HomeMy WebLinkAboutRES NO 81-87RESOLUTION NO. 81-87
A RESOLUTION OF THE COUNCIL OF THE CITY
OF BAKERSFIELD, CALIFORNIA, ORDERING SALE
OF BONDS IN THE MATTER OF CITY OF BAKERSFIELD
ASSESSMENT DISTRICT NO. 86-5
adopted
not to
WHEREAS, the Council by Resolution No. 80-87 ,
May 6 , 1987, authorized the issuance of
exceed $889,944.00 principal amount of bonds to be known
as "IMPROVEMENT BONDS, CITY OF BAKERSFIELD ASSESSMENT DISTRICT
NO. 86-5", all dated the date of delivery, which is expected to
be May 13, 1987, and further authorized the sale of such bonds by
negotiation; and
WHEREAS, sale of such bonds has been duly negotiated in
the manner prescribed by Resolution No. 80-87 ; and
WHEREAS, a Purchase Agreement has been submitted by
Kelling, Northcross & Nobriga Incorporated and Drexel Burnham
Lambert Incorporated on file with the City Clerk of the City of
Bakersfield and incorporated herein by reference.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE
CITY OF BAKERSFIELD, CALIFORNIA, as follows:
1. The offer of Kelling, Northcross & Nobriga Incor-
porated and Drexel Burnham Lambert Incorporated (the "Under-
writers") as contained in the Purchase Agreement for $889,944.00
principal amount of Improvement Bonds, City of Bakersfield Assess-
ment District No. 86-5 is hereby approved and accepted and the
Finance Director is authorized to execute said Purchase Agreement.
The Official Statement is hereby authorized for distribution in accor-
dance with said Purchase Agreement.
2. Further, this Council directs the sale and delivery to
the Underwriters in accordance with the terms and conditions stated in
the Purchase Agreement.
3. This Resol!ution shall take effect upon adoption.
.......... o0o ..........
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I HEREBY CERTIFY that the
adopted by the Council of
meeting thereof held on
ing roll
foregoing Resolution was
the City of Bakersfield at a
May 6, 1987 , by the
call vote:
AYES: COUNCILN1EMBERS CHILDS, CHRISTENSEN, SMITH, .I~ATTY, MOORE, DICKERSON, SALVAGGIO
NOES: COUNC,LMEMS~RS: r]~.~
ASSENT: COUNCILMEMSEP~S: ~..~
ABSTAINING: CO%,NCILM~ MF.,ERs ~-~')-~J
passed and
regular
follow-
CITY CLERK and Ex Officio Clerk of the
Council oi' the City of Bakersfield
APPROVED
May 6, 1987
MAYOR of the City of Bakersfield
O'ITY AT~'ORNEY oI' the City of
Bal(ersfield
4ressig 3
PURCHASE CONTRACT
$ 889,944
CITY OF BAKERSFIELD
IMPROVEMENT BONDS
ASSESSMENT DISTRICT NO. 86-5
May 6, 1987
Honorable Mayor and City Council
City of Bakersfield
1501 Truxton Avenue
Bakersfield, California 93301
Dear Mayor and City Council:
Kelling, Northcross & Nobriga Incorporated and Drexel Burnham
Lambert Incorporated (collectively, the "Underwriter,,), acting not
as a fiduciary or agent for you, but on behalf of itself, offers
to enter into this Purchase Contract with the City of Bakersfield
(the "City"), which upon acceptance will be binding upon the City
and upon the Underwriter. This offer is made subject to the
City's acceptance by the execution of this Purchase Contract and
its delivery to the Underwriter at or before 11:59 p.m., local
time, on the date set forth hereinabove, and, if not so accepted,
will be subject to withdrawal by the Underwriter upon notice
delivered to the City at any time prior to the acceptance hereof
by the City.
1. Purchase, Sale and Delivery of the Bonds.
(a) Subject to the terms and conditions and in reliance
upon the representations, warranties and agreements herein set
forth, the Underwriter hereby agrees to purchase from the City,
and the City hereby agrees to sell to the Underwriter, all (but
not less than all) of the City of Bakersfield Improvement Bonds,
Assessment District No. 86-5 (the "Bonds"), in the aggregate
principal amount of $889,944, dated May 19, 1987, bearing interest
from said date (payable on March 2 and September 2 in each year
commencing on March 2, 1988) at the rates per annum and maturing
on the dates and in the amounts set forth in Exhibit A hereto.
The purchase price for the Bonds shall be 98% of the principal
amount thereof plus accrued interest (if any). The Bonds shall be
substantially in the form described in, shall be issued and
secured under the provisions of, and shall be payable and subject
to redemption as provided in Resolution No. adopted
by the City on May 6, 1987 (the "Resolution") and the Improvement
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Bond Act of 1915, constituting Division 10 of the Streets and
Highways Code of the State of California (the "Bond Act");
provided that= (i) a reserve fund in the amount of four percent
(4%) of the principal amount of the Bonds shall be established
from the proceeds of the sale of the Bonds; and (ii) all
investment earnings on moneys on deposit in said reserve fund
shall be credited to and deposited in said reserve fund until the
balance in such fund equals the maximum annual debt service to be
paid on the Bonds then outstanding or the maximum amount that may
be set aside as a reserve fund without limitation on yield as
provided in Section 148(d)(1) of the Internal Revenue Code of
1986, whichever is less. Investment earnings on monies in the
reserve fund which would cause the size of such fund to exceed
this limitation shall be transferred by the City to the Redemption
Fund for the Bonds and credited against the next assessment
installment or installments due from owners of property within
Assessment District No. 86-5 (the "District"). However, in no
event shall interest earnings on the reserve fund cause the Bonds
to become arbitrage bonds within the meaning of Section 148 of the
Internal Revenue Code.
(b) The Underwriter has prepared and distributed an
offering statement in connection with the offer and sale of the
Bonds. Such offering statement consists of the preliminary
offering statement together with such changes as may be required
to be added subsequent to such offer and sale (the "Offering
Statement"), The City hereby authorizes the distribution of the
Offering Statement.
(c) Except as the City and the Underwriter may
otherwise agree, the City will deliver to the Underwriter, at its
City Hall or at such other location as may be designated by the
Underwriter, the documents hereinafter mentioned and the Bonds,
duly executed by the City in the manner provided for in the
Resolution and the Bond Act, at 10:00 a.m. local time, on May 19,
1987 (the "Closing Date"), and the Underwriter will accept such
delivery and pay the purchase price of the Bonds as set forth in
paragraph (a) of this section in Federal Funds (such delivery and
payment being herein referred to as the "Closing"). The Bonds
shall be made available to the Underwriter not later than 24 hours
prior to the Closing Date for the purposes of inspection and
packaging. The Bonds shall be in fully registered form and shall
be registered in accordance with instructions to be supplied to
the City by the Underwriter. The City may close by issuing one
bond in temporary form to be replaced by definitive bonds at the
expense of the City within thirty (30) days following the Closing
Date.
2. Offering of the Bonds. The Underwriter agrees to make a
bona fide offering of all the Bonds at the initial offering price
or yield to be set forth on the cover page of the Offering
Statement. Subsequent to such initial offering, the Underwriter
reserves the right to change such initial offering price or yield
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as it deems necessary in connection with the marketing of the
Bonds.
3. Representation, Warranties and Agreements of the City.
The City represents and warrants to and agrees with the
Underwriter that:
(a) The City is duly organized and validly existing as
a municipal corporation under the Constitution and laws of the
State of California and has, and at the Closing Date will have,
full legal right, power and authority (i) to enter into this
Purchase Contract, (ii) to issue, sell and deliver the Bonds to
the Underwriter as provided herein, and (iii) to carry out, give
effect to and consummate the transactions contemplated by this
Purchase Contract, the Resolution, the Offering Statement and any
agreements referred to therein.
(b) The City has complied with, and will at the Closing
Date be in compliance in all respects with the Resolution, the
Bond Act, and all other applicable laws and agreements.
(c) The City has, or prior to the Closing Date, will
have, duly and validly: (i) adopted the Resolution and approved
and authorized the execution and delivery of the Bonds, this
Purchase Contract and any other applicable agreements and
authorized the distribution of the Offering Statement; (ii)
authorized and approved the performance by the City of its
obligations contained in, and the taking of any and all action as
may be necessary to carry out, give effect to and cons~mmate the
transactions contemplated by, each of said documents, and at the
Closing Date of the Bonds, the Resolution, this Purchase Contract,
and any other applicable agreements will constitute the valid,
legal and binding obligations of the City and (assuming due
authorization, execution and delivery by such other parties
thereto, where necessary) of the other parties thereto,
enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency and other laws affecting the enforcement of
creditors' rights in general and to the application of equitable
principles if equitable remedies are sought.
(d) To the best of its knowledge, the City is not, and
as of the Closing Date will not be, in breach of or default under
any law or administrative rule or regulation of the State of
California, the United States of America, or of any department,
division, agency or instrumentality of either thereof, or any
applicable court or administrative decree or order or any loan
agreement, note, resolution, indenture, contract, agreement or
other instrument to which the City is party or is otherwise
subject or bound; and the adoption of the Resolution, and the
execution and delivery of the Bonds, this Purchase Contract, the
contract or contracts for the construction of the public
improvements which will be financed with the proceeds from the
sale of the Bonds, any other applicable agreements and the other
instruments contemplated by any of such documents to which the
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City is a party, and compliance with the provisions of each
thereof, will not conflict with or constitute a breach of or
default under any applicable law or administrative rule or
regulation of the State of California, the United States of
America, or of any department, division, agency or instrumentality
of either thereof, or any applicable court or administrative
decree or order or any loan agreement, note, resolution,
indenture, contract, agreement or other instrument to which the
City is a party of is otherwise subject or bound.
(e) All approvals, consents, authorizations, elections
and orders of or filings or registrations with any governmental
authority, board, agency or commission having Jurisdiction which
would constitute a condition precedent to, or the absence of which
would materially adversely affect, the performance by the City of
its obligations hereunder and under the Resolution, the Bonds, and
any other applicable agreements have been obtained and are in full
force and effect.
(f) The Bonds, when delivered to and paid for by the
Underwriter on the Closing Date as provided herein, will be
validly issued and outstanding and entitled to all the benefits
and security of the Resolution.
(g) The special assessment constituting the security
for the Bonds has been duly and lawfully levied under and pursuant
to the Municipal Improvement Act of 1913 and such assessment
constitutes a valid and legally binding lien on the land in the
District.
(h) There are
the land in the District
referred to in paragraph
no outstanding assessment liens against
which are senior to the assessment lien
(g) hereof.
(i) The City has created a valid pledge of, lien upon
and security interest in the unpaid assessment installments in the
District and the interest thereon and the moneys in all funds and
accounts established pursuant to the Resolution, including the
investments thereof, subject in all cases to the provisions of the
Resolution permitting the application thereof for the purposes and
on the terms and conditions set forth therein.
(J) No action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court,
regulatory agency, or public board or body is pending, or to the
knowledge of the City, threatened, in any way affecting the
existence of the City or the titles of its officers to their
respective offices or seeking to restrain or to enjoin the
issuance, sale or delivery of the Bonds, the application of the
proceeds thereof in accordance with the Resolution, or the
collection or application of assessments pledged or to be pledged
to pay the principal of and interest on the Bonds, or the pledge
thereof, or in any way contesting or affecting the validity or
enforceability of the Bonds, the Resolution, any other applicable
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agreements, this Purchase Contract, or any action of the City
contemplated by any of said documents, or in any way contesting
the completeness or accuracy of the Offering Statement or the
powers of the City or its authority with respect to the Bonds, the
Resolution, any applicable agreements, this Purchase Contract or
any action of the City contemplated by any of said documents, or
in any way seeking to enjoin or restrain the City from approving
the further development of the property within the District, or
which would adversely affect the exemption of interest paid on the
Bonds from federal income taxation or California personal income
taxation nor to the knowledge of the City, is there any basis
therefor.
(k) The City will furnish such information, execute
such instruments and take such other action in cooperation with
the Underwriter as the Underwriter may reasonably request to
qualify the Bonds for offer and sale under the "blue sky" or other
securities laws and regulations of such states and other
Jurisdictions of the United States as the Underwriter may
designate.
(1) Any certificate signed by any official of the City
authorized to do so shall be deemed a representation and warranty
by the City to the Underwriter as to the statements made therein.
(m) The City will apply the proceeds of the Bonds in
accordance with the Resolution and all other applicable
documents.
4. Conditions to the Obligations of the Underwriter. The
obligations of the Underwriter to accept delivery of and pay for
the Bonds on the Closing Date shall be subject, at the option of
the Underwriter, to the accuracy in all material respects of the
representations and warranties on the part of the City contained
herein as of the date hereof and as of the Closing Date, to the
accuracy in all material respects of the statements of the
officers and other officials of the City, as well as of the other
individuals referred to herein, made in any certificates or other
documents furnished pursuant to the provisions hereof, to the
performance by the City of its obligations to be performed
hereunder at or prior to the Closing Date and 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 to 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
Richard H. Hatgrove, Bond Counsel for the City, shall be necessary
and appropriate;
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(b) At the Closing Date, the Offering Statement shall
be in form and substance satisfactory to the Underwriter~
(c) Between the date hereof and the Closing Date, the
market price or marketability of the Bonds 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=
(i) legislation introduced in or enacted by the
Congress or recommended to the Congress by the President of the
United States, the Department of the Treasury, the Internal
Revenue Service, or any member of Congress, or favorably reported
for passage to either House of Congress by any committee of such
House to which such legislation has been referred for
consideration, 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 of the United States of America or the
Internal Revenue Service, with the purpose or effect, directly or
indirectly, of imposing federal income taxation upon such interest
as would be received by any holders of the Bonds beyond the extent
to which such interest is subject to taxation as of the date
hereof;
(ii) legislation introduced in or enacted (or
resolution passed) by the Congress 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 gualification 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 underlying arrangements, as
contemplated hereby or by the Offering Statement or otherwise is
or would be in violation of the Federal securities laws as amended
and then in effect;
(iii) a general suspension of trading in
securities on the New York Stock Exchange, or a general banking
moratorium declared by federal, State of New York or State of
California officials authorized to do so, or a war or other
national calamity;
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(iv) 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, eecurities (or interest thereon), the validity or
enforceability of the assessment or the ability of the City to
acquire and construct the Improvement Project as contemplated by
the Resolution and the Offering Statement~ or
(v) any event occurring, or information becoming
known which, in the Judgment of the Underwriter, makes untrue in
any material respect any statement or information contained in the
Offering Statement, or has the effect that the Offering Statement
contains any untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading~ or
(d) At or prior to the Closing Date, the Underwriter
shall have received two counterpart originals or certified copies
of the following documents, in each case satisfactory in form and
substance to the Underwriter=
(i) The Resolution, as adopted on May 6, 1987,
together with a certificate of the City Clerk dated as of the
Closing Date, to the effect that the Resolution is a true, correct
and complete copy of the one duly adopted by the City and that it
has not been further amended, modified or rescinded (except as may
have been agreed to by the Underwriter) and is in full force and
effect as of the Closing Date;
(ii) An unqualified approving opinion, dated the
Closing Date and addressed to the City, of Richard H. Hatgrove,
Bond Counsel for the City, in customary form for such
transactions, approving the validity of the Bonds, the levy of the
assessments and the exemption of interest on the Bonds from
federal income taxes and from personal income taxes of the State
of California, and an unqualified opinion of such counsel, dated
the Closing Date and addressed to the City that it may be relied
upon by the Underwriter to the same extent as if such opinion was
addressed to it;
(iii) A certificate, dated the Closing Date and
signed by the Mayor, City Manager, .Finance Director or such other
officer of the City as the Underwriter may select, to the effect
that (1) the representations and warranties of the City contained
herein are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing
Date; (2) to the best knowledge of said officer, the information
contained in Appendix B is true and correct and not misleading in
any material respect; and (3) the City has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied under this Purchase Contract, and the
Resolution at and prior to the Closing Date;
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(iv) An opinion, dated the Closing Date and
addressed to the Underwriter, of the City Attorney, to the effect
that (1) no action, suit, proceeding, inquiry or investigation, at
law or in equity, before or by any court, regulatory agency,
public board or body, is pending or, to his knowledge, threatened
in any way affecting the existence of the City or the titles of
its officers to their respective offices, or seeking to restrain
or to enjoin the issuance, sale or delivery of the Bonds, the
application of the proceeds thereof in accordance with the
Resolution, or the collection or application of the
assessments and the interest thereon to pay the principal of and
interest on the Bonds, or in any way contesting or affecting the
validity or enforceability of the Bonds, the Resolution, this
Purchase Contract, or any other applicable agreements or any
action of the City contemplated by any of said documents, or in
any way contesting the the powers of the City or its authority
with respect to the Bonds, the Resolution, this Purchase Contract,
or any other applicable agreement, or any action on the part of
the City contemplated by any of said documents, or in any way
seeking to enjoin or restrain the City from approving the further
development of the property within the District, or which
challenges the exemption of interest paid on the Bonds from
federal income taxation, nor California personal income taxation
nor to his knowledge is there any basis therefor~ (2) the City is
duly organized and validly existing as a municipal corporation
under the Constitution and laws of the State of California, with
full legal right, power and authority to issue the Bonds and to
perform all of its obligations under this Purchase Contract, the
Bonds, and all other applicable agreements~ (3) the City has duly
and validly adopted the Resolution, and it is in full force and
effect~ and (4) the City has duly authorized, executed and
delivered this Purchase Contract and has authorized the
distribution of the Offering Statement~
(vi) A transcript of all proceedings relating to
the authorization, issuance, sale and delivery of the Bonds~
(vii) Such
certificates, proceedings,
Underwriter or Richard H.
request.
additional legal opinions,
instruments and other documents as the
Hatgrove, Bond Counsel, may reasonably
All the opinions, letters, certificates,
instruments and other documents mentioned in this section or
elsewhere in this Purchase Contract shall be deemed to be in
compliance with the terms hereof if, and only if, they are in form
and substance satisfactory to the Underwriter.
If any of the conditions to the obligations of the
Underwriter contained in this section or elsewhere in this
Purchase Contract shall not have been satisfied when and as
required herein, or if the obligations of the Underwriter to
accept delivery and to pay for the Bonds shall be terminated for
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any reason permitted by this Purchase Contract, all obligations of
the Underwriter and the City hereunder terminate at, or at any
time prior to, the Closing Date and neither the Underwriter nor
the City shall be under any further obligation hereunder, except
that the respective obligations of the Underwriter and the City
set forth in Section 4 hereof shall continue in full force and
effect.
5. Expenses. (a) The City shall pay or cause to be paid
all expenses incident to the performance of the Cityts obligations
hereunder, including but not limited to: the cost of printing,
engraving and delivering the Bonds to the Underwriter~ the cost of
preparation, printing (and/or word processing and reproduction),
distribution and delivery of the Resolution, the Offering
Statement and all other agreements and documents contemplated
thereby (and drafts of any thereof) in such reasonable quantities
as requested by the Underwriter~ and the fees and disbursements of
the paying agent and registrar for the Bonds and the Bond Counsel,
financial consultant and any accountants, engineers or other
experts or consultants the City has retained in connection with
the Bonds~
(b) Whether or not the Bonds are delivered to the
Underwriter as set forth herein, 'the City shall be under no
obligation to pay, and the Underwriter shall pay the cost or
preparation of any "blue sky" or legal investment memoranda and
this Purchase Contract~ expenses to qualify the Bonds for sale
under any "blue sky" or other state securities laws~ and all other
expenses incurred by the Underwriter in connection with its public
offering and distribution of the Bonds (except those specifically
enumerated in paragraph (a) of this section), including the fees
and disbursements of their counsel and any advertising expenses.
6. Notices. Any notice or other communication to be given
to the City under this Purchase Contract may be given by
delivering the same in writing at the City~s address set forth
above, Attention: Finance Director~ and any notice or other
communication to be given to the Underwriter may be given by
delivering the same in writing to Kelling, Northcross & Nobriga
Incorporated, 4 Embarcadero Center, Suite 1610, San Francisco,
California 94111, Attention: President and to Drexel Burnham
Lambert Incorporated, Pacific Financial Center, 444 South Flower
Street, 27th Floor, Los Angeles, California 90017, Attention: Vice
President and Manager.
7. Parties in Interest. This Purchase Contract is made
solely for the benefit of the City and the Underwriter (including
successors or assignees of any Underwriter) and no other person,
including but not limited to any owner of land within the
District, shall acquire or have any right hereunder or by virtue
hereof.
8. Survival of Representations and Warranties. The
representations and warranties of the City, set forth in or made
pursuant to this Purchase Contract, shall not be deemed to have
been discharged, satisfied or otherwise rendered void by reason of
the Closing or termination of this Purchase Contract and
regardless of any investigations made by or on behalf of the
Underwriter (or statements as to the results of such
investigations) concerning such representations and statements of
the City and regardless of delivery of and the payment for the
Bonds.
9. Execution in Counterparts. This Contract of Purchase
may be executed in several counterparts each of which shall be
regarded as an original and all of which shall constitute one and
the same document.
10. Applicable Law. This Contract of Purchase shall be
interpreted, governed and enforced in accordance with the laws of
the State of California.
Very truly yours,
KELLING, NORTHCROSS & NOBRIGA INCORPORATED
By
DREXEL BURNHAM LAMBERT INCORPORATED
By
Accepted:
CITY OF BAKERSFIELD
By
Finance Director
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EXHIBIT A
$889,944
CITY OF BAKERSFIELD
IMPROVEMENT BONDS
ASSESSMENT DISTRICT NO. 86-5
Year
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Principal
Amount
$ 34,944
55,000
60,000
65,000
65,000
70,000
75,000
80,000
85,000
95,000
100,000
105,000
Interest
Rate
5.5O%
6.00
6.25
6.50
6.75
7.00
7.20
7.40
7.50
7.60
7.70
7.80
PRELIMINARY OFFERING STATEMENT DATED APKIL 29, 1987
In the opinion of Bond Counsel. under existing laws, reg~dations, rulings, and judicial decisions, and assuming
compliance with the provisions of the Bond Resolution designed to meet the re. quire,~ents of Section 148~9 of the
Internal Revenue Code of 1986, as amended, and regulations thereunder (the 'Code ), the interest on the bonds is
exempt from income taxation by the United States of ,4merles and from personal income taxation by the State of
California. provided, however, that in the case of corporations subject to the alternative minimum tax described in
Section $$ of the Code and to the environmental tax described in Section $9,4 of the Code. said interest will be
included in adjusted net book income and adjusted current earnings for the purpose of determining alternative
minimum taxable income under Sections $6~I~ and 56(g). respectively, of the Code and for the purpose of dete, rmining
modified alternative minimum taxable income under Section 59/1(b} of the Code. See "T.4X EXEMPTION herein.
$889,944*
CITY OF BAKERSFIELD
(Kern County, California)
ASSESSMENT DISTRICT NO. 86-5
Dated: May 19, 1987 Due: September 2 as shown below
The Bonds are issued pursuant to the Improvement Bond Act of 1915 (Division 10 of the California Streets and
Highways Code) (the "Bond Act") and are secured by the unpaid assessments levied in proceedings conducted by the
City of Bakersfield, California pursuant to the Chatter and Municipa Code of the Cty of Bakersfield and the
Mun c pa Improvement Act of 1913 (Division 12 of the California Streets and Highways Code).
Thc Bonds are issued only as fully registered bonds in denominations of S5 000 each or any integral multiple
thereof, except for one Bond in an odd amount due n 1988. Principal of and premium, if any, on the Bonds are payable
at the principal corporate trust oltice of Bank of America National Trust and
Savings
Association,
Los
Angeles,
California, Paying Agent, Registrar and Transfer Agent. Interest (other than the final payment of interest) is payable
commencing March 2. 1988. The Bonds will mature on September 2 of each of the years and in the amounts and will
bear interest at the rates shown in thc maturity schedule set forth below.
The Bonds are subject to redemption on any March 2 or September 2 in advance of maturity by the City if there
ate sufficient surplus funds available for the purposn in the Redemption Fund upon giving 60 days prior notice and upon
payment of the principal and interest accrued thereon to the date of redemption or earlier surrender, plus a redemption
premium of three percent (3%) of the principal amount of the Bonds to be redeemed.
Under the provisions of the Bond Act, installments of principal and interest sufficient to meet annual Bond debt
service are included on the regular County of Kern tax hills sent to owners of property against which there are unpaid
If a delinquency occurs in the payment of any assessment installment, the City has a duty to transfer into the
Redemption Fund the amount of the delinquency out of available funds of the City. Available funds consist of the
balance in the Reserve Fund together with any surplus funds of the City not required for lawful municipal obligations.
This duty of thc City is continuing during the period of delinquency, until reinstatement, redemption or sale of the
delinquent property. THERE IS NO ASSURANCE THAT FUNDS WILL BE AVAILABLE FOR THIS PUR-
POSE AND IF. DURING THE PERIOD OF DELINQUENCY. THERE ARE INSUFFICIENT AVAILABLE
FUNDS, A DELAY MAY OCCUR IN PAYMENTS TO THE OWNERS OF THE BONDS. THE BONDS ARE
NOT GENERAL OBLIGATIONS OF THE CITY, OF THE STATE OF CALIFORNIA OR OF ANY OTHER
POLITICAL SUBDIVISION OF THE STATE AND NEITHER THE CITY NOR THE STATE NOR ANY
POLITICAL $UBD[VISION OF THE STATE HAS PLEDGED ITS FULL FAITH AND CREDIT FOR THE
PAYMENT THEREOF.
To provide funds for payment of the Bonds and thc interest thereon as a result of any delinquent installments thc
City will establish a Reserve Fund and deposit therein Bond proceeds in the original amount of four percent (4%) of the
aggregate principal amount of the Bonds. Additiona[ly, the City has convenanted to initiate judicial foreclosure in the
event of a delinquency and to commence the procedure within 150 days following such delinquency.
The information set forth in this Official Statement, including information under the heading "RISK FACTORS"
should be rend in its entirety.
Due Principa| Interne Due Pr~ipal
~ptem~r 2 Amount* . Rate PHce ~ptem~r 2 Amo~t*
1988 $34,944 % 1994 $ 75,0~
1989 55,000 1995 80.000
1990 60,000 1996 85.000
1992 65,000 1998 100,000
1993 70,000 1999 105,000
Rate Price
The Bonds are offered when. as and if issued and delivered to the Underwriters subject to the approval of Richard
H. Hargrove, Fresno. California. Bond Counsel and certain other conditions. It is expected that the ~onds in definitive
form will be available for delivery in New York. New York on or about May 19, 1987.
KELLING, NORTHCROSS & NOBRIGA
INCORPORATED
DREXEL BURNHAM LAMBERT
INCORPORATED
Dated: May . 198'/
*Preliminary. subject to change.
TO WHOM IT MAY CONCERN:
The purpose of this Offering Statement, which includes
the cover page, table of contents and appendices, is to provide
information concerning the sale and issuance of $889,944*
principal amount of City of Bakersfield Improvement Bonds,
Assessment District No. 86-5 ("the Bonds") proposed to be issued
by the City of Bakersfield ("the City,,) pursuant to the Charter
and Municipal Code of the City of Bakersfield and the Improvement
Bond Act of 1915 (the "Bond Act").
C'~ The. i~formati~n.set forth herein has been furnished by the
l=y an~ from cer=aln other sources which are believed to be
accurate and reliable but is not guaranteed as to accuracy or
completeness, and is not to be construed as a representa~ion ?f
such by the City or the Underwriters. Statements contained in
this Offering Statement which involve estimates, forecasts,
other matters of opinion, or
whether or not expressly so described
herein, are intended solely as such and are not to be construed as
representations of fact. Further, the information and expressions
of opinion contained herein are subject to completion or amendment
without notice.
No dealer, broker, salesman or other person has been
authorized by the City or the Underwriters to give any information
or to make any representations other than those contained in this
Official Statement, and, if given or made, such other information
or representations must not be relied upon as having been
authorized by the City or the Underwriters. This Offering
Statement does not constitute an offer to sell or the solicitation
of an offer to buy, nor shall there be any sale of the Bonds by
any person in any jurisdiction in which it is unlawful for such
person to make such offer, solicitation or sale. The delivery of
this Offering Statement shall not, under any circumstances, create
any implication that there has been no change in the affairs of
the City, the Improvement Project or the District since the date
hereof.
The summaries and references to the Bond Act, the Bond
Resolution and to other statutes and documents referred to herein
do not purport to be comprehensive or definitive, and are
qualified in their entireties by reference to each such statute
and document.
This Offering Statement does not constitute a contract
between any bondowner and the City or the Underwriters.
*Preliminary, subject to change
CITY OF
Thomas A. Payne
Mayor
NAYORAND CITY COUNCIL
J. M. Christensen
Patricia M. Smith
Ronald K. Ratty
James Henry Childs
Vice Mayor
Rollie Moore
Mark G. Dickerson
Mark C. Salvaggio
CITY STAFF
Gregory Klimko
Finance Director
George A. Caravalho
City Manager
Richard J. Oberholzer
City Attorney
Mary L. Strenn
Deputy City Manager
J. Dale Hawley
Superintendent of Streets
Carol Williams
City Clerk
Kenneth R. Pulskamp
Assistant City Manager
BOND COUNSEL
Richard H. Hargrove
Fresno, California
ASSESSMENT ENGINEER
Willdan Associates
Anaheim, California
PAYING AGENT, I~EGIS~ARAND TRANSFER AGENT
Bank of America National Trust & Savings Association
Los Angeles, California
TABLE OF CONTENTS
INTRODUCTION
THE BONDS . .
Authority for issuance
Description of the Bonds
Optional Redemption and Prepayment of Bonds
Security for the Bonds
Obligation of the City Upon
Reserve Fund
Covenant to Con;n e'S&p;rio &o&r& o e &sur,
Priority of Lien
Annual Debt Servic~ .
SOURCES AND USES OF FUNDS
THE IMPROVEMENT PROJECT Scope
Method of Spread
THE DISTRICT General
Unpaid Assessments
Assessed Valuation
Property Tax Status
RISK FACTORS
General
Bankruptcy .
Availability of 6i~y Funds
Articles XIII A and B of State Constitution
LEGAL OPINION
TAX EXEMPTION
NO LITIGATION
NORATING
UNDERWRITING
ADDITIONAL INFORMATION .
APPENDIX A EXCERPT FROM ASSESSMENT DIAGRAM
APPENDIX B CITY GENERAL AND FINANCIAL INFORMATION
APPENDIX C ECONOMIC PROFILE
1
2
2
3
4
4
5
5
6
7
8
8
9
9
9
10
10
10
11
11
11
11
12
12
13
14
14
16
16
16
16
.A-1
.B-1
.C-1
IN CONNECTION WITH THIS OFFERING OF THE BONDS, THE
UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE
OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE
UNDERWRITERS MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND
BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING
PRICES STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING
PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS.
OFFERING STATEMENT
$ 889,944*
CITY OF BAKERSFIELD
(Kern County, California)
IMPROVEMENT BONDS
ASSESSMENT DISTRICT NO. 86-5
IBTKODUCTION
The purpose of this Offering Statement, which includes the
cover page, table of contents and appendices, is to provide
information concerning the sale and issuance of $889,944*
principal amount of City of Bakersfield Improvement Bonds,
Assessment District No. 86-5..(the "Bonds").
The Bonds are being issued by the City of Bakersfield (the
"City") to finance the construction of sanitary sewer improvements
as more fully described herein under the heading "THE IMPROVEMENT
PROJECT" (the "Improvement Project").
Assessment District No. 86-5 (the "District") contains four
fully developed residential areas recently annexed by the City.
There are 447 parcels in the District with unpaid assessments
which have a combined 1986/87 assessed valuation of $4,396,994 for
land only and $23,839,200 for land and improvements. See "THE
DISTRICT" for a more complete discussion of the District.
The Bonds are issued upon and secured by the unpaid
assessments together with interest thereon, and said unpaid
assessments together with interest thereon constitute a trust fund
for the redemption and payment of the principal of the Bonds and
the interest thereon. All the Bonds are additionally secured by
the monies in a redemption fund (the "Redemption Fund") created
pursuant to the assessment proceedings. The unpaid assessments
represent fixed liens on the lots and parcels assessed. They do
not, however, constitute a personal indebtedness of the owner or
owners of said lots and parcels.
under the provisions of the Improvement Bond Act of 1915,
installments of principal and interest sufficient to meet annual
debt service on the Bonds are to be included on the regular county
tax bills sent to owners of property against which there are
unpaid assessments. These annual installments are to be paid into
*Preliminary, subject to change
1
a Redemption Fund, which will be held by the City and used to pay
Bond principal and interest as it becomes due, and are subject to
the same provisions for recovery as are applicable for nonpayment
of general taxes. The installments billed against each property
each year represent a pro rata share of the total principal and
interest coming due that year, based on the percentage which the
unpaid assessment against that property bears to the total of
unpaid assessments.
If a delinquency occurs in the payment of any assessment
installment, the City has e duty to transfer into the Redemption
Fund the amount of the delinquency out of available funds of the
City. Available funds consist of the balance in the Reserve Fund
together with any funds of the City not required for lawful
municipal obligations. This duty of the City is continuing during
the period of delinquency, until reinstatement, redemption or sale
of the delinquent property. There is no assurance that funds will
be available for this purpose and if, during the tax sale process,
there are insufficient funds a delay may occur in payments to the
owners of the Bonds or there may be insufficient funds to make
such payments.
A reserve fund (the "Reserve Fund") for the Bonds will be
established. The Reserve Fund shall initially be funded in an
amount equal to four percent (4%) of the total principal amount of
Bonds issued. The Reserve Fund will be a source of available
funds to advance to the Redemption Fund in the event of delinquent
installments. Additionally, the City has covenanted to institute
judicial foreclosure proceedings within 150 days following the
date of a delinquency, and thereafter diligently prosecute to
completion, such foreclosure proceedings upon the lien of any and
all delinquent unpaid assessments and interest. In such
foreclosure proceedings the City may sell property for the amount
of the delinquent installment only.
The Bonds are not general obligations of the City, of the
State of California or of any political subdivisions of the State,
and neither the City nor the State nor any political subdivision
of the State has pledged its full faith and credit for the payment
thereof.
Authority for Issuance
The improvement proceedings for the District are being
conducted pursuant to the Charter and Municipal Code of the City
of Bakersfield and the Municipal Improvement Act of 1913 ("the
Improvement Act") and Resolution of Intention No. 1019, as
amended, adopted by the City Council on February 4, 1987. The
Bonds, which represent the unpaid assessments levied against
property in the District are issued pursuant to the provisions of
the Charter and Municipal Code of the City of Bakersfield and the
2
Improvement Bond Act of 1915 ("the
Determining Unpaid Assessments and
Bonds, adopted by the City on May
Resolution").
Bond Act") and A Resolution
Providing for Issuance of
, 1987 (the "Bond
Description of the Bonds
The Bonds are dated May 19, 1987 and mature serially in
various amounts on each September 2 commencing September 2, 1988
and ending September 2, 1999. Interest is payable commencing on
March 2, 1988, and semiannually thereafter on March 2 and
September 2 of each year until maturity or prior redemption. The
Bonds are issued only as fully registered Bonds in denominations
of $5,000 each or any integral multiple thereof, except for one
bond in an odd amount due in 1988. Principal of, interest at
maturity or upon prior redemption, as applicable, and premium, if
any, on the Bonds are payable at the principal corporate trust
office of Bank of America National Trust and Savings Association,
Los Angeles, California, Paying Agent, Registrar and Transfer
Agent ("the Paying Agent"). Interest (other than at maturity or
upon prior redemption) shall be paid by check or draft of the
Paying Agent mailed to the registered owners (as shown on the
registration books kept by the Paying Agent) as of the date 15
days prior to each March 2 or September 2, as applicable. The
Bonds mature in the amounts and on the dates as shown in the
following maturity schedule.
Due Principal
September 2 Amount *
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
34 944
55 000
60 000
65 000
65 000
70 000
75 000
80 000
85 000
95 000
100 000
105 000
*Preliminary, subject to change
Optional Redemption and Prepayment of Bonds
Any Bond may be called for redemption prior to maturity on
any March 2 or September 2 upon payment of one hundred three
percent (103%) of par value, plus accrued interest to the date of
surrender or the date of redemption, whichever is earlier. No
interest will accrue on a Bond beyond the March 2 or September 2
on which said Bond is called for redemption. Notice of redemption
must be given to the registered owner of the Bond by personal
service or registered mail at least 60 days prior to the
redemption date. The determination as to which Bond or Bonds are
to be called will be made by the City in accordance with the Bond
Act.
Any prepayment of all or part of any assessment would, and
the issuance of refunding bonds may, result in redemption of all
or a portion of the Bonds prior to their stated maturities. A
transfer or transfers of property ownership and other similar
circumstances could result in prepayment of all or part of any
assessment. Pursuant to the Refunding Act of 1984 for 1915
Improvement Act Bonds, Division 11.5 of the Streets and Highways
Code of the State of California, the City may issue refunding
bonds for the purpose of redeeming the Bonds.
Security for the Bonds
The Bonds are issued upon and secured by the unpaid
assessments against the property in the District together with
interest thereon, and said unpaid assessments together with
interest thereon constitutes a trust fund for the redemption and
payment of the principal of the Bonds and the interest thereon.
All the Bonds are secured by the monies in the Redemption Fund and
the Reserve Fund created pursuant to the proceedings and by the
unpaid assessments levied to provide for payment of said
acquisition and construction of improvements. Principal of and
interest on the Bonds are payable exclusively out of the
Redemption Fund.
Each assessment and each installment thereof and any interest
and penalties thereon constitute a lien against the single parcel
of land on which it is levied until the same is paid. Such lien
is subordinate to all fixed special assessment liens previously
imposed upon the same property, but has priority over all existing
and future private liens and over all fixed special assessment
liens which may thereafter be created against the property. Such
lien is co-equal to and independent of the lien for general
property taxes and any community facilities district special
taxes. There are no prior special assessment liens against the
parcels in the District and the land within the District does not
presently lie within the boundaries of any community facilities
district.
4
The Bonds are not secured by the general taxing power of the
City, or the State or any political subdivision of the State, and
neither the City nor the Stete nor any political subdivision of
the Stete has pledged its ftu11 faith and credit for the payment
thereo f.
Although the unpaid assessments constitute a fixed lien on
the parcels assessed, they do not constitute a personal
indebtedness of the respective owners of said parcels.
Furthermore, there can be no assurance as to the ability or the
willingness of such owners to pay the unpaid assessments.
The unpaid assessments will be collected in annual
installments, together with interest on the declining balance, on
the County of Kern tax roll on which general taxes on real
property are collected and are payable and become delinquent at
the same time and in the same proportionate amounts and bear the
same proportionate penalties and interest after delinquency as do
said general taxes, and the property upon which the assessments
were levied are subject to the same provisions for sale and
redemption as are properties for nonpayment of general taxes.
These annual assessment installments are to be paid into the
Redemption Fund which will be held by the City and used to pay the
principal of and interest on the Bonds as they become due.
Obligation of the City Upon Delinquency
If a delinquency occurs in the payment of any assessment
installment, the City will have the duty to transfer into the
Redemption Fund the amount of such delinquent installment out of
available funds of the City. Available funds consist of the
balance in the Reserve Fund together with any funds of the City.
This duty of the City is continuing during the period of
delinquency, until reinstatement, redemption or sale of the
delinquent property. There is no assurance that funds will be
available for this purpose and if, during the period of
delinquency, there are insufficient funds, a delay may occur in
payments to the owners of the Bonds. For information on City
finances, see APPENDIX B herein. See also "Reserve Fund" below,
and the section entitled "RISK FACTORS."
Reserve Fund
Out of the proceeds of the sale of the Bonds, the City
will set aside a Reserve Fund in the amount of four percent (4%)
of the principal amount of the Bonds. The Reserve Fund will
constitute a trust fund for the benefit of the holders of the
Bonds. The Reserve Fund will be maintained, used, transferred,
reimbursed and liquidated as follows:
(a) Whenever there are insufficient funds in the Redemption
Fund to pay the next maturing installment of principal of or
5
interest on the Bonds, an amount necessary to make up such
deficiency will be transferred from the Reserve Fund, to the
extent of available funds, to the Redemption Fund. The amounts so
advanced will be reimbursed from the proceeds of redemption or
sale of the parcel for which payment of delinquent installments of
the assessments and interest thereon has been made from the
Reserve Fund.
(b) If any assessment or any portion thereof is prepaid
prior to the final maturity of the Bonds, the amount of principal
of the assessment to be prepaid will be reduced by an amount which
will be determined by multiplying the then current balance of the
Reserve Fund by the percentage which the original unpaid amount of
the prepaid assessment is to the total amount of the original
unpaid assessment on the land in the District. The reduction in
the amount of principal prepaid shall be compensated for by a
transfer of like amount from the Reserve Fund to the Redemption
Fund.
(c) Investment income from the Reserve Fund will remain in
the Reserve Fund until the balance therein is equal to the lesser
of the maximum annual debt service to be paid on the Bonds then
outstanding or the maximum amount that may be set aside as a
reserve fund without limitation on yield as provided by the
Internal Revenue Code of 1986. If at any time the amount in the
Reserve Fund exceeds this limitation, such excess shall be
credited against the next payment of assessment installments due.
(d) When the balance in the Reserve Fund is sufficient to
retire all Bonds then outstanding (whether by advance retirement
or otherwise), the amount of the Reserve Fund will be transferred
to the Redemption Fund, and the remaining installments of
principal and interest not yet due from the assessed property
owner will be cancelled without payment, and the Reserve Fund will
be liquidated upon the retirement of the Bonds.
Covenant to Commence Superior Court Foreclosure
The Bond Act provides that in the event any assessment or
installment thereof or any interest thereon is not paid when due,
the City may order the institution of a court action to foreclose
the lien of the unpaid assessment. In such an action, the real
property subject to the unpaid assessment may be sold at Judicial
foreclosure sale. This foreclosure sale procedure is not
mandatory. However, in the Bond Resolution, the City has
covenanted with the Bondowners that, in the event any assessment
or installment thereof, including any interest thereon, is not
paid when due, it will order, and cause to be commenced within 150
days following the date of delinquency, and thereafter diligently
prosecute to completion, court foreclosure proceedings upon the
lien of any and all delinquent unpaid assessments and interest.
In the event such Superior Court foreclosure or foreclosures are
necessary, there may be a delay in payments to Bondowners pending
prosecution of the foreclosure proceedings and receipt by the City
of the proceeds of the foreclosure sale~ it is also possible that
no bid for the purchase of the applicable property would be
received at the foreclosure sale. See also the section herein
entitled "RISK FACTORS."
Prior to July 1, 1983, the right of redemption from
foreclosure sales was limited to a period of one year from the
date of sale. Under legislation effective July 1, 1983, the
statutory right of redemption from such foreclosure sales has been
repealed. However, a period of 150 days must elapse after a court
adjudges and decrees a lien against the lot or parcel of land
covered by an assessment before the sale of such parcel can be
given. Furthermore, if the purchaser at the sale is the Judgment
creditor, i.e., the City, an action may be commenced by the
delinquent property owner within 6 months after the date of sale
to set aside such sale. The constitutionality of the
aforementioned legislation which repeals the one year redemption
period has not been tested and there can be no assurance that, if
tested, such legislation will be upheld.
Priority of Lien
Each assessment (and any reassessment) and each installment
thereof, and any interest and penalties thereon, constitute a lien
against the parcel of land on which it was imposed until the same
is paid. Such a lien is subordinate to all fixed special
assessment liens previously imposed upon the same property, but
has priority over all private liens and over all fixed special
assessment liens which may thereafter be created against the
property. Such a lien is co-equal to and independent of the lien
for general taxes and any community facilities district special
taxes. There are no prior special assessment liens against the
parcels in the District and the land within the District does not
presently lie within the boundaries of any community facilities
district.
7
Annual Debt Service
(1)
Due September 2
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Principal* Interest** Total
$ 34,944 $ 80,902(1) $ 115,846
55,000 61,070 116,070
60,000 57,908 117,908
65,000 54,158 119,158
65,000 49,932 114,932
70,000 45,545 115,545
75,000 40,645 115,645
80,000 35,283 115,283
85,000 29,442 114,442
95,000 23,110 118,110
100,000 15,890 115,890
105,000 8t190 113,190
$ 889,944
Represents interest from May 19,
$ 502,075
$ 1,392,019
1987 to September 2, 1988.
SOURCES AND USES OF FUNDS
The proceeds of the Bonds (other than accrued interest)
together with certain other funds will be applied as follows:
SOURCES
Bonds (par value)
City Contribution
Cash Payments
889,944
250,317
127,347
TOTAL SOURCES
$ 1,267,608
USES
Construction
Reserve Fund
Cost of Issuance
Discount
$ 1,149,460
35,597
64,752
17,799
TOTAL USES
$ 1,267,608
*Preliminary, subject to change
**Estimate, subject to change
8
Scope
Most properties in the District currently are not connected
to the public sewage system and are served by onsite septic tank
facilities. In order to avoid potential sewage overflows, a
majority of the property owners within the District petitioned the
City to institute assessment proceedings to finance the
construction of sewer improvements.
More specifically, the Improvement Project consists of the
construction of a sanitary sewer system together with house
laterals, manholes, cleanouts, fittings, asphalt patching of all
streets and appurtenances thereto within the boundary of the
District, including, but not limited to, all those works,
appliances and appurtenant facilities necessary to operate the
facilities.
The City will engineer and supervise the construction of the
Improvement Project. Work on the Improvement Project is expected
to commence in May 1987 and is expected to be completed by
October 1987. Upon completion, the City will own, operate and
maintain the Improvement Project.
Method of Spread
Assessments levied pursuant to the provisions of the
Improvement Act must be based on the benefit that the subject
properties receive from the works of improvement. The statute
does not specify the method or formula that should be used in any
particular special assessment district proceeding. That
responsibility rests with the Assessment Engineer, who is retained
by the City for the purpose of making an analysis of the facts and
determining the correct apportionment of the assessment
obligation. For these proceedings, the City has retained the
services of Willdan Associates, Anaheim, California as Engineer
(the "Assessment Engineer").
Pursuant to the Improvement Act, the Assessment Engineer
makes his recommendations as to the cost and method of
apportionment of the special assessments at the public hearing on
the District, and final authority and action with respect to the
levy of the assessments rests with the City Council after hearing
all testimony and evidence presented at the public hearing. Upon
the conclusion of the public hearing, the City Council must take
final action in determining whether or not the assessment
apportionment has been made in direct proportion to the benefits
received by the properties assessed.
Most of the properties in the District are zoned for single-
family residential use and contribute similar sewage discharge.
The location and size of the sewer facilities will provide to each
9
property the availability of a public sewer. Thus, the benefit of
the sewer improvements are aesessed on a per-parcel basis. In a
few cases where multiple dwelling units exist or can be developed
upon a single parcel, these parcels have been assessed on an
equivalent dwelling unit basis (i.e., a single parcel containing
two duplexes with two residential units in each duplex is assessed
at the rate of two single-family detached residential units). The
single commercial facility within the boundaries of the District
is assessed at the rate of one single-family detached unit.
At several locations there are sewers which have been
constructed by private developments or other public assessment
districts outside the boundaries of the District. Since these
sewers were not financed by the properties which they abut, such
properties are included within the District but are given adjusted
assessments as a result of the partial availability of such
sewers.
All properties have been assessed the Sewer Treatment Plan
capacity charge imposed by the City. This charge is also applied
to those properties abutting existing sewers where such properties
have not previously paid the charge or contributed to the cost of
the sewer. Sewer laterals have been assessed equally to all
properties irrespective of their location, with one exception.
City contributions will be made to cover approximately all of
the incidental costs of the program, together with certain
construction items, such as paving the streets over the sewer
mains to be constructed.
DISTRICT
General
The District consists of four separate areas recently annexed
by the City located in the southwestern portion of the City
adjacent to State Highway 99. The District is fully developed and
contains mostly single-family residences. APPENDIX A contains an
index map of the District. The full assessment diagram is on file
with the City Clerk and with the Kern County Recorder.
Unpaid Assessments
There are 447 parcels in the District with unpaid
assessments. These unpaid assessments range from $969.70 to
$4,453.16, however, over 90% of the parcels with unpaid
assessments have an unpaid assessment of $2,049.08 each. A
complete list of all unpaid assessments is on file with the City
Clerk.
10
Assessed Valuation
The total assessed valuation of land only for the
parcels in the District with unpaid assessments is equal to
$4,396,994 or 4.9 times the amount of the unpaid assessments in
the District. The total assessed valuation of land and
improvements for the parcels in the District with unpaid
assessments is equal to $23,839,200 or 26 times the amount of
unpaid assessments. Individually, assessed valuations range from
$4,637 to $58,605 for land only, and from $20,675 to $156,061 for
land and improvements. The lowest land value to lien ratio for
any one parcel is 2.26:1 and the lowest land and improvement
value to lien ratio for any one parcel is 10:1.
Since the passage of Proposition 13 in 1978, California
assessed valuations are not necessarily equal or proportionate to
current market value. Property valuation for tax purposes in
California is based on "full cash value" which is defined by State
law to mean "the county assessor's valuation of real property as
shown on the 1975/76 tax roll under 'full cash value', or
thereafter, the appraised value of real property when purchased,
newly constructed or a change in ownership has occurred after the
1975 assessment period", subject to exemptions in certain
circumstances of property transfer or reconstruction. The "full
cash value" is subject to annual adjustment to reflect increases,
not to exceed 2% per year, or decreases in the consumer price
index or comparable local data, or to reflect reductions in
property value caused by damage, destruction or other factors.
Property Tax Status
A review of the Kern County tax rolls, as of March 15, 1987
showed that 34 parcels with unpaid assessments were delinquent in
the payment of the first installment of 1986/87 property taxes.
The delinquent taxes amounted to $22,061.42, of which $14,018.52
are delinquencies from prior years. All other assessment parcels
have been paid current through March 15, 1987.
The second installment of taxes for 1986/87 become
delinquent, if not paid, on April 10, 1987. No assurances can be
made that all of the assessment parcels will not be delinquent on
the second installment.
RISK FACTOldS
General
In order to pay debt service on the Bonds, it is necessary
that unpaid installments of the assessments on property within the
District are paid in a timely manner. Should the installments not
be paid on time, the City has established a Reserve Fund in the
amount of four percent (4%) of the principal amount of the Bond
11
issue to cover delinquencies, and, pursuant to the Bond
Resolution, will use available surplus funds of the City to pay
such delinquent installments. In the event of a default in the
payment of an assessment installment, the City must institute
foreclosure proceedings within 150 days to sell the parcel with
delinquent installments for the amount of such delinquent
installments in order to obtain funds to pay debt service on the
Bonds.
Failure by owners of the assessed parcels to pay installments
of the assessments when due, depletion of the Reserve Fund or the
inability of the City to sell the property if it is subject to
foreclosure proceedings for amounts sufficient to cover the
delinquent installments of the assessment levied against such
property may result in the inability of the City to make full or
punctual payments of debt service on the Bonds and Bondowners
would therefore be adversely affected.
The unpaid assessments do not constitute a personal
indebtedness of the owners of the parcels within the District.
There is no assurance that the owners will be able to pay the
assessment installments or that they will pay such installments
even though they may be financially able to do so.
The payment of the owners' assessment installments and the
ability of the City to foreclose the lien of a delinquent unpaid
assessment installment, as discussed in the section herein
entitled "THE BONDS--Security for the Bonds", may be limited by
bankruptcy, insolvency, or other laws generally affecting
creditors' rights or by the laws of the State relating to Judicial
foreclosure.
Although bankruptcy proceedings would not cause the
assessment lien to become extinguished, bankruptcy of any of the
owners could result in a delay in the City prosecuting Superior
Court foreclosure proceedings. Such delay may increase the
likelihood of a delay or a default in payment of the principal of
and interest on the Bonds. Moreover, amounts received upon
foreclosure sales may not be sufficient to fully repay outstanding
Bonds. Bond Counsel's approving legal opinion will be qualified
as to the enforceability of the various legal instruments, by
bankruptcy, reorganization, insolvency or other similar laws
affecting the rights of creditors generally.
Availability of City Funds
As discussed herein under "THE BONDS--Obligation of the City
Upon Delinquency," if a delinquency occurs in the payment of any
reassessment installment, the City has a duty to transfer into the
Redemption Fund the amount of the delinquency out of available
12
funds of the City. Available funds consist of the balance in the
Reserve Fund together with any surplus funds of the City not
required for lawful municipal obligations. This duty of the City
is continuing during the period of delinquency, until
reinstatement, redemption or sale of the delinquent property.
There is no assurance that funds will be available for this
purpose and if, during the period of delinquency, there are
insufficient available funds, a delay may occur in payments to the
owners of the Bonds. In order to provide a source of surplus
funds for such purpose, the City will establish a Reserve Fund out
of Bond proceeds in the amount of four percent (4%) of the
principal amount of the Bond issue. If the Reserve Fund were ever
depleted as a result of a major or prolonged delinquency in the
payment of reassessment installments, the City would be obligated
to advance available funds to the Redemption Fund in order to pay
principal and/or interest on the Bonds.
Articles XIII A and B of State Constitution
On June 6, 1978, California voters approved an amendment to
the California Constitution commonly known as Proposition 13, the
Jarvis/Gann Amendment, which added Article XIIIA to the California
Constitution. On November 6, 1979, California voters approved a
further amendment commonly known as Proposition 4, the Gann
Initiative, which added Article XIIIB to the California
Constitution.
On July 2, 1979, the Fifth District Court of Appeal (94 Cal.
App. 3d 974) rendered a 3-0 decision in the case of County of
Fresno vs Maimstrom that determined that special assessments are
not subject to the limitations of Article XIIIA (Proposition 13).
The Court held the one percent tax limitation imposed by
California Constitution Article XIIIA on ad valorem taxes does not
apply to special assessments levied pursuant to Streets and
Highways Code, Section 5000 et seq. and 10000 et seq., the
Improvement Act of 1911 and the Municipal Improvement Act of 1913.
The Court further held that because special assessments pursuant
to such acts are not within the definition of "special taxes" in
Article XIIIA, the Constitution does not require the levy of
assessments and the issuance of bonds to be approved by a two-
thirds vote of the qualified electors of the District. On
September 12, 1979, the California Supreme Court refused to hear
an appeal of the lower court~s decision.
On December 17, 1980, the Third District Court of Appeal (113
Cal. App. 3d 443) rendered a 3-0 decision in the case of County of
Placer v. Corin that determined that special assessments are not
subject to the limitation of Article XIIIB (Proposition 4). The
Court held that the definition of "proceeds of taxes" imposed by
California constitution Article XIIIB does not apply to special
assessments and improvement bonds issued pursuant to Streets and
Highways Code, Sections 8500 et seq., and 1000 et seq., the
13
Improvement Bond Act of 1915 and the Municipal Improvement Act
of 1913. The decision of the Court was not appealed.
LEGAL OPINION
The legal opinion of Richard H. Hatgrove, Fresno,
California, Bond Counsel for the City of Bakersfield, approving
the validity of the Bonds will be printed on each Bond.
The statements of law and legal conclusions set forth in this
Offering Statement under the heading "THE BONDS" have been
reviewed by Bond Counsel. Bond Counsel~s employment is limited to
a review of legal procedures required for the issuance of the
Bonds and to rendering an opinion as to the validity of the Bonds
and the exemption of interest on the Bonds. The opinion of
Bond Counsel will not consider or extend to any documents which
Bond Counsel did not prepare, or to any agreement,
representations, official statement, offering circulars, or other
material of any kind concerning the Bonds not mentioned in this
paragraph. Bond Counsel will receive compensation contingent on
sale and delivery of the Bonds.
TAX EXEMPTION
On October 22, 1986, the Tax Reform Act of 1986 (the "Act")
was enacted. The Act amends section 103 of the Internal Revenue
Code of 1954 in whole and imposes restrictions upon the tax-
exemption of interest on obligations of states and local
government units. Generally, the Act characterizes such
obligations as either "governmental" obligations or "private
activity" obligations. The Bonds constitute governmental
obligations for the purposes of this characterization.
Under Section 103 of the Internal Revenue Code of 1986, as
amended (the "Code"), the interest on governmental obligations is
excludable from gross income for federal income tax purposes if
the obligations satisfy restrictions relating to (1) limitations
upon the use of proceeds for a private business use or to make a
private loan, (2) reserve fund funding requirements, investment
yield limitations and rebate requirements, (3) federal guarantee
prohibitions, (4) registration requirements, (5) information
reporting requirements.
The Code imposes an alternative minimum tax upon certain
individuals and corporations and includes interest on certain
private activity obligations as a preference item for such
purpose. The bonds are not private activity obligations for
purposes of such alternative minimum tax preference.
In the case of certain corporations which are subject to the
alternative minimum tax upon corporations, the interest on the
Bonds received by such corporations for taxable years beginning in
14
1987, 1988 and 1989 would be included in adjusted net book income
for the purpose of provisions stating that alternative minimum
taxable income shall be increased by 50 percent of the amount by
which the adjusted net book income of such corporations exceeds
the alternative minimum taxable income of such corporations, and
for taxable years beginning after 1989, said interest would be
included in adjusted current earnings for the purpose of
provisions stating that the alternative minimum taxable income
shall be increased by 75 percent of the amount by which the
adjusted current earnings of such corporations exceed the
alternative minimum taxable income of such corporations.
On October 17, 1986, the Superfund Amendments and
Reauthorization Act of 1986 ("SA~A") was enacted. SARA
establishes a program for clearing hazardous waste sites and
imposes an environmental tax to fund such program. The
environmental tax is imposed upon modified alternative minimum
taxable income, which income includes interest on the bonds in the
same manner as the computation of alternative minimum taxable
income referenced above. The environmental tax is effective for
taxable years beginning after December 31, 1986 and, generally,
before January 1, 1989.
In the opinion of Richard H. Hatgrove, Fresno, California,
Bond Counsel, under existing laws, regulations, rulings, and
Judicial decisions, and assuming compliance with the provisions of
the resolution designed to meet the requirements of Section 148(f)
of the Code and regulations thereunder, which section relates to
the rebate requirements imposed upon the City with respect to
certain interest earnings on certain gross proceeds of the bonds,
the interest on the bonds is exempt from income taxation by the
United States of America and from personal income taxation by the
State of California, provided, however, that in the case of
corporations subject to the alternative minimum tax described in
Section 55 of the Code and to the environmental tax described in
Section 59A of the Code, said interest will be included in
adjusted net book income and adjusted current earnings for the
purpose of determining alternative minimum taxable income under
Sections 56(f) and 56(g), respectively, of the Code for the
purpose of determining modified alternative minimum taxable income
under Section 59A(b) of the Code.
In addition, the Tax Reform Act of 1986, as amended,
disallows interest for taxable years ending after December 31,
1986, on debt incurred by financial institutions to purchase or
carry tax-exempt obligations for obligations acquired after
August 7, 1986. The bonds would be included as tax-exempt
obligations for the purpose of this provision, with the result
that interest on debt incurred by financial institutions to
acquire the bonds would not be deductible to such institutions.
15
NO LITIGATION
There is no action, suit, or proceeding known by the City to
be pending at the present time restraining or enJoining the
delivery of the Bonds or in any way contesting or affecting the
validity of the Bonds or any proceedings of the City taken with
respect to the execution or delivery thereof. A no litigation
certificate executed by the City Attorney will be delivered to the
Underwriters simultaneously with the delivery of the Bonds.
NO~ATING
The City has not, and does not contemplate making,
application to any rating agency for the assignment of a rating to
the Bonds.
UNDERWRITING
Kelling, Northcross & Nobriga Incorporated and Drexel Burnham
Lambert Incorporated, the Underwriters, have purchased the Bonds
from the City at an aggregate discount of $ from the
total par value of Bonds as set forth on the cover page of this
Offering Statement. The public offering prices may be changed
from time to time by the Underwriters. The Underwriters may offer
and sell Bonds to certain dealers and others at a price lower than
the offering price stated on the cover page hereof.
ADDITIONAL INFORMATION
Any statements made in this Offering Statement involving
matters of opinion or of estimates, whether or not so expressly
stated, are set forth as such and not as representations of fact,
and no representation is made that any of the estimates will be
realized. This Offering Statement is not to be construed as a
contract or agreement between the City and the purchasers, holders
or owners of any of the Bonds.
The distribution of this Offering Statement has been duly
authorized by the City pursuant to a Resolution adopted by the
City Council on May , 1987.
16
APPENDIX A
EXc~,ttPT FROM ASSESSMENT DIAGRAM
SHEET ¶ OF i7 SHEETS
ASSESSMENT DIAGRAM *
ASSESSMENT DISTRICT NO. 86 - 5
(REAL - AKERS - HARRIS - FAIRVIEW)
CITY OF BAKERSFIELD
· . COUNTY OF KERN
STATE OF CALIFORNIA
INDEX MAP
*The complete assessment diagram is on file with the City Clerk
and the Kern County Recorder.
APPENDIX B
CITY GENERAL AND FINANCIAL INFORMATION
The following information is presented as general background
information. The Bonds are payable solely from the proceeds of
payments upon the unpaid assessment and the Reserve Fund as
described herein. The taxing power of the City of Bakersfield,
the State of California or any political subdivision thereof is
not pledged to the payment of the Bonds. See the section herein
entitled "THE BONDS".
Location
The City of Bakersfield is located at the southern end of the
San Joaquin Valley, about 110 miles northeast of Los Angeles and
100 miles south of Fresno and is the county seat of Kern County.
Municipal Government
The City of Bakersfield was incorporated on January 11,
1898 and is a charter city. The City has a council-manager form
of government. The City is governed by a mayor elected at large
and a seven member City Council elected from districts for
staggered four-year terms. The City Manager is appointed by the
Council and is the administrative head of the City.
Financial Statements
The City's 1985/86 General Fund Balance Sheet and Statement
of Revenues, Expenditure and Changes in Fund Balance prepared by
the City Finance Department are reflected on the following two
tables:
B-1
CITY OF BAKERSFIELD
GENERAL FUND BALANCE SHEET
JUNE 30, 1986
ASSETS
Cash and short-term investments
Receivables
Due from other funds
Due from other governments
Inventory, at cost
Total assets
LIABILITIES AND FUND EQUITY
Accounts payable
Payrolls payable
Employer contributions payable
Deferred revenue
Compensated absences
Total liabilities
Fund balances
Reserved for encumbrances
Reserved for petty cash and inventory
Reserved for cash basis
Unreserved - undesignated
Total fund equity
Total liabilities and fund equity
7,896,754
236,240
1,213,113
1,408,761
10,157
$10,765,025
$ 2,737,327
938,988
320,170
35,497
243,400
4,275,382
400,409
18,707
2,900,000
3,170,527
6,489,643
$10,765,025
Source: Prepared by City of Bakersfield Finance Dept.
B-2
CITY OF B;tKERSFIELD
STATEMENT OF GENERAL FUND REVENUES, EXPENDITURES
& CHANGES IN FUND BALANCE
Year ended June 30, 1986
Revenues Taxes
Licenses and permits
Intergovernmental revenue
Charges for services
Fines and forfeitsnments
Miscellaneous revenue
Total revenues
Expenditures
Current
General government
Public safety
Public works
Development and conservation
Total expenditures
Excess of revenues over
(under) expenditures
Other financing sources (uses)
Operating transfers in
Operating transfers (out)
Total other financing sources (uses)
Excess of revenues and other sources
over (under) expenditures and
other uses
Fund balance - beginning of year
Fund balance - end of year
$ 35,766,898
1,436,525
5,220,139
2,194,833
353,080
779,126
45,750,601
3,280,786
24,825,061
12,378,773
1,947,580
42,432,200
3,318,401
1,050,000
(3,876,700)
(2,826,700)
491,701
5,997,942
$ 6,489,643
Source: Prepared by City of Bakersfield Finance Dept.
B-3
APPENDIX C
ECONOMIC PROFILE
General Description
The City is located in central Kern County (the "County"),
the third largest county in California. The County is known for
its agriculture, mining and recreational activities and is the
leading oil and mineral producing county in the State and the
nation. According to the State Department of Finance, Bakersfield
is the fastest-growing large city in California.
Population
The following table shows the City's and the County's
population for 1960, 1970 and 1980 and the annual estimates for
1985 and 1986.
CITY OF BAKERSFIELD
AND KERN COUNTY
POPULATION
Year City of Bakersfield Kern County
1960 56,848 291,984
1970 69,515 330,234
1980 105,611 403,089
1985 138,800 472,100
1986 148,200 486,800
Source:
Statistics for 1985 and 1986 are State Department of
Finance estimates as of January 1. The 1960, 1970
and 1980 totals are U.S. Census figures.
C-1
Employment
The largest
below:
employers for the City of Bakersfield are listed
CITY OF BAKERSFIELD
LARGEST EMPLOYERS (1)
Company
Tenneco West
Bakersfield City
School District
Texaco Refining &
Marketing Co.
Kern High School District
Giumarra Vineyards Corp.
Shell California
Production, Inc.
Superior Farming Co.
Kern Medical Center
Chevron U.S.A., Inc.
Mercy Hospital
Pacific Bell
Greater Bakersfield
Memorial Hospital
San Joaquin Hospital
Product/Service
Agricultural Processing/
Farming
Education
Oil, Petroleum,
Refining & Marketing
Education
Agricultural Production
Oil & Gas Production
Farming
County Hospital
Petroleum Refining,
Products and Pipeline
Hospital
Communications/Utility
Hospital
Hospital
Employees
2,280
2,254
1,700
1,700
2,200 *
100
1,590
1,000
1,250
1,200
1,300
523
880
825
(1) Does not include County of Kern employees
* Seasonal
Source: Bakersfield Chamber of Commerce, 1987
C-2
The table shown below represents, as of January, 1986, the
County~s labor patterns for 1984 and 1985 and the forecast for the
County for 1986 and 1987.
KERN COUNTY
CIVILIAN LABOR FORCE, EMPLOIq4ENT AND UNEMPLOYMENT
ANNUAL AVERAGES
(Amounts in Thousands)
Civilian Labor Force(1)
Employment
Unemployment
Unemployment Rate
Wage & Salary Employmt(2)
Agricultural
Non Agricultural
Mining/Construction
Nondurable
Manufacturing
Durable Manufacturing
Transportation &
Public Utilities
Wholesale Trade
Retail Trade
Finance, Insurance &
Real Estate
Services
Government
ACTUAL FORECAST
1984 1985 1986 1987
215,900 216,100 218,300 222,700
189,500 191,000 192,000 196,200
26,400 25,100 26,300 26,500
12.2% 11.6% 12.0% 11.9%
177,300 179,800 178,900 181,400
29,200 26,500 26,000 26,000
148,100 153,300 152,900 155,400
23w800 25,400 21,600 21,700
5,000 4,800 5,000 5,100
5,300 5,600 5,700 5,900
7,600 8,300 8w200 8,300
7,700 7,600 7,500 7,600
30,900 31,000 31,600 32,100
5,600 5,800 5,900 6,000
27,800 28,900 29.900 30,500
34,400 36,000 37,500 38,200
(1) Based on place of residence
(2) Based on place of work
Source: California Employment Development Department
Commercial Activity
The following table shows total
the City over the last five years.
taxable
transactions within
CITY OF BAKERSFIELD
TAXABLE TRANSACTIONS
(In thousands of dollars)
Year Permits
1981 3,482
1982 3,889
1983 3,997
1984 4,195
1985 4,430
Taxable Transactions
$ 1,403,662
1,374,727
1,398,464
1,576,598
1,676,836
Source: State Board of Equalization
Construction Activity
The following table shows the valuation of building
issued in the City for the last five years.
permits
CITY OF BAKERSFIELD
BUILDING PERMITS AND VALUATIONS 1981-1985
(In thousands of dollars)
Residential
Year Permits Residential
Non-Residential
1981 1,299 $ 70,524 $ 43,365
1982 2,716 127,837 87,175
1983 3,347 146,481 60,152
1984 3,765 162,762 70,452
1985 2,312 118,140 122,957
Source: "California Construction Trends,"
Security Pacific National Bank
C-4
~ncome
The following table reflects
income for the last five years:
the median
household buying
CITY OF BAKERSFIELD
MEDIAN HOUSEHOLD BUYING INCOME
Year Amount
1981 $ 21,710
1982 24,894
1983 26,249
1984 28,595
1985 (1) 26,923
(1) 1985 methodology differs from methodology of previous
years.
Source:
"Survey of Buying Power,"
Sales and Marketing Management Magazine
C-5