offer to Purchase Bonds in the Sum of $2,511,000 par value City of Bakersfield - Assessment District No. 87-2 (Kern County, California) Honorable Members of the Council: Stone & Youngberg ("the Underwriter") hereby offers to purchase all of the referenced bonds subject to the following conditions: 1. The bonds shall be issued pursuant to the Municipal Improvement Act of 1913 and the Improvement Bond Act of 1915 The par value of the bonds shall be in the amount of $2,511,000, and the bonds shall mature serially over a period of 15 years. 3. The bonds shall be issued in denominations of $5,000, or in integral multiples thereof as may be requested by the Underwriter. All bonds shall be issued in registered form in accordance with instructions to be determined by the Underwriter prior to closing. The City shall retain Bank of America N.T. & S.A., Los Angeles, California, as Paying Agent, Registrar and Transfer Agent. The bonds shall be dated August 17, 1987 and be delivered within 30 days thereafter. The bonds shall mature in each of the years and in the amounts and at the rates of interest set forth on the attached maturity schedule marked Exhibit A. The City shall establish from the proceeds of the bonds a reserve fund equal to seven percent <7%) of the principal amount of the bonds. The reserve fund shall be administered pursuant to the Resolution of Issuance for the bonds, as well as pursuant to applicable federal laws and regulations. The reserve fund balance shall be shown as a separately stated item in the City's annual financial report. ONE CALIFORNIA STREET ' SAN FRANCISCO, CAL[FORNIA 94111 · (415) 981-1314 The Honorable Members of the City Council August 12, 1987 of the Clty of BaKersfield Page 2 9. 10. 11. 12. The City shall covenant to commence judicial foreclosure of delinquent assessments within 150 days after any delinquency. The City shall award the sale of the bonds to us at the City Council meeting on August 12, 1987. The purchase price shall be 98.3 percent of par, plus accrued interest, if applicable, and shall be paid in full upon delivery to us of the Bonds. The City will deliver to the Underwriter at closing in forms suitable to the Underwriter: (a) The unqualified approving legal opinion of Richard H. Hargrove, Attorney At Law, Fresno, California, Bond Counsel. The legal opinion shall be printed on the bonds at no charge to us. (b) A no-litigation certificate of the City. The obligations of the Underwriter to accept delivery of and pay for the bonds on tile Closing Date shall be subject, at the option of the Underwriter to the following additional conditions: (a) At the Closing Date, the Resolution and any other applicable agreements shall be in full force and effect, and shall not have been amended, modified or supplemented except as may have been agreed in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the bonds and with the transactions contemplated thereby and by this Purchase Contract, all such actions as, in the opinion of Bond Counsel, shall be necessary and appropriate~ (b) Between t,qe date hereof and the Closing Date, the market price or marketability of the bonds at the initial offering prices set forth in the Offering Memorandum shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds) by reason of any of the following: (1) Legislation enacted (or resolution passed) by the Congress of tqe United States of America or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department or the Internal Revenue Service of the United States of America, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon the interest as would be received by the owners of the bonds; The Honorable Members of' the City Council August 12, 1987 of the City of Bakersfield Page 3 KS:crq (2726A) (2) Legislation enacted (or resolution passed) by the Congress of the United States of America, or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the bonds, or the bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Resolution is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the bonds, or of the bonds, including any or all underwriting arrangements, as contemplated hereby or by the Offering Memorandum or other'wise is or would be in violation of the federal securities laws as amended and then in effect; (3) The withdrawal or downgrading of any rating of any securities of the City by a national municipal bond rating agency; (4) Any amendment to the Federal or California Constitution or action by any Federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the City, its property, income, securities (or interest thereon), validity or enforceability ,gf the assessments or the ability of the City to construct or acquire the improvements as contemplated by the Resolution and the Offering Memorandum~ or (5) Any event occurring, or information becoming known which, in the judgment of the Underwriter makes untrue or misleading in any material respect any statement or information contained in the Offering Memorandum concerning the City, the Improvement Project, the major landowner or the property assessed. (c) Parcel Map 7744 shall have been approved by the City Council. Respectfully submitted, STONE & YOUNGBERG Kimberly St.~nsbury The Honorable Members of the City Council August 12, 1987 of the City of Bakersfield Page 4 EXHIBIT A $2,511,000 CITY OF BAKERSFIELD IMPROVEMENT BONDS ASSESSMENT DISTRICT NO. 87-2 (KERN COUNTY, CALIFORNIA) Maturity Date (September 2) 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Principal Amount $101 000.00 110 000.00 115 000.00 125 000.00 130 000.00 140 000.00 150 000.00 155000.00 170 000.00 180 000.00 195 000.00 210 000.00 225 000.00 245 000.00 260 000.00 Interest Rate 5.00% 5.50% 5.75% 6.00% 6.25% 6.50% 6.75% 7.00% 7.25% 7.50% 7.70% 7.80% 7.90% 7.90% 7.90% The net interest cost of the bonds based on the above maturity schedule and a discount of 1.7% is 7.673%. The average interest rate is 7.490%. (2726A)