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HomeMy WebLinkAboutRES NO 80-87RESOLUTION NO. 80-87 A RESOLUTION OF THE COUNCIL OF THE CITY OF BAKERSFIELD DETERMINING UNPAID ASSESSMENTS AND PROVIDING FOR ISSUANCE OF BONDS IN THE MATTER OF CITY OF BAKERSFIELD ASSESSMENT DISTRICT NO. 86-5 RESOLVED, by the Council of the City of Bakersfield, California (the "City"), that WHEREAS, on February 4, 1987, this CouncJ. 1 passed and adopted Resolution of Intention No. 1019 (the "Resolution of Intention"), as amended, relating to the construction of public improvements under and pursuant to the provisions of the Munici- pal Improvement Act of 1913, the Charter, and the Municipal Code of the City. By said Resolution of Intention, this Council pro- v~ded that serial bonds would be issued thereunder pursuant to the provisions of the Improvement Bond Act of 1915, Division 10 of the Streets and Highways Code of California and reference to said Resolution of ]intention is hereby expressly made for further particulars; HEREAS, notice of the recordation of the assessment and of the time within which assessments were to be paid in cash was duly published and mailed in the manner provided by law and the time so provided for receiving payment of assessments in cash expired, and a list of the assessments remaining unpaid has been filed by the Finance Director of the City as the Collection Offi- cer with the City; and WHEREAS, this Council duly considered said list and determined that the same was an accurate statement thereof; follows: NOW, THEREFORE, IT IS HEREBY DETERMINED AND ORDERED, as SECTION 1. Definitions. Unless the context otherwise requires, the terms defined in this Section 1 shall, for all pur- poses of this Resolution, have the meanings herein specified and shall be equally applicable to both the singular and plural forms of any of the terms herein defined. "Act" means the Improvement Bond Act of 1915, Division 10 of the Streets and Highways Code of the State of California. "Agent" means Bank of America National Trust and Sav- ings Association, the Transfer Agent, Registrar and Paying Agent designated in Section 6 hereof. "Bond" or "Bonds" means Bakersfield Assessment District No. Act and this Resolution. the Improvement Bonds, City of 86-5, issued pursuant to the "Bond Date" means the dated date of the Bonds, which is May 13, 1987. "Bond Denomination means the amount of $5,000.00, which is the minimum amount in which the Bonds may be issued, except that one Bond may contain the amount of $4,944.00. "Bond Year" means the twelve month period beginning on May 13 of each year and ending on May 12 of the following year, commencing with the period beginning on May 13, 1987, and ending on May 12, 1988. "Closing Date" means the date upon which there is an exchange of the Bonds for the proceeds representing the purchase of the Bonds by the Original Purchaser. amended. "Code" means the Internal Revenue Code of 1986, as "Debt Service" means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. "Excess Investment Earnings" has the meaning set forth in Section 24(b) hereof. "Excess Investment Earnings Account" means the account by that name created by, and held by the Treasurer pursuant to, Section 24(a) hereof. amounts: "Gross Proceeds" means the sum of the following (i) original proceeds, namely, net amounts (after payment of all expenses of issuing the Bonds) received by or for the Issuer as a result of the sale of the Bonds, excluding original proceeds which become trans- ferred proceeds (determined in accordance with appli- cable Regulations) of obligations issued to refund in whole or in part the Bonds; (ii) investment proceeds, namely, amounts received at any time by or for the Issuer, such as interest and dividends, resulting from the Investment of any origi- nal proceeds (as referenced in clause (i) above) or investment proceeds (as referenced in this clause (ii)) in Nonpurpose Obligations, increased by any profits and decreased (if necessary, below zero) by any losses on such investments, exc|ud~ng investment proceeds which become transferred proceeds (determined in accordance with applicable Regulations) of obligations issued to refund in whole or in part the Bonds; (iii) sinking fund proceeds, name]y, amounts, other than original proceeds or investment proceeds (as referenced in clauses (i) and (ii) above) of the Bonds, which are held in the Redemption Fund and any other fund to the extent that the Issuer reasonably expects to use such other fund to pay Debt Service on the Bonds; (iv) amounts in the Reserve Fund or in any fund established as a reasonably required reserve or replace- ment fund; (v) Investment Property pledged as security for payment of Debt Service on the Bonds by an ultimate obligor or a related person or by the Issuer; (vi) amounts, other than as specified in this definition, used to pay Debt Service on the Bonds; and (vii) amounts received as a result of investing amounts described in this definition. "Improvement Fund" means the fund established by the Treasurer into which shall be placed the proceeds received from the sale of the Bonds, including any premium, all pursuant to Section 10 hereof. "Interest Payment Date" means the dates upon which interest on the Bonds is payable, commencing on March 2, 1988, and semiannually thereafter on September 2 and March 2 of each year to maturity. name 24(a) "Investment Earnings Account" means the account by that created by, and held by the Treasurer pursuant to, Section hereof. "Investment Property" means any security (as said term is defined in section 165(g)(2)(A) or (B) of the Code), obliga- tion, annuity or investment-type property, excluding, however, obligations the interest on which is exempt from income tax under section 103 of the Code. "Issuance Costs" means all costs and expenses of issu- ance of the Bonds, including, but not limited to: (i) underwriters' fees other than those taken in the form of a discount on the Closing Date; (ii) counsel fees, including bond counsel, under- writers' counsel, Issuer's counsel and special tax coun- 3 sel fees, as well as any other specialized counsel fees incurred in connection with the borrowing; (iii) financial advisor fees incurred in connec- tion with the issuance of the Bonds; (iv> rating agency fees; (v) trustee fees and trustee counsel fees; (vi) paying agent and certifying and authenticat- ing agent fees related to issuance of the Bonds; (vii) accountant fees related to issuance of the Bonds; (viii) printing costs of the Bonds and of the pre- liminary and final official statement; (ix) publication costs associated with the financ- ing proceedings; and (x) costs of engineering and feasibility studies necessary to the issuance of the Bonds. "Issuer" means the issuer of the Bonds, which is the City of Bakersfield, County of Kern, State of California. "Net Proceeds of the Bonds" means proceeds of the Bonds received by or for the Issuer on the Closing Date, less amounts used to pay Issuance Costs and less amounts deposited on the Clos- ing Date in the Reserve Fund. which is acquired Bonds. "Nonpurpose Obligation" means any Investment Property acquired with the Gross Proceeds of the Bonds and is not in order to carry out 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. "Project" means the acquisitions and improvements des- cribed in the Resolution of Intention. "Purchase Price" for the purpose of computation of the Yield of the Bonds, as provided in the Code, the term in general, means the initial offering price to the public (not including bond houses and brokers, or similar persons or organizations act- ing in the capacity of underwriters or wholesalers) at which price a substantial amount of the Bonds are sold or, if the Bonds are privately placed, the price paid by the first buyer of the Bonds or the acquisition cost of the first buyer. The term "Pur- chase Price", for the purpose of computation of the Yield of Non- purpose Obligations, means the fair market value of the Nonpur- pose Obligations on the date of use of Gross Proceeds of the Bonds for acquisition thereof, or if later, on the date that Investment Property constituting a Nonpurpose Obligation becomes a Nonpurpose Obligation of the Bonds. "Redemption Fund" means the fund established by the Treasurer into which shall be placed any accrued interest for the period from the Bond Date to the closing date and all sums re- ceived from the collection of unpaid assessments and of the inter- est and penalties thereon, all as provided in Section 11 hereof. "Redemption Premium" means 3% of the principal amount of the Bonds. "Regulations" means temporary and permanent. regulations promulgated under section 148 of the Code. "Reserve Fund" means the fund established by the Trea- surer from the proceeds of the sale of the Bonds in the amount of $35,597.00 , all as provided in Section 18 hereof. "Treasurer" means the Finance Director, or designee, of the City of Bakersfield. "Yield" means that yield which, when used in computing the present worth of all payments of principal and interest (or other payments in the case of Nonpurpose Obligations which re- quire payments in a form not characterized as principal and inter- est) on a Nonpurpose Obligation or on the Bonds produces an amount equal to the Purchase Price of such Nonpurpose Obligation or the Bonds, all computed as prescribed in the Code and, in the case of variable rate obligations, as further prescribed in Sec- tion 23 hereof. SECTION 2. List of Unpaid Assessments. The assess- ments now remaining unpaid are as shown on said list and on Exhibit "A" attached hereto and by this reference made a part hereof; the aggregate amount thereof is $889,943.97; 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 $889,944.00, shall be issued as hereinafter 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 froin the date to which interest has been paid. Each Bond will continue to bear interest after maturity at the rate stated therein, provided it is presented at maturity and payment thereof is refused on the sole ground that there is not sufficient money in the redemption fund with which to pay same; if it is not presented at maturity, interest thereon will run only until maturity. SECTION 6. Designation of Agent. Bank of America National Trust and Savings Association is hereby designated as the Transfer Agent, Registrar and Paying Agent (hereinafter the "Agent"). The principal and redemption premium of the Bonds shall be payable in lawful money of the United States of America at the office(s) of the Agent in San Francisco, California, upon the presentation and surrender of the Bonds as the same become due and payable. Interest on the Bonds shall be paid to the registered owner by check or draft mailed to the address entered in the registry book provided for herein as of the fifteenth (15) day immediately preceding each Interest Payment Date. The Trea- surer is hereby authorized and directed to enter into agreements with the Agent in furtherance of the purposes of this Section. SECTION 7. Execution. The Bonds shall be executed on behalf of the Issuer and under its official seal by its Treasurer 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 Jn 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 cer- tificate of authentication on all the Bonds issued hereunder. [FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION] This is one of the Bonds described in the Resolution Determining Unpaid Assessments and Providing for Issuance of Bonds, which has been registered on , By Authorized Officer SECTION 9. Preparation and Delivery of Bonds. The Treasurer is hereby directed to cause the Bonds to be prepared in accordance with this resolution and to deliver same upon their completion and execution to the Agent who shall authenticate and deliver the Bonds to the purchaser thereof, upon receipt of the purchase price therefor, and upon the performance of the condi- tions contained in the accepted offer for the purchase of the Bonds. SECTION 10. Improvement Fund. The Treasurer shall establish the Improvement Fund designated by the name and/or num- ber of the improvements or assessment district into which shall be placed the proceeds received from the sale of the Bonds, in- cluding any premium (except that any interest accrued from the date of the Bonds to the date of delivery thereof shall be placed in the Redemption Fund provided for herein). All moneys in the Improvement Fund shall be withdrawn only upon checks or warrants of the Issuer and shall be applied exclusively to the payment of the cost of the acquisitions and/or construction of the improve- ments described in the proceedings under and pursuant to said Resolution of Intention, as now or hereafter changed or modified by appropriate legal proceedings, and all expenses incidental thereto. Any surplus remaining after payment of all costs and all legal charges, claims and expenses shall be used as set forth in said proceedings. SECTION 11. 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 p~ovided for in Section 12 hereof, and of the interest and penal- ties thereon. From the Redemption Fund disbursements shall be made to pay the principal or advance redemption price of the Bonds and the interest due thereon. SECTION 12. Collection of Unpaid Assessments. The unpaid assessments shown on said list, together with the interest thereon, shall be payable in annual series corresponding in num- ber to the number of serial maturities of the Bonds issued. An annual proportion of each unpaid assessment shall be payable in each year preceding the date of maturity of each of the several series of Bonds issued, sufficient to pay the Bonds when due, and such proportion of each unpaid assessment coming due in any year, together with the annual interest thereon, shall be payable in the same manner and at the same time and in the same installments as the general taxes on real property are payable, and become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property. All sums received from the collection of said unpaid assessments and of the interest and penalties thereon shall be placed in the Redemption Fund provided for herein. SECTION 13. Redemption Prior to Maturity. Each Bond, or any portion thereof in the amount of the Bond Denomination or any integral multiple thereof, outstanding may be redeemed and paid in advance of maturity upon any Interest Payment Date in any year by giving at least 60 days notice and by paying the princi- pal amount thereof! together with the Redemption Premium plus in- terest to the date of advanced maturity, unless sooner surren- 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. to the Bonds. The provisions of Part 11.1 of the Act are applicable advance payment of assessments and to the calling of the SECTION 14. Exchange of Bonds. Any Bond, upon surren- der thereof at the office of the Agent, together with an assign- ment duly executed by the registered owner thereof or his attor- ney or legal representative in such form as shall be satisfactory to the Agent, may, at the option of such owner, be exchanged for an aggregate principal amount of Bonds equal to the principal amount of the Bond so surrendered, and of any authorized denomina- tion or denominations. The Issuer shall make provision for the exchange of Bonds at the office of the Agent. SECTION 15. Negotiability, Registration and Transfer of Bonds. The Agent shall keep books for the registration, and for the registration of transfers, of the Bonds as provided ~n 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 Jn any such exchange or registration of transfer shall forthwith be cancelled by the Agent. The Issuer or the Agent may make a charge for every such exchange or registration of transfer of Bonds suffi- cient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or registration of transfer, but no other charge shall be made to any owner for the privilege of exchanging or registering the transfer of Bonds under the provisions of this resolution. Neither the Issuer nor the Agent shall be required to make such exchange or registration 9 of transfer of Bonds during the fifteen (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 sa].e is made. The Issuer shall also pay and transfer from available surplus funds into the Redemption Fund, as an advance recoverable upon sale or redemption of the property, the amount of any future delinquent unpaid assessment installments on such property pending redemption. SECTION 18. Reserve Fund. Upon receipt of the pro- ceeds from the sale of the Bonds, the Treasurer shall forthwith establish the Reserve Fund, which shall be designated by the name and/or number of the assessment district proceedings. The moneys in the Reserve Fund shall constitute a trust fund for the benefit of owners of the Bonds and shall be administered by the Issuer in accordance with and pursuant to the provisions of Part 16 of the Act; provided, that proceeds from redemption or sale of the prop- erties with respect to which payment of delinquent assessments and interest thereon was paid from the Reserve Fund, shall be credited to the Reserve Fund; and provided, further, that for the purposes of providing for reduction of the amount of money in the Reserve Fund during the term of the Bonds pursuant to Section 8887 of the Act, all proceeds from investment of moneys in the Reserve Fund shall be credited upon the assessments. In the event that the crediting of any portion of such proceeds upon assessments not theretofore paid in full in cash would result in moneys in the Redemption Fund remaining therein for a period of more than twelve (12) months, then any portion of such proceeds which would otherwise remain in the Redemption Fund for a period of more than twelw~ (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. 10 SECTION 19. Covenant to Foreclose. The Issuer hereby covenants with and for the benefit of the owners of the Bonds that it will order, and cause to be commenced within 150 days following the date of delinquency, and thereafter diligently pros- ecuted, an action in the superior court to foreclose the lien of any assessment or installment thereof not paid when due, pursuant to and as provided in Sections 8830 through 8835, inclusive, of the Act. SECTION 20. Investment of Funds. Moneys in the Im- provement Fund, Redemption Fund, and the Reserve Fund shall, when- ever practicable, be invested in legal investments for the Issuer under applicable law for the moneys held pursuant to this resolu- tion at the time when any of such moneys are to be invested there- in. Any income therefrom or interest thereon shall accrue to and be deposited in the fund from which said moneys were invested, except as otherwise provided in Section 24 hereof. SECTION 21. No Arbitrage. The Issuer shall not take, nor permit nor suffer to be taken by the Treasurer or otherwise, any action with respect to the Gross Proceeds of the bonds which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, or] the date of the issuance of the Bonds would have caused the Bonds to be "arbi- trage bonds" within the meaning of section 148 of the Code and Regulations promulgated thereunder. SECTION 22. Certificate as to Non-Arbitrage. On the basis of the facts, estimates and circumstances now in existence and in existence on the date of issue of the Bonds, as determined by the Treasurer, the Treasurer is authorized and directed to certify that it is not expected that the proceeds of said issue will be used in a manner that would cause such obligations to be arbitrage bonds. Such certification shall be delivered to the purchaser of the Bonds at the time of delivery of and payment for the Bonds. SECTION 23. Yield Computations for Variable Rate Obli- gations. For the purpose of Section 24 hereof, the yield on a Nonpurpose Obligation that consists of variable rate Investment Property shall be determined as of the date the Nonpurpose Obliga- tion is acquired and as of the first day of each Bond Year by assuming that the rate of interest will be weighted average rate of interest for such Investment Property during the preceding one-year period (or portion thereof in which the Nonpurpose Obli- gation was outstanding). with respect to a Nonpurpose Obligation purchased on its date of issue, the Yield for the first Bond Year shall be determined by assuming that the rate of interest will be the initial rate of interest for such Nonpurpose Obligation as determined under the prescribed formula on such date of issue (without regard to any fixed rate initially applicable to such Nonpurpose Obligation). ll 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- ment Earnings Account and the Excess Investment Earn- ings Account. All interest earnings and profits on amounts in all funds and accounts established under this Resolution, other than interest earnings on the Redemption Fund and any other funds referenced in sub- section (c)(5) of this Section 24 if such earnings in any Bond Year are less than $100,000, shall, upon re- ceipt by the Treasurer, be deposited in the Investment Earnings Account. In addition, all interest earnings and profits on Gross Proceeds in funds held by the Issuer shall, upon receipt, be paid to the Treasurer for deposit in the Investment Earnings Account. Annual- ly, on the last day of each Bond Year or on the preced- ing business day in the event that such last day is not a business day, the Treasurer shall transfer from the Investment Earnings Account to the Excess Investment Earnings Account for purposes of ultimate rebate to the United States an amount equal to Excess Investment Earn- ings, all as more particularly described in this Sec- tion 24. Following the transfer referenced in the pre- ceding sentence, the Treasurer shall transfer all amounts remaining in the Investment Earnings Account to the Redemption Fund to be used for the payment of Debt Service on the Bonds on the next interest payment date and for such purpose. Debt Service due from the Issuer on such date shall be credited by an amount equal to the amount so transferred. (b) Definition of Excess Investment Earnings. The Issuer shall calculate Excess Investment Earnings in accordance with this subsection (b) and shall assure payment of an amount equal to Excess Investment Earn- ings to the United States in accordance with subsection (c). The term "Excess Investment Earnings" means an amount equal to the sum of: (i) the excess of (A) the aggregate amount earned from the date of delivery of the Bonds on all Nonpur- pose Obligations in which Gross Proceeds of the Bonds are invested (other than amounts attribu- table to an excess described in this paragraph (i)), over (B) the amount that would have been earned if the yield on such Nonpurpose Obligations 12 (other than amounts attributable to an excess des- cribed in this paragraph (i)) had been equal to the yield on the Bonds. plus (ii) any income attributable to the excess described in paragraph (i). (c) Calculation of Excess Investment Earnings. Prior to the last day of the first Bond Year, the Issuer shall cause to be calculated, and shall provide written notice to the Treasurer of, the Excess Invest- ment Earnings referenced in paragraph (i) of subsection (a). Thereafter, prior to the last day of each Bond Year and on the date of the retirement of the Bonds, the Issuer shall calculate, and shall provide written notice to the Treasurer of, the amount of Excess Invest- ment Earnings referenced in paragraphs (i) and (ii) of subsection (a). Said calculations shall be made or cause to be made by the Issuer in accordance with the following: (1) Except as provided in (2), in determin- ing the amount described in paragraph (i)(A) of subsection (a), the aggregate amount earned on Nonpurpose Obligations shall include (i) all in- come realized under federal income tax accounting principles (whether or not the person earning such income is subject to federal income tax) with respect to such Nonpurpose Obligations and with respect to the reinvestment of investment receipts from such Nonpurpose Obligations (without regard to the transaction costs incurred in acquiring, carrying, selling or redeeming such Nonpurpose Obligations), including, but not limited to, gain or loss realized on the disposition of such Nonpur- pose Obligations (without regard to when such gains are taken into account under Section 453 of the Code relating to taxable year of inclusion of gross income), and income under Section 1272 of the Code (relating to original issue discount) and (ii) any unrealized gain or loss as of the date of retirement of the Bonds in the event that any Non- purpose Obligation is retained after such date. (2) In determining the amount described in paragraph (i) of subsection (a), Investment Proper- ty shall be treated as acquired for its fair mar- ket value at the time it becomes a Nonpurpose Obli- gation, so that gain or loss on the disposition of such Investment Property shall be computed with reference to such fair market value as its ad- justed basis. 13 (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 ([i) of subsection (b), all income attri- butable to the excess described in paragraph (i) of subsection (b) must be taken into account, whether or not that income exceeds the yield on the Bonds, and no amount may be treated as "nega- tive arbitrage". (5) In determining the amount described in subsection (b), there shall be excluded any amount earned on any fund or account which is used primar- ily to achieve a proper matching of revenues and debt service within each Bond Year and which is depleted at least once a year except for a reason- able carryover amount not in excess of the greater of one year's earnings on such fund or account or one-twelfth of annual Debt Service as well as amounts earned on said earnings if the gross earn- ings on all such funds and accounts for the Bond year is .[ess than $100,000. (d) Payments to United States. The Issuer shall direct the Treasurer to pay from the Excess Investment Earnings Account an amount equal to Excess Investment Earnings to the United States in installments with the first payment to be made not later than thirty (30) days after the end of the fifth Bond Year and with sub- sequent payments to be made not later than five (5) years after the preceding payment was due. The Issuer shall assure that each installment is in an amount equal to at least 90 percent of the Excess Investment Earnings with respect to the Bonds as of the close of the computation period. Not later than thirty (30) days after the retirement of the Bonds, the Issuer shall pay 100 percent of the theretofore unpaid Excess Investment Earnings of the Bonds. In the event that there are any amounts remaining in the Excess Invest- ment Earnings Account following the payment required by the preceding sentence, the said amounts may be used for any lawful purpose of the Issuer. The ]~ssuer shall remit payments to the United States at the address pre- scribed by the Regulations as the same may be from time to time in effect with such reports and statements as may be prescribed by such regulations. In the event that, for any reason, amounts in the Excess Investment Earnings Account are insufficient to make the payments to the United States which are required by this subsec- 14 tion (d), the Issuer shall assure that such payments are made to the United States, on a timely basis, from any funds lawfully available therefor. (e) Further Obligations of Issuer. The Issuer shall assure that Excess Investment Earnings are not paid or disbursed except as required in this Section 24. To that end the Issuer shall assure that investment transactions are on an arm's length basis. In the event that Nonpurpose Obligations consist of certifi- cates of deposit or investment contracts, investment in such Nonpurpose Obligations shall be made in accordance with the procedures described in applicable Regulations as from time to time in effect. (f) Maintenance of Records. The Issuer shall keep, and retain for a period of six (6) years follow- ing the retirement of the Bonds, records of the determi- nations made pursuant to this Section 24. (g) Independent Consultants. In order to provide for the administration of Section 23 hereof and this Section 24, the Issuer and the Treasurer may provide for the employment of independent attorneys, accoun- tants and consultants compensated on such reasonable basis as the Issuer or the Treasurer may deem appropri- ate. SECTION 25. No Federal Guarantee. The Issuer shall take no action nor permit nor suffer any action to be taken if the result of the same would cause the Bonds to be a federally guaranteed obligation within the meaning of section 149(b) of the Code. Any section reference in this resolution to the Code shall be deemed to be and shall refer to any section of similar import enacted in lieu or in amendment of such section or contained in any internal revenue code enacted in lieu of the Internal Revenue Code of 1954. SECTION 26. Amendment. Without the consent of the Bondowners, the Issuer hereafter may amend this Resolution to add, modify or delete provisions if the same is necessary or desirable, in the opinion of Bond Counsel, to assure the exemp- tion of interest on the Bonds from Federal income taxation, pro- vided that the security interest of the bondholders is not affected thereby. SECTION 27. Authority of Treasurer. All actions man- dated by this Resolution to be performed by the Treasurer may be performed by the designee of thereof or such other official of the Issuer or independent costractor, contractor or trustee duly authorized by the City Council of the Issuer to perform such action or actions in furtherance of all or a specific portion of the requirements hereof. 15 SECTION 28. Certified Copies. The City Clerk shall furnish a certified copy of this resolution to the Treasurer, to the Agent and to the Auditor of the County of Kern. tions. SECTION 29. Private Activity and Private Loan Prohibi- (a) Private Activity Prohibition. The Issuer shall assure that (i) not in excess of ten percent (10%) of the Net Proceeds of the Bonds are used for a Private Business Use if, in addition, the payment of more than ten percent (10%) of the principal or ten percent (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 percent (5%) of the principal or five percent (5%) of the interest due on the Bonds during the term thereof is, under the terms of the bonds or any underly- ing arrangement, directly or indirectly, secured by any interest in property used or to be used for said Pri- vate Business Use or in payments in respect of property used or to be used for said Private Business Use or is to be derived from payments, whether or not to the Issuer, Jn respect of property or borrowed money used or to be used for said Private Business Use, then said excess over said five percent (5%) of Net Proceeds of the Bonds used for a Private Business Use shall be used for a Private Business Use related to the governmental use of the Project. (b) Private Loan Prohibition. The Issuer shall assure that not in excess of the lesser of .five percent (5%) of the Net Proceeds of the Bonds are used, direct- ly or indirectly, to make or finance loans (other than loans constituting Nonpurpose Investments or assess- ments) to persons other than governmental u~its. (c) Disbursement Statement. Upon each disburse- ment of Net Proceeds of the Bonds deposited in the Improvement Fund, the Treasurer shall prepare and exe- cute a statement setting forth the portion, if any, of the Net Proceeds of the Bonds to be used for a Private Business Use or to make or finance a private loan (other than a loan constituting a Nonpurpose Investment or an assessment) and certifying that there has been 16 compliance with subsections (a) and (b) above. Such statements shall be maintained as a part of the perma- nent business records of the Issuer pertaining to the Bonds. I HEREBY CERTIFY that the adopted by the Council of meeting thereof held on ing roll call vote: foregoing Resolution was passed and the City of Bakersfield at a regular May 6, 1987 , by the follow- AYES: COUNCrLMEMRERS CHILDS, CHRISFENSEN, SMITH. RATT¥, MOORE, DICKERSON, SALVAGGIO NOES. COUNCILMEI~RERS ABSENT: COUNCILMEMBERS ABSTAINING: COUNCILMEMBERS: CITY CLERK and Ex Officio Clerk of the Council of the City of Bakersfield APPROVED May 6, 1987 MAYOR of the City of Bakersfield CI~I'T~ATTORIqEY of t°~r~Ci ty Bakersfield of 4ressig 17