HomeMy Public PortalAbout2020-11-17 LPFAThis Agenda contains a brief general description of each item to be considered. Copies of the Staff reports or
other written documentation relating to each item of business referred to on the Agenda are on file in the Office of
the City Clerk and are available for public inspection. Any person who has a question concerning any of the
agenda items may call the City Manager at (310) 603-0220, ext. 200.
Procedures for Addressing the Council
IN ORDER TO EXPEDITE CITY COUNCIL BUSINESS, WE ASK THAT ALL PERSONS WISHING TO ADDRESS THE
COUNCIL SUBMIT YOUR COMMENTS IN ADVANCE TO CITYCLERK@LYNWOOD.CA.US OR FILL OUT A FORM
PROVIDED AT THE PODIUM, AND TO TURN IT IN TO THE CITY CLERK PRIOR TO THE START OF THE
MEETING. FAILURE TO FILL OUT SUCH A FORM WILL PROHIBIT YOU FROM ADDRESSING THE COUNCIL IN
THE ABSENCE OF THE UNANIMOUS CONSENT OF THE COUNCIL.
AGENDA
Lynwood Public Financing Authority
TO BE HELD ON
November 17, 2020
Live Meeting in Council Chamber - 11350 Bullis Road, Lynwood, CA 90262 - or - Web
conference via ZOOM - To participate please join via Zoom or by telephone: 1-669-900-9128 or
1-253-215-8782 Meeting ID: 849 2307 8152 Passcode: 2020.
If interpretation services are needed, please dial (310) 372-7549; conference code 673120 -
Duly Posted 11/12/20 by MQ
6:00 PM
1.CALL TO ORDER
2.CERTIFICATION OF AGENDA POSTING BY SECRETARY
3.ROLL CALL OF MEMBERS
Aide Castro, President
Jorge Casanova, Vice President
Salvador Alatorre, Member
Marisela Santana, Member
Jose Luis Solache, Member
4.GOVERNMENT CODE SECTION 54954.3
Members of the City Council are also members of Lynwood Public Financing Authority, which is
concurrently convening with the City Council this evening and each Council Member is paid an
Additional Stipend of $100 for Attending the Lynwood Public Financing Authority Meeting. Further,
the Authority is scheduled to meet four (4) timer per year. If additional meetings are required beyond
the scheduled four (4) meetings, the City Council will only get paid for the first four(4) meetings.
PUBLIC ORAL COMMUNICATIONS
(Regarding Agenda Items Only)
Lynwood Public Financing Authority - Page 1 of 244
NON-AGENDA PUBLIC ORAL COMMUNICATIONS
THIS PORTION PROVIDES AN OPPORTUNITY FOR THE PUBLIC TO ADDRESS THE LYNWOOD PUBLIC
FINANCING AUTHORITY ON ITEMS WITHIN THE JURISDICTION OF THE LYNWOOD PUBLIC FINANCING
AUTHORITY AND NOT LISTED ON THE AGENDA. IF AN ITEM IS NOT ON THE AGENDA, THERE SHOULD BE NO
SUBSTANTIAL DISCUSSION OF THE ISSUE BY LYNWOOD PUBLIC FINANCING AUTHORITY, BUT LYNWOOD
PUBLIC FINANCING AUTHORITY MAY REFER THE MATTER TO STAFF OR SCHEDULE SUBSTANTIVE
DISCUSSION FOR A FUTURE MEETING. (The Ralph M. Brown Act, Government Code Section 54954.2 (a).)
PUBLIC HEARING
5.LYNWOOD PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS, SERIES
2020A (FEDERALLY TAXABLE)
Comments:
To approve the issuance of the Lynwood Public Financing Authority Lease Revenue Bonds, 2020
Series A (Federally Taxable), in the principal amount not to exceed $13,500,000 to (a) finance
working capital for the City’s general fund or such other approved purposes. (FIN)
Recommendation:
Staff recommends that the City Council of the City of Lynwood (the “City”) hold a public hearing to
consider the issuance of lease revenue bonds on behalf of the City by the Lynwood Public
Financing Authority (“Authority”) for the purpose to (a) finance working capital for the City’s
General Fund or such other approved purposes, (b) purchase a municipal bond insurance policy
and a reserve funds surety for the Bonds, and (c) pay the costs of issuance of such bonds; and
adopt the respective resolution entitled:
· A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LYNWOOD
APPROVING THE ISSUANCE BY THE LYNWOOD PUBLIC FINANCING AUTHORITY
OF NOT TO EXCEED $13,500,000 OF LYNWOOD PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2020A (FEDERALLY TAXABLE); APPROVING
THE EXECUTION AND DELIVERY OF VARIOUS RELATED DOCUMENTS IN
CONNECTION WITH THE OFFERING AND SALE OF SUCH BONDS; AND OTHER
MATTERS RELATED THERETO
· A RESOLUTION OF THE COMMISSION OF THE LYNWOOD PUBLIC FINANCING
AUTHORITY AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $13,500,000 OF
LYNWOOD PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS, SERIES
2020A (FEDERALLY TAXABLE) AND; APPROVING THE EXECUTION AND DELIVERY
OF VARIOUS RELATED DOCUMENTS IN CONNECTION WITH THE OFFERING AND
SALE OF SUCH BONDS; AND OTHER MATTERS RELATED THERETO
CONSENT CALENDAR
ALL MATTERS LISTED UNDER THE CONSENT CALENDAR WILL BE ACTED UPON BY ONE MOTION
AFFIRMING THE ACTION RECOMMENDED ON THE AGENDA. THERE WILL BE NO SEPARATE DISCUSSION ON
THESE ITEMS PRIOR TO VOTING UNLESS MEMBERS OF THE COUNCIL OR STAFF REQUEST SPECIFIC
ITEMS TO BE REMOVED FROM THE CONSENT CALENDAR FOR SEPARATE ACTION.
6.PREVIOUS MEETING MINUTES
Comments:
Approving previous meeting minutes for Lynwood Public Financing Authority (CC)
September 15, 2020
Recommendation:
Staff recommends that the Lynwood Public Financing Authority approve the following minutes:
September 15, 2020
Lynwood Public Financing Authority - Page 2 of 244
ADJOURNMENT
THE LYNWOOD PUBLIC FINANCE AUTHORITY MEETINGS WILL BE POSTED AS
NEEDED. THE NEXT MEETING WILL BE HELD IN THE COUNCIL CHAMBERS OF CITY
HALL ANNEX, 11350 BULLIS ROAD, CITY OF LYNWOOD, CALIFORNIA.
Lynwood Public Financing Authority - Page 3 of 244
Agenda Item # 5.
AGENDA STAFF REPORT
DATE: November 17, 2020
TO: Honorable Mayor and Members of the City Council
APPROVED BY: Michelle Ramirez, Acting City Manager
PREPARED BY: John Downs, Director of Finance & Administration
SUBJECT: LYNWOOD PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS, SERIES
2020A (FEDERALLY TAXABLE)
Recommendation:
Staff recommends that the City Council of the City of Lynwood (the “City”) hold a public hearing to consider the
issuance of lease revenue bonds on behalf of the City by the Lynwood Public Financing Authority (“Authority”) for
the purpose to (a) finance working capital for the City’s General Fund or such other approved purposes, (b)
purchase a municipal bond insurance policy and a reserve funds surety for the Bonds, and (c) pay the costs of
issuance of such bonds; and adopt the respective resolution entitled:
· A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LYNWOOD APPROVING THE
ISSUANCE BY THE LYNWOOD PUBLIC FINANCING AUTHORITY OF NOT TO EXCEED $13,500,000
OF LYNWOOD PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS, SERIES 2020A
(FEDERALLY TAXABLE); APPROVING THE EXECUTION AND DELIVERY OF VARIOUS RELATED
DOCUMENTS IN CONNECTION WITH THE OFFERING AND SALE OF SUCH BONDS; AND OTHER
MATTERS RELATED THERETO
· A RESOLUTION OF THE COMMISSION OF THE LYNWOOD PUBLIC FINANCING AUTHORITY
AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $13,500,000 OF LYNWOOD PUBLIC
FINANCING AUTHORITY LEASE REVENUE BONDS, SERIES 2020A (FEDERALLY TAXABLE) AND;
APPROVING THE EXECUTION AND DELIVERY OF VARIOUS RELATED DOCUMENTS IN
CONNECTION WITH THE OFFERING AND SALE OF SUCH BONDS; AND OTHER MATTERS
RELATED THERETO
Background:
In review, the Lynwood Public Financing Authority (the “Authority”) was established for the purpose of carrying out
the intent of the State Legislature as set forth in Article 4 of the Joint Powers Act, namely the financing of Public
Capital Improvements, and working capital whenever there are significant public benefits for taking such actions.
The Authority, after due investigation and deliberation, has determined that due to the prevailing interest rates in
the municipal bond market, it is in the interest of the Authority at this time to provide for the issuance of bonds
under the Bond Law to finance working capital for the City’s general fund or such other uses as the City may
determine including public capital improvements.
Lynwood Public Financing Authority - Page 4 of 244 Agenda Item # 2
The issuance of bonds by the Authority will result in the following public benefits: (i) demonstrable savings in
effective interest rate, bond preparation, bond underwriting, or bond issuance costs (ii) significant reductions in
effective user charges levied by the City, and (iii) more efficient delivery of local agency services to residential and
commercial development.
To that end, the Authority has determined to issue its revenue bonds, to be designated as the Lynwood Public
Financing Authority Lease Revenue Bonds, 2020 Series A (Federally Taxable), in the principal amount not to
exceed $13,500,000 (the “Bonds”), to be secured by a pledge of the lease payments set forth in the lease
agreement.
The Bonds are being issued by the Authority to (a) finance working capital for the City’s general fund or such other
approved purposes, (b) purchase a municipal bond insurance policy and a reserve funds surety for the Bonds, and
(c) pay the costs of issuance of such bonds.
The costs of issuance for the consultants are: Bond & Disclosure Counsel-Nixon Peabody-$70,000; Financial
Advisor-Willdan Financial Services-$40,000; Rating Agency-S&P-$20,750; Trustee-U.S. Bank-$2,600; Printer-
$3,000; City Legal Expenses-$20,000; Contingency -$3,000; Title Insurance $10,125; California Municipal
Statistics $525=Total $170,000.
All of the consultants involved in the financing effort are paid on a contingency basis and are paid only from Bond
proceeds.
In accordance with Section 5852.1 of the California Government Code, good faith estimates of the following are
set forth on Exhibit A attached hereto: (a) the true interest cost of the Bonds, (b) the sum of all fees and charges
paid to third parties with respect to the Bonds, (c) the amount of proceeds of the Bonds expected to be received
net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with
proceeds of the Bonds, and (d) the sum total of all debt service payments on the Bonds calculated to the final
maturity of the Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Bonds.
Discussion and Analysis:
The Authority’s financing team and staff have determined that since this is a new money issue, a “public offering”
was in the best interest of the Authority. The Bonds are expected to receive an investment grade rating from
Standard and Poor’s. Bond Insurance and Surety Reserve will be bid out prior to bond pricing. The firm of
Raymond James & Associates has proposed to underwrite the Bonds.
Fiscal Impact:
The Average Annual Debt Service is $981,744 which will be paid through the General Fund.
Coordinated With:
City Attorney's Office
Lynwood Public Financing Authority - Page 5 of 244 Agenda Item # 2
ATTACHMENTS:
Description
2020 Lease Revenue Bonds - City Resolution
2020 Lease Revenue Bonds - PFA Resolution
Bond Purchase Agreement
Official Statement
Appendix A
Assignment Agreement
Continuing Disclosures
Facility Lease
Site Lease
Indenture
Lynwood Public Financing Authority - Page 6 of 244 Agenda Item # 2
4813-3409-0951.3
RESOLUTION NO. 20- R-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LYNWOOD APPROVING THE ISSUANCE BY THE
LYNWOOD PUBLIC FINANCING AUTHORITY OF NOT TO
EXCEED $13,500,000 OF LYNWOOD PUBLIC FINANCING
AUTHORITY LEASE REVENUE BONDS, SERIES 2020A
(FEDERALLY TAXABLE); APPROVING THE EXECUTION
AND DELIVERY OF VARIOUS RELATED DOCUMENTS IN
CONNECTION WITH THE OFFERING AND SALE OF SUCH
BONDS; AND OTHER MATTERS RELATED THERETO
WHEREAS, the Lynwood Public Financing Authority (the “Authority”) was established
for the purpose of carrying out the intent of the State Legislature as set forth in Article 4 of the
Joint Powers Act, namely the financing of Public Capital Improvements, and working capital
whenever there are significant public benefits for taking such actions; and
WHEREAS, the City of Lynwood (the “City”) desires to finance working capital for its
general fund or such other uses as the City may determine including public capital
improvements; and
WHEREAS, in order to provide funds to finance such working capital or such other
approved purposes, the City desires that the Authority issue its Lease Revenue Bonds, Series
2020A (Federally Taxable) (the “Series 2020A Bonds”); and
WHEREAS, in connection with the issuance of the Series 2020A Bonds, the City desires
to approve the form and distribution of a preliminary official statement (the “Preliminary Official
Statement”); and
WHEREAS, the City also desires to approve in connection with the sale of the Series
2020A Bonds, the form of Bond Purchase Agreement (the “Purchase Agreement”), among the
Authority, the City and Raymond James & Associates, Inc. (the “Underwriter”); and
WHEREAS, Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the California
Legislature) (“SB 450”) requires that the City obtain from an underwriter, financial advisor or
private lender and disclose, prior to authorization of the issuance of bonds with a term of greater
than 13 months, good faith estimates of the following information in a meeting open to the
public: (a) the true interest cost of the bonds, (b) the sum of all fees and charges paid to third
parties with respect to the bonds, (c) the amount of proceeds of the bonds expected to be received
net of the fees and charges paid to third parties and any reserves or capitalized interest paid or
funded with proceeds of the bonds, and (d) the sum total of all debt service payments on the
bonds calculated to the final maturity of the bonds plus the fees and charges paid to third parties
not paid with the proceeds of the bonds; and
WHEREAS, in compliance with SB 450, the City has obtained from Willdan Financial
Services Co., as the City’s municipal advisor, and the Underwriter, the required good faith
estimates and such estimates are disclosed and set forth on Exhibit A attached hereto; and
Lynwood Public Financing Authority - Page 7 of 244 Agenda Item # 2
4813-3409-0951.3
-2-
WHEREAS, to fulfill the requirements of Rule 15c2-12 under the Securities Exchange
Act of 1934 (as amended, the “Rule”), the City will enter into a Continuing Disclosure
Agreement (the “Continuing Disclosure Agreement”), whereby the City will agree to provide
certain continuing disclosure reports; and
WHEREAS, there have been presented to this meeting the proposed forms of the
following documents:
(a) the Indenture (the “Indenture”), among the Authority, the City and U.S.
Bank National Association, as trustee (the “Trustee”);
(b) the Site Lease (the “Site Lease”) between the City and the Authority;
(c) the Facility Lease (the “Facility Lease”) between the City and the
Authority;
(d) the Preliminary Official Statement;
(e) the Purchase Agreement; and
(f) the Continuing Disclosure Agreement;
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Lynwood,
as follows:
SECTION 1. Findings and Determinations. The City hereby specifically finds
and declares that the actions authorized hereby constitute and are with respect to public affairs of
the City and that the statements, findings and determinations of the City set forth above are true
and correct and that the issuance of the Series 2020A Bonds by the Authority will result in the
following public benefits (i) demonstrable savings in effective interest rate, bond preparation,
bond underwriting, or bond issuance costs (ii) significant reductions in effective user charges
levied by the City, and (iii) more efficient delivery of local agency services to residential and
commercial development.
SECTION 2. Approval of Issuance of Series 2020A Bonds by the Authority. The
issuance of the Series 2020A Bonds by the Authority on the terms and conditions set forth in,
and subject to the limitations specified in, the Indenture and this Resolution, is hereby approved;
provided, however, that (i) the aggregate principal amount of Series 2020A Bonds shall not
exceed $13,500,000, (ii) the maturity of the Series 2020A Bonds shall not exceed October 1,
2040, and (iii) true interest cost of the Series 2020A Bonds shall not exceed 4.75%.
SECTION 3. Approval of Indenture. The form of Indenture presented at this
meeting is hereby approved, and the City’s Mayor, Mayor Pro Tem, City Manager or Finance
Director, or his or her designee (each, an “Authorized Officer”) are each hereby authorized and
directed, for and in the name of and on behalf of the City, to execute, acknowledge and deliver
the Indenture in substantially the form presented at this meeting with such changes therein as the
officer executing the same may approve, such approval to be conclusively evidenced by the
execution and delivery thereof, including with respect to whether and what type(s) of credit
Lynwood Public Financing Authority - Page 8 of 244 Agenda Item # 2
4813-3409-0951.3
-3-
enhancement supports the Bonds, or by other factors, as determined by the Authorized Officers
in consultation with the City’s financial and legal consultants as being in the best interests of the
City.
SECTION 4. Approval of Site Lease. The form of Site Lease presented at this
meeting is hereby approved and each Authorized Officer is hereby authorized and directed, for
and in the name of and on behalf of the City, to execute, acknowledge and deliver the Site Lease
in substantially the form presented at this meeting with such changes therein as the Authorized
Officer executing the same may approve, such approval to be conclusively evidenced by the
execution and delivery thereof.
SECTION 5. Approval of Facility Lease. The form of Facility Lease presented at
this meeting is hereby approved and each Authorized Officer is hereby authorized and directed,
for and in the name of and on behalf of the City, to execute, acknowledge and deliver the Facility
Lease in substantially the form presented at this meeting with such changes therein as the
Authorized Officer executing the same may approve, such approval to be conclusively evidenced
by the execution and delivery thereof.
SECTION 6. Approval of Purchase Agreement. The City is hereby authorized to
enter into the Purchase Agreement and each Authorized Officer is hereby authorized and
directed to execute and deliver the Purchase Agreement on behalf of the City, in substantially the
form presented to this meeting, with such changes therein, deletions therefrom and additions
thereto as the Authorized Officer shall approve in consultation with the City’s financial and legal
consultants, which approval shall be conclusively evidenced by the execution and delivery
thereof; provided, that the underwriting discount payable by the City pursuant to the Purchase
Agreement shall not exceed 0.9% of the aggregate principal amount of the Series 2020A Bonds.
SECTION 7. Approval of Official Statement. The Preliminary Official
Statement is hereby approved and the same may be used and is hereby authorized to be used and
distributed in the market by the Underwriter incident to the marketing of the Series 2020A
Bonds. Each Authorized Officer is hereby authorized to (a) make such changes in such form of
the Preliminary Official Statement as such officer, in consultation with the City’s financial and
legal consultants and the Underwriter, shall determine to be appropriate, and (b) on behalf of the
City, to deem such Preliminary Official Statement “final” pursuant to Rule 15c2-12 under the
Securities Exchange Act of 1934 (the “Rule”). Each Authorized Officer is authorized and
directed to prepare a final Official Statement, with such additional information as may be
permitted to be excluded from the Preliminary Official Statement pursuant to the Rule, which
final Official Statement shall be executed and delivered in the name and on behalf of the City by
an Authorized Officer, and such Authorized Officer is authorized and directed to prepare,
execute and deliver in the name and on behalf of the City any supplemental filings related to
such final Official Statement.
SECTION 8. Approval of Continuing Disclosure Agreement. The form of
Continuing Disclosure Agreement presented at this meeting is hereby approved and each
Authorized Officer is hereby authorized and directed, for and in the name of and on behalf of the
City, to execute, acknowledge and deliver the Continuing Disclosure Agreement in substantially
the form presented at this meeting with such changes therein as the Authorized Officer executing
Lynwood Public Financing Authority - Page 9 of 244 Agenda Item # 2
4813-3409-0951.3
-4-
the same may approve, such approval to be conclusively evidenced by the execution and delivery
thereof.
SECTION 9. Approval of Legal and Financial Work on behalf of the City in
connection with the Proposed Issuance of Bonds. The City has requested the Authority to issue
the Series 2020A Bonds for the purpose of financing working capital for the City’s general fund
as described herein, and in connection therewith the City approves legal and financial work on
behalf of the City, and authorizes the City Manager to negotiate (i) an agreement to provide
underwriting services with Raymond James & Associates, Inc., (ii) an agreement to provide
municipal advisory services with Willdan Financial Services, and (iii) an agreement to provide
bond and disclosure counsel services with Nixon Peabody LLP.
SECTION 10. Other Acts. The officers and staff of the City are hereby
authorized and directed, jointly and severally, to do any and all things, to execute and deliver any
and all documents, which in consultation with the City Attorney or with Nixon Peabody LLP, as
bond counsel, they may deem necessary or advisable in order to effectuate the purposes of this
Resolution, and any and all such actions previously taken by such officers or staff members are
hereby ratified and confirmed. Any one of the Authorized Officers is hereby authorized and
directed, for and in the name of and on behalf of the City, to evaluate and select one or more
municipal bond insurers for all or any portion of the Series 2020A Bonds and to execute and
deliver such contracts and agreements with such bond insurers as may be approved by the
Authorized Officer executing the same, subject to the provisions of this Resolution, such
approval to be conclusively evidenced by such execution and delivery.
SECTION 11. Effective Date. This Resolution shall take effect upon adoption.
PASSED and ADOPTED this November 17, 2020.
Lynwood Public Financing Authority - Page 10 of 244 Agenda Item # 2
4813-3409-0951.3
-5-
Mayor
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
APPROVED AS TO CONTENT:
City Manager
Lynwood Public Financing Authority - Page 11 of 244 Agenda Item # 2
4813-3409-0951.3
EXHIBIT A
GOOD FAITH ESTIMATES
The following information based on cash flows prepared on November 2, 2020
was obtained from Raymond James & Associates, Inc. (the Underwriter), and is provided in
compliance with Section 5852.1 of the California Government Code with respect to the base
rental payments evidenced by the Series 2020A Bonds:
1. True Interest Cost of the Base Rental Payments Evidenced by the Series
2020A Bonds. Assuming the estimated aggregate principal amount of the Series 2020A Bonds
authorized to be issued by the Authority $13,390,000 is sold, and based on market interest rates
prevailing at the time of preparation of this information, a good faith estimate of the true interest
cost of the base rental payments evidenced by the Series 2020A Bonds, which means the rate
necessary to discount the amounts payable on the respective principal and interest payment dates
to the purchase price received for the Series 2020A Bonds, is 3.75%.
2. Finance Charge of the Series 2020A Bonds. Assuming the estimated
aggregate principal amount of the Series 2020A Bonds authorized to be issued by the Authority
$$13,390,000 is sold, and based on market interest rates prevailing at the time of preparation of
this information, a good faith estimate of the City’s finance charge of the Series 2020A Bonds,
which means the sum of all fees and charges paid to third parties (or costs associated with the
Series 2020A Bonds), is $387,415.
3. Amount of Proceeds to be Received. Assuming the estimated aggregate
principal amount of the Series 2020A Bonds authorized to be issued by the Authority
$$13,390,000 is sold, and based on market interest rates prevailing at the time of preparation of
this information, a good faith estimate of the amount of proceeds expected to be received by the
City following the Authority’s sale of the Series 2020A Bonds, less the finance charge of the
Series 2020A Bonds described in paragraph 2 above and any reserves or capitalized interest paid
or funded with proceeds of the Series 2020A Bonds, is $13,000,000.
4. Total Payment Amount. Assuming the estimated aggregate principal
amount of the Series 2020A Bonds authorized to be issued by the Authority $13,390,000 is sold,
and based on market interest rates prevailing at the time of preparation of this information, a
good faith estimate of the total payment amount, which means the sum total of all payments the
City will make to pay base rental payments evidenced by the Series 2020A Bonds plus the
finance charge of the Series 2020A Bonds described in paragraph 2 above not paid with the
proceeds of the Series 2020A Bonds, calculated to the final base rental payment evidenced by the
Series 2020A Bonds, is $19,424,896.
Attention is directed to the fact that the foregoing information constitutes good
faith estimates only. The actual interest cost, finance charges, amount of proceeds and total
payment amount may vary from those presently estimated due to variations from these estimates
in the timing of the sale of the Series 2020A Bonds, the actual principal amount of Series 2020A
Bonds sold, the amortization of the Series 2020A Bonds sold and market interest rates at the time
Lynwood Public Financing Authority - Page 12 of 244 Agenda Item # 2
4813-3409-0951.3
of sale. The date of sale and the amount of Series 2020A Bonds sold will be determined by the
City based on need for improvement funds and other factors. The actual interest rates at which
the Series 2020A Bonds will be sold will depend on the bond market at the time of sale. The
actual amortization of the Series 2020A Bonds will also depend, in part, on market interest rates
at the time of sale. Market interest rates are affected by economic and other factors beyond the
City’s control.
Lynwood Public Financing Authority - Page 13 of 244 Agenda Item # 2
4842-4257-8887.3
RESOLUTION NO. _____
A RESOLUTION OF THE COMMISSION OF THE LYNWOOD
PUBLIC FINANCING AUTHORITY AUTHORIZING THE
ISSUANCE OF NOT TO EXCEED $13,500,000 OF LYNWOOD
PUBLIC FINANCING AUTHORITY LEASE REVENUE
BONDS, SERIES 2020A (FEDERALLY TAXABLE) AND;
APPROVING THE EXECUTION AND DELIVERY OF
VARIOUS RELATED DOCUMENTS IN CONNECTION WITH
THE OFFERING AND SALE OF SUCH BONDS; AND OTHER
MATTERS RELATED THERETO
WHEREAS, the Lynwood Public Financing Authority (the “Authority”) was established
for the purpose of carrying out the intent of the State Legislature as set forth in Article 4 of the
Joint Powers Act, namely the financing of Public Capital Improvements, and working capital
whenever there are significant public benefits for taking such actions; and
WHEREAS, the City of Lynwood (the “City”) desires to finance working capital for its
general fund or such other uses as the City may determine including public capital improvements;
and
WHEREAS, in order to provide funds to finance such working capital or such other
approved purposes, the City desires that the Authority issue its Lease Revenue Bonds, Series
2020A (Federally Taxable) (the “Series 2020A Bonds”); and
WHEREAS, in connection with the issuance of the Series 2020A Bonds, the Authority
desires to approve the form and distribution of a preliminary official statement (the “Preliminary
Official Statement”); and
WHEREAS, the Authority also desires to approve in connection with the sale of the Series
2020A Bonds, the form of the Bond Purchase Agreement (the “Purchase Agreement”), among the
Authority, the City and Raymond James & Associates, Inc. (the “Underwriter”); and
WHEREAS, there have been presented to this meeting the proposed forms of the following
documents:
(a) the Indenture (the “Indenture”), among the Authority, the City and U.S.
Bank National Association, as trustee (the “Trustee”);
(b) the Site Lease (the “Site Lease”) between the City and the Authority;
(c) the Facility Lease (the “Facility Lease”) between the City and the Authority;
(d) the Preliminary Official Statement;
(e) the Purchase Agreement; and
Lynwood Public Financing Authority - Page 14 of 244 Agenda Item # 2
4842-4257-8887.3
2
(f) the Assignment Agreement;
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY THE
CITY OF LYNWOOD PUBLIC FINANCING AUTHORITY AS FOLLOWS:
SECTION 1. Approval of Issuance of Series 2020A Bonds by the Authority. The
issuance of the Series 2020A Bonds by the Authority on the terms and conditions set forth in, and
subject to the limitations specified in, the Indenture and this Resolution, is hereby approved;
provided, however, that (i) the aggregate principal amount of Series 2020A Bonds shall not exceed
$13,500,000, (ii) the maturity of the Series 2020A Bonds shall not exceed October 1, 2040, and
(iii) the true interest cost of the Series 2020A Bonds shall not exceed 4.75%.
SECTION 2. Approval of Indenture. The form of Indenture presented at this
meeting is hereby approved and the President, Vice-President, Treasurer, Chief Administrative
Officer and Finance Director or their respective designated representatives (each an “Authorized
Officer”) are hereby authorized and directed, for and in the name of and on behalf of the Authority,
to execute, acknowledge and deliver the Indenture in substantially the form presented at this
meeting with such changes therein as the officers executing the same may approve, such approval
to be conclusively evidenced by the execution and delivery thereof.
SECTION 3. Approval of Site Lease. The form of Site Lease presented at this
meeting is hereby approved and each Authorized Officer is hereby authorized and directed, for
and in the name of and on behalf of the Authority, to execute, acknowledge and deliver the Site
Lease in substantially the form presented at this meeting with such changes therein as the
Authorized Officer executing the same may approve, such approval to be conclusively evidenced
by the execution and delivery thereof.
SECTION 4. Approval of Facility Lease. The form of Facility Lease presented at
this meeting is hereby approved and each Authorized Officer is hereby authorized and directed,
for and in the name of and on behalf of the Authority, to execute, acknowledge and deliver the
Facility Lease in substantially the form presented at this meeting with such changes therein as the
Authorized Officer executing the same may approve, such approval to be conclusively evidenced
by the execution and delivery thereof.
SECTION 5. Approval of Purchase Agreement. The Authority is hereby
authorized to enter into the Purchase Agreement and each Authorized Officer is hereby authorized
and directed to execute and deliver the Purchase Agreement on behalf of the Authority, in
substantially the form presented to this meeting, with such changes therein, deletions therefrom
and additions thereto as the Authorized Officer shall approve in consultation with the Authority’s
financial and legal consultants, which approval shall be conclusively evidenced by the execution
and delivery thereof; provided, that the underwriting discount payable pursuant to the Purchase
Contract shall not exceed 0.9% of the aggregate principal amount of the Series 2020A Bonds.
SECTION 6. Approval of Assignment Agreement. The form of Assignment
Agreement presented at this meeting is hereby approved and each Authorized Officer is hereby
authorized and directed, for and in the name of and on behalf of the Authority, to execute,
acknowledge and deliver the Assignment Agreement in substantially the form presented at this
Lynwood Public Financing Authority - Page 15 of 244 Agenda Item # 2
4842-4257-8887.3
3
meeting with such changes therein as the Authorized Officer executing the same may approve,
such approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 7. Approval of Official Statement. The Preliminary Official Statement
is hereby approved and the same may be used and is hereby authorized to be used and distributed
in the market by the Underwriter incident to the marketing of the Series 2020A Bonds. Each
Authorized Officer is hereby authorized to (a) make such changes in such form of the Preliminary
Official Statement as such officer, in consultation with the Authority’s financial and legal
consultants and the Underwriter, shall determine to be appropriate, and (b) on behalf of the
Authority, to deem such Preliminary Official Statement “final” pursuant to Rule 15c2-12 under
the Securities Exchange Act of 1934 (the “Rule”). Each Authorized Officer is authorized and
directed to prepare a final Official Statement, with such additional information as may be permitted
to be excluded from the Preliminary Official Statement pursuant to the Rule, which final Official
Statement shall be executed and delivered in the name and on behalf of the Authority by an
Authorized Officer, and such Authorized Officer is authorized and directed to prepare, execute
and deliver in the name and on behalf of the Authority any supplemental filings related to such
final Official Statement.
SECTION 8. Confirmation and Approval of Actions taken by the City; SB 1029
Representation. The City has requested the Authority to issue the Series 2010A Bonds for the
purpose of financing working capital for the City’s general fund, and in connection therewith the
Authority approves legal and financial work on behalf of the City and the Authority, and the
execution of agreements with, Raymond James & Associates, Inc. (the “Underwriter”) for
underwriting services, with Willdan Financial Services (the “Municipal Advisor”) for municipal
advisory services, with Nixon Peabody LLP for bond and disclosure counsel services. In addition,
the Authority adopts and approves the Good Faith Estimates required by Senate Bill 450 (Chapter
625 of the 2017-2018 Session of the California Legislature) (“SB 450”) and obtained by the City
from the Underwriter and the Municipal Advisor.
The Authority confirms, that to the extent applicable, it adopts the City’s stated debt
management policies required by Senate Bill 1029 (“SB 1029”), and further represents that it is in
compliance with the applicable SB 1029 pre-issuance requirements and that it expects to comply
with all post-issuance requirements of SB 1029 applicable to the Series 2020A Bonds.
SECTION 9. Other Acts. The officers and staff of the Authority are hereby
authorized and directed, jointly and severally, to do any and all things, to execute and deliver any
and all documents, which in consultation with Authority Counsel and with Nixon Peabody LLP,
the Authority’s bond counsel, they may deem necessary or advisable in order to effectuate the
purposes of this Resolution, and any and all such actions previously taken by such officers or staff
members are hereby ratified and confirmed. Any one of the Authorized Officers is hereby
authorized and directed, for and in the name of and on behalf of the City, to evaluate and select
one or more municipal bond insurers for all or any portion of the Series 2020A Bonds and to
execute and deliver such contracts and agreements with such bond insurers as may be approved
by the Authorized Officer executing the same, subject to the provisions of this Resolution, such
approval to be conclusively evidenced by such execution and delivery.
SECTION 10. Effective Date. This Resolution shall take effect upon adoption.
Lynwood Public Financing Authority - Page 16 of 244 Agenda Item # 2
4842-4257-8887.3
4
PASSED and ADOPTED this November 17, 2020.
President
ATTEST:
Secretary
APPROVED AS TO FORM:
Authority Counsel
APPROVED AS TO CONTENT:
Chief Administrative Officer
Lynwood Public Financing Authority - Page 17 of 244 Agenda Item # 2
1
$_______
LYNWOOD PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
SERIES 2020A (FEDERALLY TAXABLE)
BOND PURCHASE AGREEMENT
________, 2020
Lynwood Public Financing Authority
11330 Bullis Road
Lynwood, California 90262
City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Ladies and Gentlemen:
Raymond James & Associates, Inc. (the “Underwriter”), hereby offers to enter into this Bond
Purchase Agreement with you, the City of Lynwood (the “City”) and the Lynwood Public Financing
Authority (the “Authority”), for the purchase by the Underwriter and the delivery by you of the Bonds
specified below. The Authority’s Lease Revenue Bonds, Series 2020A (Federally Taxable) (the
“Bonds”) are being issued to provide funds to (i) finance working capital for the City’s general fund,
(ii) purchase a municipal bond insurance policy for the Bonds, (iii) purchase a reserve surety for the
debt service reserve fund for the Bonds and (iv) pay costs of issuance of the Bonds. This offer is made
subject to acceptance by you prior to 11:59 p.m., Los Angeles time, on the date hereof. Upon such
acceptance, this Bond Purchase Agreement shall be in full force and effect in accordance with its terms
and shall be binding upon you and the Underwriter.
1. Purchase and Sale. Upon the terms and conditions and upon the basis of the
representations, warranties and agreements hereinafter set forth, the Underwriter agrees to purchase
from the Authority all (but not less than all) of the $_______ aggregate principal amount of the Bonds.
The purchase price for the Bonds shall be $_______ (being the principal amount of the Bonds,
less an original issue discount in the amount of $_____ and less an Underwriter’s discount in the
amount of $______).
The Bonds will be dated the date of delivery thereof and will have the maturities and bear
interest at the rates set forth on Exhibit A hereto. The Bonds will be subject to redemption as set forth
in the Indenture and Official Statement herein described. The Bonds will be issued in book-entry form
only. It is anticipated that CUSIP identification numbers will be inserted on the Bonds, but neither the
failure to provide such numbers nor any error with respect thereto shall constitute a cause for failure
or refusal by the Underwriter to accept delivery of the Bonds in accordance with the terms of this Bond
Purchase Agreement.
The scheduled payment of principal of and interest on the Bonds when due will be guaranteed
under an insurance policy (the “Policy”) to be issued concurrently with the delivery of the Bonds by
Lynwood Public Financing Authority - Page 18 of 244 Agenda Item # 2
2
_________ (the “Insurer”). The Insurer will also issue a Municipal Bond Debt Service Reserve
Insurance Policy (the “Reserve Policy”) concurrently with the delivery of the Bonds.
2. Authorizing Instruments and Law. The Bonds shall be issued pursuant to the
provisions of a resolution (the “Resolution”) adopted by the Authority on _______, 2020 authorizing
the issuance of the Bonds and the Marks-Roos Local Bond Pooling Act of 1985, constituting Section
6584 et seq. of the California Government Code (the “JPA Act”). The Bonds are issued pursuant to
an Indenture, dated as of _______ 1, 2020 (the “Indenture”), among the Authority, the City and U.S.
Bank National Association, as trustee (the “Trustee”), and shall be as described in the Indenture.
The Bonds are limited obligations of the Authority payable primarily from and secured by
certain base rental payments (the “Base Rental Payments”) to be paid by the City pursuant to a Facility
Lease, dated as of _______ 1, 2020, between the City and the Authority (the “Lease”), for certain real
property and the improvements thereon (the “Leased Property”).
3. Offering the Bonds. The Underwriter agrees to offer all the Bonds to the public
initially at the prices (or yields) set forth on the cover pages of the Official Statement of the Authority
pertaining to the Bonds, dated _________, 2020 (the Official Statement, together with all appendices
thereto, and with such changes therein and supplements thereto as are consented to in writing by the
Authority, the City, the Underwriter or its legal counsel in accordance with the provisions of Sections
6(j) and 7(j) hereof or otherwise consented to by the Underwriter pursuant to Section 10(b)(v), are
herein called the “Official Statement”). Subsequent to the initial public offering of the Bonds, the
Underwriter reserves the right to change the public offering prices (or yields) as they deem necessary
in connection with the marketing of the Bonds. The Bonds may be offered and sold to certain dealers
at prices lower than such initial public offering prices. “Public Offering” shall include an offering to a
number of institutional investors or registered investment companies, regardless of the number of such
investors to which the Bonds are sold.
The City and the Authority acknowledge and agree that (i) the purchase and sale of the Bonds
pursuant to this Bond Purchase Agreement is an arm’s-length commercial transaction between the
City, the Authority and the Underwriter, and that the Underwriter has financial and other interests that
differ from those of the City and the Authority, (ii) in connection with such transaction the Underwriter
is not acting as a municipal advisor, financial advisor or fiduciary to the City and the Authority or any
other person or entity and have not assumed a fiduciary responsibility in favor of the City or the
Authority with respect to the offering of the Bonds or the process leading thereto (whether or not the
Underwriter has advised or are currently advising the City or the Authority on other matters), (iii) the
only contractual obligations the Underwriter has to the City and the Authority with respect to the
transaction contemplated hereby expressly are set forth in this Bond Purchase Agreement, except as
otherwise provided by applicable rules and regulations of the SEC or the rules of the Municipal
Securities Rulemaking Board (the “MSRB”) and (iv) the City and the Authority have consulted with
their own legal and other professional advisors to the extent they deemed appropriate in connection
with the offering of the Bonds. The City and the Authority acknowledge that they have previously
provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure
under Rule G-17 of the MSRB relating to disclosures concerning the Underwriter’s role in the
transaction, disclosures concerning the Underwriter’s compensation, conflict disclosures, if any, and
disclosures concerning complex municipal securities financing, if any.
4. Delivery of Official Statement. If requested by the Underwriter, the Authority shall
deliver to the Underwriter two (2) copies of the Official Statement manually executed on behalf of the
Lynwood Public Financing Authority - Page 19 of 244 Agenda Item # 2
3
Authority and the City. The Authority shall also deliver copies of the Official Statement in such
quantities as the Underwriter may reasonably request in order to enable the Underwriter to distribute a
single copy of each Official Statement to any potential customer of the Underwriter requesting an
Official Statement during the time period beginning when the Official Statement becomes available
and ending on the End Date (defined below). The Authority shall deliver these copies to the
Underwriter within seven (7) business days after the execution of this Bond Purchase Agreement and
in sufficient time to accompany or precede any sales confirmation that requests payment from any
customer of the Underwriter. The Authority and the Underwriter hereby agree that the end of the
underwriting period shall be the date of Closing (as defined below) unless the Underwriter informs the
Authority in writing of a different end of the underwriting period.
“End Date” as used herein is that date which is the earlier of:
(a) twenty-five (25) days after the end of the underwriting period, as defined in
SEC Rule 15c2-12 originally adopted by the Securities and Exchange Commission on June 28, 1989,
as amended (“Rule 15c2-12”); or
(b) the time when the Official Statement becomes available from the MSRB, but
in no event less than twenty-five (25) days after the underwriting period (as defined in Rule 15c2-12)
ends.
The Underwriter acknowledges that the “End Date” will be the date of Closing unless the
Underwriter otherwise notifies the Authority and the City in writing that the Underwriter still own
some or all of the Bonds.
The Authority and the City have authorized the use of the Official Statement in connection
with the public offering of the Bonds. The Authority and the City also have consented to the use by
the Underwriter prior to the date hereof of the Preliminary Official Statement dated _______, 2020,
relating to the Bonds in connection with the public offering of the Bonds, (which, together with all
appendices thereto, is herein called the “Preliminary Official Statement”). Authorized officers of
the City and the Authority have certified to the Underwriter that such Preliminary Official Statement
was deemed to be final as of its date for purposes of Rule 15c2-12, with the exception of certain final
pricing and related information referred to in Rule 15c2-12. The Underwriter has distributed a copy
of each Preliminary Official Statement to potential customers on request.
5. The Closing. At 9:00 A.M., California time, on _______, 2020, or at such other time
or on such earlier or later business day as shall have been mutually agreed upon by the Authority, the
City and the Underwriter, the Authority, upon receipt of the purchase price thereof, will deliver (i) the
Bonds in book-entry form through the facilities of The Depository Trust Company (“DTC”), and
(ii) the closing documents hereinafter mentioned at the offices of Nixon Peabody LLP, Los Angeles,
California (“Bond Counsel”), or another place to be mutually agreed upon by the Authority, the City
and the Underwriter. The Underwriter will accept such delivery from the Authority. The Underwriter
will pay the purchase price of the Bonds as set forth in Section 1 hereof by wire transfer of immediately
available funds. This payment and delivery, together with the delivery of the aforementioned
documents, is herein called the “Closing.”
6. City Representations, Warranties and Covenants. The City represents, warrants and
covenants to the Underwriter that:
Lynwood Public Financing Authority - Page 20 of 244 Agenda Item # 2
4
(a) The City is a municipal corporation of the State of California (the “State”)
organized and operating pursuant to the law of the State with power and authority to enter into and
perform its duties under the Lease, the Continuing Disclosure Agreement, dated the date of Closing
(the “Continuing Disclosure Agreement”), the Indenture, the Site Lease, dated as of _______ 1, 2020
(the “Site Lease”), between the City and the Authority, the Official Statement and this Bond Purchase
Agreement (collectively, the “City Documents”).
(b) To the best knowledge of the City, neither the approval, execution and delivery
of the City Documents, and compliance with the provisions on the City’s part contained therein, nor
the consummation of any other of the transactions herein and therein contemplated, nor the fulfillment
of the terms hereof and thereof, materially conflicts with or constitutes a material breach of or default
under nor materially contravenes any law, administrative regulation, judgment, decree, loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is
otherwise subject, nor does any such execution, delivery, adoption or compliance result in a security
interest or encumbrance of any nature whatsoever upon any of the properties or assets of the City under
the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture,
bond, note, resolution, agreement or other instrument, except as provided by the City Documents.
(c) The City Documents have been duly authorized, executed and delivered by the
City, and, assuming due authorization, execution and delivery by the other parties thereto, constitute
legal, valid and binding agreements of the City enforceable in accordance with their respective terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or other laws affecting the enforcement of creditors’ rights
generally, and by the application of equitable principles if sought, by the exercise of judicial discretion,
and by the limitations on legal remedies imposed on actions against cities in the State.
(d) Except as may be required under blue sky or other securities laws of any state,
there is no material consent, approval, authorization or other order of, or filing with, or certification
by, any regulatory agency having jurisdiction over the City required for the execution and delivery of
the Bonds or the consummation by the City of the other transactions contemplated by the Official
Statement and this Bond Purchase Agreement.
(e) To the best of the knowledge of the City, there is, and on the Closing there will
be, no action, suit, proceeding or investigation at law or in equity before or by any court or
governmental agency or body pending (notice of which has been received by the City) or threatened
against the City to restrain or enjoin the delivery of any of the Bonds, or the payments to be made
pursuant to the Lease, or in any way contesting or affecting the validity of the City Documents or the
Bonds or the authority of the City to approve this Bond Purchase Agreement, or enter into the City
Documents or contesting the powers of the City to enter into or perform its obligations under any of
the foregoing or in any way contesting the powers of the City in connection with any action
contemplated by this Bond Purchase Agreement or to restrain or enjoin the execution, sale and delivery
of the Bonds, contesting the completeness or accuracy of the Preliminary Official Statement as of its
date or the Official Statement or any supplement or amendment thereto wherein an unfavorable
decision, ruling or finding would materially adversely affect the validity or enforceability of the City
Documents to be executed by it or asserting that the Preliminary Official Statement as of its date or the
Official Statement contained any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements therein, in light of all the
circumstances under which they were made, not misleading, or, except as described in the Preliminary
Lynwood Public Financing Authority - Page 21 of 244 Agenda Item # 2
5
Official Statement and the Official Statement, nor is there any basis for any such action, suit,
proceeding or investigation.
(f) The Preliminary Official Statement provided to the Underwriter has been
deemed final by the City, as required by Rule 15c2-12. As of the date thereof and at all times
subsequent thereto up to and including the Closing, the information relating to the City, the Bonds, the
Leased Property and the City Documents contained in the Official Statement was and will be materially
complete for its intended purposes. The information relating to the City, the Bonds, the Leased
Property and the City Documents contained in the Official Statement as of the date hereof is true and
correct in all material respects and such information does not contain any untrue or misleading
statement of a material fact or omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading in any material respect.
(g) The City agrees to cooperate with the Underwriter in endeavoring to qualify
the Bonds for offering and sale under the securities or blue sky laws of such jurisdictions of the United
States as the Underwriter may request; provided, however, that the City will not be required to execute
a special or general consent to service of process in any jurisdiction in which it is not now so subject
or to qualify to do business as a foreign corporation in any jurisdiction where it is not so qualified. The
Underwriter shall be responsible for all costs relating to such qualification of the Bonds under blue sky
or similar laws.
(h) By official action of the City prior to or concurrently with the execution hereof,
the City has duly approved the distribution of the Official Statement, and has duly authorized and
approved the execution and delivery of, and the performance by the City of the obligations on its part
contained in the City Documents and the consummation by it of all other transactions contemplated by
the Official Statement and this Bond Purchase Agreement.
(i) To the best knowledge of the City, it is not in any material respect in breach of
or default under any material applicable law or administrative regulation of the State or the United
States or any material applicable judgment or decree or any loan agreement, indenture, bond, note,
resolution, agreement or other instrument to which the City is a party or is otherwise subject and in
connection with which the City is obligated to make payments from its own funds, and no event has
occurred and is continuing which, with the passage of time or the giving of notice, or both, would
constitute a default or an event of default under any such instrument the consequence of which could
materially and adversely affect the performance of the City under the City Documents.
(j) If between the date of this Bond Purchase Agreement and the End Date an
event occurs, of which the City has knowledge, which might or would cause the information relating
to the City, the City’s finances, the Leased Property, or the City’s functions, duties and responsibilities
contained in the Official Statement, as then supplemented or amended, to contain an untrue statement
of a material fact or to omit to state a material fact required to be stated therein or necessary to make
such information therein, in the light of the circumstances under which it was presented, not misleading
in any material respect, the City will notify the Underwriter, and if, in the opinion of the Underwriter,
the City or their respective legal counsel, such event requires the preparation and publication of a
supplement or amendment to the Official Statement, the City will cooperate with the Underwriter in
the preparation of an amendment or supplement to the Official Statement in a form and in a manner
approved by the Underwriter, provided all expenses thereby incurred will be paid for by the City.
Lynwood Public Financing Authority - Page 22 of 244 Agenda Item # 2
6
(k) If the information relating to the Leased Property, the City, its functions, duties
and responsibilities contained in the Official Statement is amended or supplemented pursuant to the
immediately preceding subparagraph, at the time of each supplement or amendment thereto and (unless
subsequently again supplemented or amended pursuant to such subparagraph) at all times subsequent
thereto up to and including the date of the Closing, the portions of the Official Statement so
supplemented or amended (including any financial and statistical data contained therein) will not
contain any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make such information therein, in the light of the circumstances under which it
was presented, not misleading in any material respect.
(l) Any certificate signed by a duly authorized official of the City and delivered to
the Underwriter shall be deemed a representation and warranty by the City to the Underwriter as to the
statements made therein.
(m) As of the time of acceptance hereof and as of the Closing, the City does not
and will not have outstanding any indebtedness which is payable from the City’s general fund except
as disclosed in the Official Statement.
(n) Between the date of this Bond Purchase Agreement and the date of Closing,
the City will not, and except as disclosed in the Official Statement, offer or issue any certificates, notes
or other obligations for borrowed money, or, other than in the normal course of its operations, incur
any material liabilities, direct or contingent, secured by or payable from the City’s general fund.
(o) The City will undertake, pursuant to the Continuing Disclosure Agreement, to
provide or cause to be provided annual financial reports and notices of certain events; a description of
this undertaking is set forth in the Official Statement. Except as disclosed in the Preliminary Official
Statement and Official Statement, the City and its related entities have not failed to comply in any
material respect with a continuing disclosure undertaking under Rule 15c2-12 during the previous five
years.
(p) The financial statements of, and other financial information regarding the City
in the Official Statement fairly present the financial position and results of the operations of the City
as of the dates and for the periods therein set forth and the audited financial statements have been
prepared in accordance with generally accepted accounting principles applicable to cities.
7. Authority Representations, Warranties and Covenants. The Authority represents,
warrants and covenants to the City and the Underwriter that:
(a) The Authority is a joint powers authority, duly organized and existing under
the Constitution (the “Constitution”) and laws of the State, including the JPA Act, with full right,
power and authority to enter into, execute and deliver the Authority Documents (defined below) and
to perform its obligations hereunder.
(b) By all necessary official action, the Authority has duly authorized and approved
the execution and delivery of, and the performance by the Authority of the obligations on its part
contained in the Bond Purchase Agreement, the Bonds, the Indenture, the Site Lease, the Assignment
Agreement, dated as of ______ 1, 2020 (the “Assignment Agreement”), between the Authority and
the Trustee and the Lease (collectively, the “Authority Documents”), and has approved the use by the
Underwriter of the Preliminary Official Statement, and the Official Statement and, as of the date hereof,
Lynwood Public Financing Authority - Page 23 of 244 Agenda Item # 2
7
such authorizations and approvals are in full force and effect and have not been amended, modified or
rescinded. When executed and delivered by the parties hereto, the Authority Documents will constitute
the legally valid and binding obligations of the Authority enforceable upon the Authority in accordance
with their respective terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors
rights generally, to the exercise of judicial discretion and to the limitations on legal remedies against
joint powers authorities in California. The Authority has complied and will at the Closing, be in
compliance in all respects, with the terms of the Authority Documents.
(c) The Bonds, when issued in accordance with the Indenture, will be valid and
binding limited obligations of the Authority, entitled to the benefits of the Indenture and enforceable
in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’
rights generally, to the exercise of judicial discretion and to the limitations on legal remedies against
joint powers authorities in California.
(d) As of the time of acceptance hereof and as of the time of the Closing, except
as otherwise disclosed in the Official Statement, to the best knowledge of the Authority, the Authority
is not and will not be in any material respect in breach of or in default under any law or administrative
rule or regulation of the State or the United States, or any applicable judgment or decree or any trust
agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which
the Authority is a party or is otherwise subject, and no event has occurred and is continuing which,
with the passage of time or the giving of notice, or both, would constitute a default or event of default
under any such instrument which breach, default or event could have an adverse effect on the
Authority’s ability to perform its obligations under the Authority Documents; and, as of such times,
except as disclosed in the Official Statement, the authorization, execution and delivery of the Authority
Documents and compliance by the Authority with the provisions thereof do not and will not conflict
with or constitute a breach of or default under any applicable constitutional provision, law or
administrative rule or regulation of the State or the United States or any applicable judgment, decree,
license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other
instrument to which the Authority is subject, or by which it or any of its properties is bound, nor will
any such authorization, execution, delivery or compliance result in the creation or imposition of any
lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets
or properties under the terms of any such law, regulation or instrument except as provided in the
Authority Documents.
(e) As of the time of acceptance hereof and the Closing, except as disclosed in the
Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, government agency, public board or body, pending (notice of which has been
received by the Authority), or to the best knowledge of the Authority threatened against the Authority
in any material respect:
(i) affecting the existence of the Authority or the titles of the officers of
the Authority to their respective offices;
(ii) affecting, contesting or seeking to prohibit, restrain or enjoin the
issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be
pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the
validity of the Authority Documents or the consummation of the transactions on the part of the
Lynwood Public Financing Authority - Page 24 of 244 Agenda Item # 2
8
Authority contemplated thereby, or contesting the exclusion of the interest on the Bonds from Federal
or State taxation, as applicable, or contesting the powers of the Authority or its authority to enter into
the Lease and to pledge the Base Rental Payments for repayment of the Bonds;
(iii) which may result in any material adverse change relating to the
financial condition of the Authority;
(iv) contesting the completeness or accuracy of the Preliminary Official
Statement as of its date or the Official Statement or any supplement or amendment thereto or asserting
that the Preliminary Official Statement as of its date or the Official Statement contained any untrue
statement of a material fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of all the circumstances under which they were made,
not misleading; or
(v) challenging the ability of the Authority to sell the Bonds to the
Underwriter.
(f) The Authority will furnish such information, execute such instruments and take
such other action in cooperation with the Underwriter as the Underwriter may reasonably request in
order to qualify the Bonds for offer and sale under the blue sky laws or other securities laws and
regulations of such states and other jurisdictions of the United States as the Underwriter may designate
and will use its best efforts to continue such qualification in effect so long as required for distribution
of the Bonds; provided however, that in no event shall the Authority be required to take any action
which would subject it to general or unlimited service of process in any jurisdiction in which it is not
now so subject.
(g) Any certificate signed by a duly authorized officer of the Authority and
delivered to the Underwriter shall be deemed to be a representation and warranty by the Authority to
the Underwriter as to the statements made therein.
(h) As of the time of acceptance hereof and as of the date of Closing, except as
otherwise disclosed in the Official Statement, the Authority has complied with the filing requirements
of the JPA Act.
(i) The Authority will advise the Underwriter promptly of any proposal to amend
or supplement the Official Statement from the delivery of the Official Statement to the End Date and
will not effect or consent to any such amendment or supplement without prior consultation with the
Underwriter. The Authority will advise the Underwriter promptly of the institution of any proceedings
known to it by any governmental agency prohibiting or otherwise affecting the use of the Official
Statement in connection with the offering, sale or distribution of the Bonds.
(j) For a period beginning on the date hereof and continuing until the End Date,
(a) the Authority will not adopt any amendment of, or supplement to, the Official Statement without
prior consultation with the Underwriter and Kutak Rock LLP, counsel to the Underwriter
(“Underwriter’s Counsel”) and (b) if any event relating to or affecting the Authority shall occur as a
result of which it is necessary, in the opinion of the Underwriter and Underwriter’s Counsel, to amend
or supplement the Official Statement in order to make the Official Statement not misleading in the
light of the circumstances existing at the time it is delivered to a purchaser of the Bonds, the Authority
will forthwith cause the City to prepare and furnish to the Underwriter a reasonable number of copies
Lynwood Public Financing Authority - Page 25 of 244 Agenda Item # 2
9
of an amendment of, or supplement to, the Official Statement (in form and substance satisfactory to
Underwriter’s Counsel) which will amend or supplement the Official Statement so that it will not
contain an untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing at the time the Official Statement is
delivered to a purchaser of the Bonds, not misleading.
8. [Reserved].
9. Closing Conditions. The Underwriter has entered into this Bond Purchase Agreement
in reliance upon the representations, warranties and covenants herein and the performance by the
Authority and the City of their respective obligations hereunder, both as of the date hereof and as of
the date of the Closing. The Underwriter’s obligations hereunder are and shall be subject to the
following additional conditions:
(a) Bring-Down Representation. The representations, warranties and covenants of
the Authority and the City contained herein shall be true and correct at the date hereof and at the time
of the Closing, as if made on the date of the Closing.
(b) Executed Agreements and Performance Thereunder. At the time of the
Closing:
(i) the City Documents and the Authority Documents shall be in full force
and effect, and shall not have been amended, modified or supplemented except with the prior written
consent of the Underwriter;
(ii) there shall be in full force and effect such resolutions (the
“Authorizing Resolutions”) as, in the opinion of Bond Counsel, shall be necessary in connection with
the transactions on the part of the Authority and the City contemplated by the City Documents and the
Authority Documents;
(iii) the Authority shall perform or have performed its obligations required
or specified in the Authority Documents to be performed at or prior to Closing;
(iv) the City shall perform or have performed its obligations required as
specified in the City Documents to be performed at or prior to Closing; and
(v) the Official Statement shall not have been supplemented or amended,
except pursuant to Paragraph 6(j) or 7(j), or as otherwise may have been agreed to in writing by the
Underwriter.
(c) No Default. At the time of the Closing, no default shall have occurred or be
existing under the Authority Documents or the City Documents and neither the Authority nor the City
shall be in default in the payment of principal or interest on any of its bonded indebtedness or other
obligations payable from the City’s general fund which default shall adversely impact the ability of the
Authority to make payments on the Bonds or the City to make payments pursuant to the Lease.
(d) Termination Events. The Underwriter shall have the right to terminate this
Bond Purchase Agreement, without liability therefor, by written notification to the Authority and the
City if at any time at or prior to the Closing the market price or marketability of the Bonds, or the
Lynwood Public Financing Authority - Page 26 of 244 Agenda Item # 2
10
ability of the Underwriter to enforce contracts for the sale of the Bonds, shall have been materially
adversely affected in the reasonable judgment of the Underwriter (evidenced by a written notice to the
City and the Authority terminating the obligation of the Underwriter to accept delivery of and pay for
the Bonds) by reason of any of the following:
(i) an amendment to the Constitution of the United States or by any
legislation in or by the Congress of the United States or by the State, or the amendment of legislation
pending as of the date of the Authority Documents or the City Documents in the Congress of the United
States, or the recommendation to Congress or endorsement for passage (by press release, other form
of notice or otherwise) of legislation by the President of the United States, the Treasury Department of
the United States, the Internal Revenue Service or the Chairman or ranking minority member of the
Committee on Finance of the United States Senate or the Committee on Ways and Means of the United
States House of Representatives, or the proposal for consideration of legislation by either such
Committee, or the presentment of legislation for consideration as an option by either such Committee,
or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable
reporting for passage of legislation to either House of the Congress of the United States by a Committee
of such House to which such legislation has been referred for consideration, or any decision of any
Federal or State court or any ruling or regulation (final, temporary or proposed) or official statement
on behalf of the United States Treasury Department, the Internal Revenue Service or other Federal or
State authority materially adversely affecting the Federal or State tax status of the Authority or the
City, or the interest on bonds or notes or obligations of the general character of the Bonds; or
(ii) any legislation, ordinance, rule or regulation shall be introduced in, or
be enacted by any governmental body, department or agency of the States or a decision by any court
of competent jurisdiction within the State or any court of the United States shall be rendered which, in
the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds;
or
(iii) legislation shall be enacted by the Congress of the United States, or a
decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official
statement by, or on behalf of, the Securities and Exchange Commission or any other governmental
agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance,
offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of
the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement,
is in violation or would be in violation of, or that obligations of the general character of the Bonds, or
the Bonds, are not exempt from registration under, any provision of the federal securities laws,
including the Securities Act of 1933, as amended and as then in effect, or that the Indenture needs to
be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or
(iv) the New York Stock Exchange or other national securities exchange,
or any governmental or regulatory authority, shall impose, as to the Bonds or obligations of the general
character of the Bonds, any material restrictions not now in force, or increase materially those now in
force, with respect to the extension of credit by, or the charge to the net capital requirements of the
Underwriter; or
(v) a general banking moratorium shall have been established by federal or
State authorities; or
Lynwood Public Financing Authority - Page 27 of 244 Agenda Item # 2
11
(vi) there shall have occurred (i) an outbreak or escalation of hostilities or
the declaration by the United States of a national emergency or war or (ii) any other calamity or crisis
in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis;
or
(vii) the commencement of any action, suit or proceeding described in
Paragraphs 6(e) or 7(e) hereof; or
(viii) a general suspension of trading on the New York Stock Exchange or
other major exchange shall be in force, or minimum or maximum prices for trading shall have been
fixed and be in force, or maximum ranges for prices for securities shall have been required and be in
force on any such exchange, whether by virtue of determination by that exchange or by order of the
Securities and Exchange Commission or any other governmental authority having jurisdiction; or
(ix) any event occurring or information becoming known which, in the
reasonable judgment of the Underwriter, makes untrue or incorrect in any material respect any
statement or information contained in the Preliminary Official Statement or in the Official Statement
or has the effect that the Preliminary Official Statement or the Official Statement contains any untrue
statement of a 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
(x) any rating of the Bonds or other obligations of the City shall have been
downgraded, suspended or withdrawn or placed on negative outlook or negative watch by a national
rating service, which, in the Underwriter’s reasonable opinion, materially adversely affects the
marketability or market price of the Bonds or the ability of the Underwriter to enforce contracts for the
sale of the Bonds; or
(xi) any rating of the Insurer shall have been downgraded, suspended or
withdrawn or placed on negative outlook or negative watch by a national rating service, which, in the
Underwriter’s reasonable opinion, materially adversely affects the marketability or market price of the
Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or
(xii) any proceeding shall be pending or threatened by the Securities and
Exchange Commission against the Authority or the City; or
(xiii) any fact or event shall exist or have existed that requires or has required
an amendment of or supplement to the Official Statement in which the market price or marketability
of the Bonds, or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall have
been materially adversely affected in the reasonable judgment of the Underwriter; or
(xiv) there shall have occurred any materially adverse change in the affairs
or financial condition of the Authority or the City; or
(xv) a material disruption in securities settlement, payment or clearance
services affecting the Bonds shall have occurred; or
Lynwood Public Financing Authority - Page 28 of 244 Agenda Item # 2
12
(xvi) the marketability of the Bonds or the market price thereof, in the
opinion of the Underwriter, has been materially and adversely affected by disruptive events,
occurrences or conditions in the securities or debt markets; or
(xvii) a decision by a court of the United States shall be rendered, or a stop
order, release, regulation or no-action letter by or on behalf of the SEC or any other governmental
agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the
issuance, offering or sale of the Bonds, including the underlying obligations as contemplated by this
Bond Purchase Agreement or by the Official Statement, or any document relating to the issuance,
offering or sale of the Bonds, is or would be in violation of any provision of the federal securities laws
at the Closing Date, including the Securities Act, the Exchange Act and the Trust Indenture Act.
(e) Closing Documents. At or prior to the Closing, the Underwriter shall receive
with respect to the Bonds (unless the context otherwise indicates) the following documents:
(1) Bond Opinion. The approving opinions of Bond Counsel dated the
date of Closing and substantially in the forms included as APPENDIX D to the Official Statement and
a reliance letter(s) thereon dated the date of Closing addressed to the Underwriter and the Trustee.
(2) Supplemental Opinion. A supplemental opinion of Bond Counsel
dated the date of Closing, addressed to the Underwriter, to the effect that:
(A) the statements on the cover of the Official Statement and in the
Official Statement under the captions “INTRODUCTION,” “THE BONDS,” “THE LEASED
PROPERTY,” “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS,” and “TAX
MATTERS,” and in “APPENDIX B – SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS”
and “APPENDIX D – PROPOSED FORM OF BOND COUNSEL OPINION,” excluding any material
that may be treated as included under such captions and appendices by any cross-reference, insofar as
such statements expressly summarize provisions of the Bonds, the Lease, the Site Lease, the Indenture,
and Bond Counsel’s final opinion concerning certain federal tax matters relating to the Bonds, are
accurate in all material respects as of the date of Closing; provided, that Bond Counsel need not express
any opinion with respect to any financial or statistical data contained therein or with respect to DTC or
the book-entry system in which the Bonds are initially delivered;
(B) The Lease, the Site Lease, the Assignment Agreement, the
Continuing Disclosure Agreement and this Bond Purchase Agreement have been duly authorized,
executed and delivered by the City and the Authority, as applicable, and are valid, legal and binding
agreement of the City and the Authority enforceable in accordance with their terms, except that the
rights and obligations under the Lease, the Site Lease, the Assignment Agreement, the Continuing
Disclosure Agreement and this Bond Purchase Agreement are subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights,
to the application of equitable principles if equitable remedies are sought, to the exercise of judicial
discretion in appropriate cases and to limitations on legal remedies against public agencies in the State,
and provided that no opinion is expressed with respect to any indemnification or contribution
provisions contained therein.
(C) The Bonds are not subject to the registration requirements of
the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust
Indenture Act of 1939, as amended.
Lynwood Public Financing Authority - Page 29 of 244 Agenda Item # 2
13
(3) Negative Assurance Letter of Disclosure Counsel. A letter of Nixon
Peabody LLP, Disclosure Counsel to the Authority and the City dated the date of Closing and addressed
to the Authority, the City, and the Underwriter to the effect that based upon their participation in the
preparation of the Official Statement as Disclosure Counsel to the Authority and without having
undertaken to determine independently the accuracy or completeness of the contents in the Official
Statement, such counsel has no reason to believe that the Preliminary Official Statement (except for
the completion of pricing information and any other matters or terms of the Bonds relating thereto) as
of its date or as of the date of this Purchase Agreement or the Official Statement as of its date or as of
the date of the Closing (except that no opinion is expressed as to any financial, statistical, economic,
engineering or demographic data or forecasts, numbers, charts, tables, graphs, maps, estimates,
projections, assumptions or expressions of opinion, any information about feasibility, valuation,
appraisals, assessed values, market absorption, real estate, ownership, environmental or archaeological
matters, Appendices B, C, D, F or G thereto, or any information about the Insurer, the Policy, the
Reserve Policy, book entry, The Depository Trust Company, debt service requirements or tax
exemption included or referred to therein, which we expressly exclude from the scope of this paragraph
and as to which we express no opinion or view) contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(4) Opinion of City Attorney. An opinion of the City Attorney, dated the
date of the Closing and addressed to the Authority, the Trustee and the Underwriter, to the effect that:
(A) the City is a municipal corporation duly organized and validly
existing under the Constitution and laws of the State of California;
(B) the resolution of the City approving and authorizing the
execution and delivery of the City Documents and approving and authorizing the issuance of the Bonds
and the delivery of the Official Statement and other actions of the City was duly adopted at a meeting
of the governing body of the City which was called and held pursuant to law and with all public notice
required by law and at which a quorum was present and acting throughout, and the resolution is now
in full force and effect and has not been amended or superseded in any way;
(C) there is no action, suit, proceeding, inquiry or investigation at
law or in equity before or by any court or public body pending with respect to which the City has been
served or, to such counsel’s knowledge, threatened against or affecting the City, except as may be
disclosed in the Official Statement, which would materially adversely impact the City’s ability to
complete the transactions contemplated by the City Documents, the Official Statement or any other
document or certificate related to such transactions, restrain or enjoin the collection of Base Rental
Payments with respect to the Lease, or in any way contesting or affecting the validity of the Bonds, the
Official Statement or the City Documents;
(5) Authority Counsel Opinion. An opinion of counsel to the Authority,
dated the date of the Closing and addressed to the City, the Trustee and the Underwriter, to the effect
that:
(A) the Authority is a joint exercise of powers authority organized
and existing under the laws of the State of California;
Lynwood Public Financing Authority - Page 30 of 244 Agenda Item # 2
14
(B) the resolution of the Authority approving and authorizing the
execution and delivery of the Authority Documents, the Bonds and the Official Statement and other
actions of the Authority was duly adopted at a meeting of the governing body of the Authority which
was called and held pursuant to law and with all public notice required by law and at which a quorum
was present and acting throughout, and the resolution is now in full force and effect and has not been
amended or superseded in any way;
(C) to the knowledge of such counsel, there is no action, suit,
proceeding, inquiry or investigation at law or in equity before or by any court or public body pending
with respect to which the Authority has been served or, to the such counsel’s knowledge, threatened
against or affecting the Authority, except as may be disclosed in the Official Statement, which would
materially adversely impact the Authority’s ability to complete the transactions contemplated by the
Authority Documents, the Official Statement or any other document or certificate related to such
transactions, restrain or enjoin the collection of Base Rental Payments with respect to the Lease, or in
any way contesting or affecting the validity of the Bonds, the Official Statement, the Authority
Documents or the transactions described in and contemplated thereby wherein an unfavorable decision,
ruling or finding would materially adversely affect the validity and enforceability of the Bonds or the
Authority Documents or in which a final adverse decision could materially adversely affect the
operations of the Authority;
(D) to the knowledge of such counsel, the execution and delivery
of the Authority Documents and the issuance of the Bonds and compliance with the provisions thereof,
do not and will not in any material respect conflict with or constitute on the part of the Authority a
breach of or default under any agreement or other instrument to which the Authority is a party or by
which it is bound or any existing law, regulation, court order or consent decree to which the Authority
is subject, which breach or default has or may have a material adverse effect on the ability of the
Authority to perform its obligations under the Authority Documents;
(6) Underwriter’s Counsel Opinion. An opinion of Underwriter’s Counsel,
dated the date of the Closing addressed to the Underwriter, in such form as may be acceptable to the
Underwriter.
(7) City Certificate. A certificate, dated the date of Closing, signed by a
duly authorized official of the City satisfactory in form and substance to the Underwriter to the effect
that: (a) the representations, warranties and covenants of the City contained in this Bond Purchase
Agreement are true and correct in all material respects on and as of the date of the Closing as if made
on the date of the Closing; (b) the City has complied with all agreements, covenants and conditions to
be complied with by the City at or prior to the Closing under the City Documents; (c) to the best of
such official’s knowledge, no event affecting the City has occurred since the date of the Official
Statement which either makes untrue or incorrect in any material respect as of the Closing the
statements or information contained in the Official Statement or is not reflected in the Official
Statement but should be reflected therein in order to make the statements and information therein, in
the light of the circumstances under which they were made, not misleading in any material respect.
(8) Authority Certificate. A certificate of the Authority, dated the date of
the Closing, signed on behalf of the Authority by the President or other duly authorized officer of the
Authority to the effect that (a) the representations, warranties and covenants of the Authority contained
herein and in the Authority Documents are true and correct in all material respects on and as of the
date of the Closing as if made on the date of the Closing; (b) the Authority has complied with all
Lynwood Public Financing Authority - Page 31 of 244 Agenda Item # 2
15
agreements, covenants and conditions to be complied with by the Authority at or prior to the Closing
under the Authority Documents and (c) to the best of such official’s knowledge, no event affecting the
Authority has occurred since the date of the Official Statement which has not been disclosed therein
or in any supplement or amendment thereto which event should be disclosed in the Official Statement
in order to make the statements therein, in the light of the circumstances under which they were made,
not misleading.
(9) Trustee’s Certificate. A certificate of the Trustee, dated the Closing
Date, in form and substance acceptable to the Authority, Bond Counsel, the Underwriter and
Underwriter’s Counsel.
(10) Trustee Incumbency Certificate. A certified copy of a certificate of an
officer of the Trustee certifying as to the incumbency, signature and signing authority of the officers
who have executed and delivered the Indenture and agreed to accept the duties of Trustee under the
Indenture.
(11) Trustee Counsel’s Opinion. An opinion, dated the date of the Closing
addressed to the Authority, the City and the Underwriter, of the Trustee’s Counsel, in form and content
satisfactory to the Authority, Bond Counsel, the Underwriter and Underwriter’s Counsel.
(12) Title Policy. A copy of a CLTA or ALTA title insurance policy in an
amount equal to the principal amount of the Bonds, insuring the City’s leasehold interest in the Leased
Property, subject only to Permitted Encumbrances (as defined in the Lease) or such other acceptable
encumbrances.
(13) Transcripts. Two CD transcripts of the proceedings prepared by Bond
Counsel relating to the authorization and issuance of the Bonds will be delivered in due course after
the Closing.
(14) Official Statement. The Official Statement and each supplement or
amendment, if any, thereto, executed on behalf of the Authority by a duly authorized officer of each.
(15) Documents. An original executed or certified copy of each of the
Authority Documents, the City Documents and the Joint Exercise of Powers Agreement (the “JPA
Agreement”), dated as of December 1, 1992, between the City and the former Lynwood
Redevelopment Agency.
(16) City Resolution. Certified copy by the City Clerk, of each resolution
of the City relating to the City Documents, the actions contemplated thereby, provided that such
resolutions may be contained in the transcripts.
(17) Authority Resolution. Certified copy by the Secretary or Assistant
Secretary of the Authority, of each resolution of the Authority relating to the Authority Documents,
the Bonds and the transactions contemplated thereby, provided that such resolutions may be contained
in the transcripts.
(18) Ratings. Evidence as of the Closing satisfactory to the Underwriter that
the Bonds have received the ratings set forth in the Official Statement and that such ratings have not
been reduced or withdrawn.
Lynwood Public Financing Authority - Page 32 of 244 Agenda Item # 2
16
(19) Policy. The Policy, duly executed by the Insurer.
(20) Reserve Policy. The Reserve Policy, duly executed by the Insurer.
(21) Insurer Counsel Opinion. An opinion of counsel to the Insurer, dated
the Closing Date, addressed to the Authority, the City and the Underwriter, in form and substance
satisfactory to the Underwriter and Bond Counsel.
(22) Insurer Certificate. A certificate or certificates of the Insurer, dated the
Closing Date, as to the accuracy of the information relating to the Insurer, the Policy and the Reserve
Policy included in the Official Statement and such other matters reasonably requested by the
Underwriter and Bond Counsel.
(23) CDIAC Statement. A copy of the Notice of Final Sale required to be
delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583 of
the Government Code and Section 8855(g) of the Government Code.
(24) Additional Documents. Such additional certificates, instruments and
other documents as the Underwriter and Bond Counsel may reasonably deem necessary.
If the Authority or the City shall be unable to satisfy the conditions contained in this Bond
Purchase Agreement, or if the obligations of the Underwriter shall be terminated for any reason
permitted by this Bond Purchase Agreement, this Bond Purchase Agreement may be terminated by the
Underwriter, and none of the Underwriter, the Authority or the City shall be under further obligation
hereunder.
10. Expenses. Except as otherwise provided in this Section, the Underwriter shall be under
no obligation to pay, and the Authority or the City shall pay or cause to be paid, the expenses incident
to the performance of the obligations of the Authority and the City hereunder including but not limited
to:
(a) the costs of the preparation and printing, or other reproduction (for distribution
on or prior to the date hereof) of the City Documents and the Authority Documents and the cost of
preparing, printing, issuing and delivering the Bonds;
(b) the fees and disbursements of any counsel, municipal advisors, accountants,
verification agent or other experts or consultants retained by the Authority or the City;
(c) the fees and disbursements of Bond Counsel and Disclosure Counsel;
(d) the cost of preparation and printing the Preliminary Official Statement and any
supplements and amendments thereto and the cost of preparation and printing of the Official Statement,
including a reasonable number of copies thereof for distribution by the Underwriter; and
(e) charges of rating agencies for the rating of the Bonds.
The Underwriter shall pay all expenses incurred by the Underwriter in connection with the
public offering and distribution of the Bonds including, but not limited to: (i) the fees and
disbursements of Underwriter’s Counsel; and (ii) all out-of-pocket disbursements and expenses
incurred by the Underwriter in connection with the offering and distribution of the Bonds (including
Lynwood Public Financing Authority - Page 33 of 244 Agenda Item # 2
17
other expenses, fees of the California Debt and Investment Advisory Commission, CUSIP Service
Bureau fees, and any other fees and expenses), except as otherwise provided in the preceding paragraph
or otherwise agreed to by the Underwriter, the Authority and the City in writing. Any meals in
connection with or adjacent to meetings, rating agency presentations, pricing activities or other
transaction-related activities shall be considered an expense of the transaction and included in the
expense component of the Underwriter’s discount.
11. Notice. Any notice or other communication to be given to the Underwriter may be
given by delivering the same to Raymond James & Associates, Inc., 39 E. Union Street, Pasadena,
California 91103, Attention: Public Finance. Any notice or other communication to be given to the
Authority or the City pursuant to this Bond Purchase Agreement may be given by delivering the same
in writing to such entity, at the addresses set forth on the cover page hereof.
12. Entire Agreement. This Bond Purchase Agreement, when accepted by the Authority
and the City, shall constitute the entire agreement among the Authority, the City and the Underwriter
and is made solely for the benefit of the Authority, the City and the Underwriter (including the
successors or assigns of any Underwriter). Except as provided in Section 16 below, no other person
shall acquire or have any right hereunder by virtue hereof, except as provided herein. All the
Authority’s and the City’s representations, warranties and agreements in this Bond Purchase
Agreement shall remain operative and in full force and effect, regardless of any investigation made by
or on behalf of the Underwriter, until the earlier of (a) delivery of and payment for the Bonds hereunder,
and (b) any termination of this Bond Purchase Agreement.
13. Definitions. Terms not otherwise defined herein shall have the same meaning as when
used in the Indenture or the Lease.
14. Severability. In case any one or more of the provisions contained herein shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
15. State of California Law Governs. The validity, interpretation and performance of
the Authority Documents shall be governed by the laws of the State.
16. No Assignment. The rights and obligations created by this Bond Purchase Agreement
shall not be subject to assignment by the Underwriter, the Authority or the City without the prior
written consent of the other parties hereto.
Lynwood Public Financing Authority - Page 34 of 244 Agenda Item # 2
S-1
17. Counterparts. This Bond Purchase Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be an original, but all
such counterparts shall together constitute but one and the same instrument.
RAYMOND JAMES & ASSOCIATES, INC.
By:
Managing Director
The foregoing is hereby agreed to and accepted as of the date
first above written:
LYNWOOD PUBLIC FINANCING AUTHORITY
By:
Title:
Time of Execution: _____________ p.m. California time
CITY OF LYNWOOD
By:
Title:
Time of Execution: _____________ p.m. California time
[EXECUTION PAGE OF BOND PURCHASE AGREEMENT]
Lynwood Public Financing Authority - Page 35 of 244 Agenda Item # 2
A-1
EXHIBIT A
MATURITY SCHEDULE
$______
LYNWOOD PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
SERIES 2020A (FEDERALLY TAXABLE)
MATURITY SCHEDULE
Maturity
(______ 1)
Principal
Amount
Interest
Rate Yield Price
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030(T)
20__(T)
20__(T)
(T) Term Bond.
Lynwood Public Financing Authority - Page 36 of 244 Agenda Item # 2
4850-9990-9831.3
PRELIMINARY OFFICIAL STATEMENT DATED ________, 2020
NEW ISSUE—BOOK-ENTRY ONLY Insured: S&P: “____”
Underlying: S&P: “____”
See “RATINGS” herein
In the opinion of Nixon Peabody LLP, Bond Counsel, interest on the Bonds is exempt from personal income taxes of the State of California
(“State”) under present law. Interest on the Bonds is not excluded from gross income for federal income tax purposes under the Code. See “TAX
MATTERS” herein regarding certain other tax consequences.
$__________
LYNWOOD PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
SERIES 2020A (FEDERALLY TAXABLE)
Dated: Date of Delivery Due: _________ 1, as shown on inside cover
The Lynwood Public Financing Authority Lease Revenue Bonds, Series 2020A (Federally Taxable) (the “Bonds”) are payable from certain revenues and
other moneys pledged under the Indenture (defined below), consisting primarily of base rental payments (the “Base Rental Payments”) to be made by the City
of Lynwood (the “City”) for the right to use certain real property consisting of two city administrative buildings (the “Leased Property”) pursuant to a certain
Facility Lease, by and between the City, as lessee, and the Lynwood Public Financing Authority (the “Authority”), as lessor. See “SECURITY AND SOURCES
OF PAYMENT FOR THE BONDS.” Capitalized terms used but not defined on the cover page of this Official Statement have the meanings ascribed herein.
The Bonds are being issued to provide funds to (i) financing working capital for the City’s general fund, and (ii) pay costs of issuance of the Bonds.
Proceeds of the Bonds will also be used to (i) purchase a municipal bond insurance policy for the Bonds and (ii) purchase a reserve surety for the debt service
reserve fund for the Bonds.
The City will covenant under the Facility Lease to take such action as may be necessary to include all Base Rental Payments and Additional Payments due
under the Facility Lease in its operating budget for each fiscal year and to make all necessary appropriations for such Base Rental Payments and Additional
Payments. The City’s obligation to make Base Rental Payments and Additional Payments under the Facility Lease is subject to abatement during any period in
which, by reason of material damage, destruction, title defect, condemnation of, the Leased Property, there is substantial interference with the City’s right to use
and occupy any portion of the Leased Property. See “RISK FACTORS—Abatement.”
The Bonds are being issued in fully registered book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust
Company, New York, New York (“DTC”). Interest on the Bonds is payable semiannually on _______ 1 and ________ 1 of each year, commencing ________
1, 20___. Purchasers will not receive certificates representing their interest in the Bonds. Individual purchases will be in principal amounts of $5,000 or integral
multiples thereof. Principal of and interest and premium, if any, on the Bonds will be paid by U.S. Bank National Association, as trustee (the “Trustee”) to DTC
for subsequent disbursement to DTC Participants who are obligated to remit such payments to the Beneficial Owners of the Bonds. See “THE BONDS—Book-
Entry Only System” herein.
The Bonds will be issued pursuant to a certain Indenture dated as of _________ 1, 2020, (the “Indenture”), by and among the City, the Authority and the
Trustee.
Certain of the Bonds are subject to optional, mandatory sinking fund, and extraordinary redemption prior to maturity as set forth herein. See “THE
BONDS—Redemption.”
The Bonds are special obligations of the Authority, payable solely from Revenues and the other assets pledged therefor under the Indenture.
Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to
the payment of the Bonds.
The scheduled payment of principal of and interest on the Bonds due will be guaranteed under a municipal bond insurance policy to be issued
concurrently with the delivery of the Bonds by _____________ (“_______”). See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS —
Bond Insurance” herein.
[INSURER LOGO]
The obligation of the City to make Base Rental Payments does not constitute an indebtedness of the City, the State of California, or any of its
political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction, and does not constitute an obligation for which
the City or the State of California is obligated to levy or pledge any form of taxation or for which the City or the State of California has levied or pledged
any form of taxation. The Authority has no power to tax.
MATURITY SCHEDULE
(See Inside Front Cover)
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE.
INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED
INVESTMENT DECISION.
The Bonds will be offered respectively when, as and if issued and received by the Underwriter, subject to the approval as to their validity by Nixon Peabody
LLP, Bond Counsel. Nixon Peabody LLP is also acting as Disclosure Counsel to the City. Certain legal matters will be passed upon for the City and the
Authority by Alvarez-Glassman & Colvin, as City Attorney, for the Underwriter by Kutak Rock LLP and for the Trustee by its counsel. It is anticipated that the
Bonds in definitive form will be available for delivery to DTC in New York, New York on or about _________, 2020.
[RAYMOND JAMES LOGO]
Dated: _________, 2020
Lynwood Public Financing Authority - Page 37 of 244 Agenda Item # 2
4850-9990-9831.3
MATURITY SCHEDULE
$________
LYNWOOD PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
SERIES 2020A (FEDERALLY TAXABLE)
Maturity Date
(_______ 1)
Principal
Amount Interest Rate Yield CUSIP†
$_________ _______% Term Bonds due ________ 1, 20___ Yield: _______%; CUSIP†: _________
$_________ _______% Term Bonds due ________ 1, 20___ Yield: _______%; CUSIP†: _________
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American
Bankers Association by S&P Global Market Intelligence. Copyright(c) 2020 CUSIP Global Services. All rights reserved. CUSIP® data herein
is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS
database. CUSIP® numbers are provided for convenience of reference only. None of the Authority, the City or the Underwriter or their agents
or counsel assume responsibility for the accuracy of such numbers.
Lynwood Public Financing Authority - Page 38 of 244 Agenda Item # 2
4850-9990-9831.3
No dealer, broker, salesperson or other person has been authorized by the City or the Authority to give any information
or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and, if given or
made, such other information or representations must not be relied upon as having been authorized by the City or the Authority.
This Official 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 a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers or Owners or Beneficial Owners of the
Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not
expressly so described herein, are intended solely as such and are not to be construed as representations of fact.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has
reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the
federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the
accuracy or completeness of such information.
This Official Statement and the information contained herein are subject to completion or amendment without notice and
neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the City or the Authority or any other parties described herein since the date hereof.
These securities may not be sold nor may an offer to buy be accepted prior to the time the Official Statement is delivered in final
form. This Official Statement is being submitted in connection with the sale of the Bonds referred to herein and may not be
reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the City. All summaries of documents
and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions.
Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking
statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United
States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended.
Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget,”
“intend” or similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the
information under the caption “RISK FACTORS” and in APPENDIX A – “THE CITY OF LYNWOOD.”
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS
DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES
NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH
IN THIS OFFICIAL STATEMENT. IN EVALUATING SUCH STATEMENTS, POTENTIAL INVESTORS SHOULD
SPECIFICALLY CONSIDER THE VARIOUS FACTORS WHICH COULD CAUSE ACTUAL EVENTS OR RESULTS
TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS THAT 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 UNDERWRITER MAY OFFER AND SELL THE
BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AND OTHERS AT
YIELDS HIGHER THAN THE PUBLIC OFFERING YIELDS STATED ON THE PAGES FOLLOWING THE COVER
PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE
UNDERWRITER.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT AND HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
___________ (“_______”) makes no representation regarding the Bonds or the advisability of investing in the Bonds.
In addition, _______ has not independently verified, makes no representation regarding, and does not accept any responsibility for
the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom,
other than with respect to the accuracy of the information regarding _______ supplied by _______ and presented under the heading
“SECURITY AND SOURCES OF PAYMENT FOR THE BONDS —Bond Insurance” and “APPENDIX G – SPECIMEN MUNICIPAL
BOND INSURANCE POLICY”.
The City maintains a website; however, information presented there is not a part of this Official Statement and should
not be relied upon in making an investment decision with respect to the Bonds.
Lynwood Public Financing Authority - Page 39 of 244 Agenda Item # 2
4850-9990-9831.3
CITY OF LYNWOOD
COUNTY OF LOS ANGELES, CALIFORNIA
CITY COUNCIL AND LYNWOOD PUBLIC FINANCING AUTHORITY
Jose Luis Solache, Mayor and President
Aide Castro, Vice Mayor and Vice President
Salvador Alatorre, Council Member and Authority Member
Jorge Casanova, Council Member and Authority Member
Marisela Santana, Council Member and Authority Member
_____________
CITY AND LYNWOOD PUBLIC FINANCING AUTHORITY ADMINISTRATIVE STAFF
José E. Ometeotl*, City Manager and Chief Administrative Officer
Michelle Ramirez, Acting City Manager and Chief Administrative Officer
John Downs, City and Authority Finance Director
Gabriela Camacho, City and Authority Treasurer
Maria Quiñonez, City Clerk and Authority Secretary
Alvarez-Glasman & Colvin, City Attorney/Authority Counsel
_____________
BOND AND DISCLOSURE COUNSEL
Nixon Peabody LLP
Los Angeles, California
_____________
MUNICIPAL ADVISOR
Willdan Financial Services
Temecula, California
_________________
TRUSTEE
U.S. Bank National Association
Los Angeles, California
_______________
* Currently on administrative leave of absence.
Lynwood Public Financing Authority - Page 40 of 244 Agenda Item # 2
4850-9990-9831.3
TABLE OF CONTENTS
Page
i
INTRODUCTION ................................................................................................................................................ 1
SOURCES AND USES OF FUNDS .................................................................................................................... 3
DEBT SERVICE SCHEDULE............................................................................................................................. 4
THE LEASED PROPERTY ................................................................................................................................. 5
THE BONDS ........................................................................................................................................................ 5
General .............................................................................................................................................................. 5
Redemption ....................................................................................................................................................... 5
Book-Entry Only System .................................................................................................................................. 7
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS .................................................................... 8
Pledge of Revenues ........................................................................................................................................... 8
Base Rental Payments ....................................................................................................................................... 9
Additional Payments ......................................................................................................................................... 9
Abatement ....................................................................................................................................................... 10
Substitution, Addition and Removal of Property ............................................................................................ 10
Action on Default............................................................................................................................................ 11
Reserve Fund .................................................................................................................................................. 12
Bond Insurance ............................................................................................................................................... 12
Insurance ......................................................................................................................................................... 12
THE AUTHORITY ............................................................................................................................................ 14
THE CITY .......................................................................................................................................................... 14
State Audit ...................................................................................................................................................... 14
RISK FACTORS ................................................................................................................................................ 15
General Considerations – Security for the Bonds ........................................................................................... 15
COVID-19 ...................................................................................................................................................... 16
Abatement ....................................................................................................................................................... 17
Limited Secondary Market ............................................................................................................................. 17
Seismic Activity .............................................................................................................................................. 17
Hazardous Substances ..................................................................................................................................... 18
Cybersecurity .................................................................................................................................................. 18
Limited Recourse on Default; No Acceleration of Base Rental ..................................................................... 18
Limitations on Remedies Available; Bankruptcy ........................................................................................... 19
Possible Insufficiency of Insurance Proceeds ................................................................................................. 20
Loss of Tax Exemption ................................................................................... Error! Bookmark not defined.
No Liability of Authority to the Owners ......................................................................................................... 20
Dependence on State for Certain Revenues .................................................................................................... 20
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS ............ 21
Article XIIIA of the State Constitution ........................................................................................................... 21
Legislation Implementing Article XIIIA ........................................................................................................ 21
Article XIIIB of the State Constitution ........................................................................................................... 21
Articles XIIIC and XIIID of the State Constitution ........................................................................................ 22
Proposition 62 ................................................................................................................................................. 23
Proposition 1A ................................................................................................................................................ 24
Proposition 22 ................................................................................................................................................. 24
Proposition 26 ................................................................................................................................................. 24
Possible Future Initiatives ............................................................................................................................... 25
TAX MATTERS................................................................................................................................................. 25
CONSIDERATIONS FOR ERISA AND OTHER U.S. BENEFIT PLAN INVESTORS ................................. 30
Lynwood Public Financing Authority - Page 41 of 244 Agenda Item # 2
4850-9990-9831.3
TABLE OF CONTENTS
(continued)
Page
ii
CERTAIN LEGAL MATTERS ......................................................................................................................... 32
ABSENCE OF LITIGATION ............................................................................................................................ 32
UNDERWRITING ............................................................................................................................................. 32
RATINGS ........................................................................................................................................................... 33
MUNICIPAL ADVISOR ................................................................................................................................... 33
CONTINUING DISCLOSURE .......................................................................................................................... 33
FINANCIAL STATEMENTS OF THE CITY ................................................................................................... 34
MISCELLANEOUS ........................................................................................................................................... 34
APPENDIX A THE CITY OF LYNWOOD .............................................................................................. A-1
APPENDIX B SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS ........................................... B-1
APPENDIX C AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE YEAR
ENDED JUNE 30, 2019 .................................................................................................... C-1
APPENDIX D PROPOSED FORMS OF BOND COUNSEL OPINION .................................................. D-1
APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT ............................................. E-1
APPENDIX F BOOK-ENTRY ONLY SYSTEM .....................................................................................F-1
APPENDIX G SPECIMEN MUNICIPAL BOND INSURANCE POLICY ............................................. G-1
Lynwood Public Financing Authority - Page 42 of 244 Agenda Item # 2
4850-9990-9831.3
1
OFFICIAL STATEMENT
$________∗∗∗∗
LYNWOOD PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
SERIES 2020A (FEDERALLY TAXABLE)
INTRODUCTION
This Official Statement (which includes the cover page and the appendices hereto) (the “Official
Statement”), provides certain information concerning the sale and delivery of $_________ aggregate principal
amount of Lynwood Public Financing Authority Lease Revenue Bonds, Series 2020A (Federally Taxable) (the
“Bonds”).
The Bonds are being issued to provide funds to (i) finance working capital for the City’s general fund,
and (ii) pay costs of issuance of the Bonds. Proceeds of the Bonds will also be used to (i) purchase a municipal
bond insurance policy for the Bonds, and (ii) purchase a reserve surety for the debt service reserve fund for the
Bonds.
The Bonds are payable from certain revenues and other moneys pledged under the Indenture (as defined
below), consisting primarily of base rental payments (the “Base Rental Payments”) to be made by the City of
Lynwood (the “City”) for the right to use certain real property consisting of two city administrative buildings
(the “Leased Property”) pursuant to a certain Facility Lease (as defined below). The Bonds will be issued
pursuant to an Indenture, dated as of _________ 1, 2020 (the “Indenture”), by and among the Authority, the City
and U.S. Bank National Association, as trustee (the “Trustee”).
Pursuant to a Site Lease, dated as of __________ 1, 2020 (the “Site Lease”), by and between the City
and the Authority, the City will lease the Leased Property to the Authority. Simultaneously with the execution
and delivery of the Site Lease, the Authority will lease the Leased Property to the City under a Facility Lease,
dated as of _________ 1, 2020 (the “Facility Lease”), between the City, as lessee, and the Authority, as lessor.
The Facility Lease will obligate the City to make Base Rental Payments to the Authority.
Upon the issuance of the Bonds, the Trustee and the Authority will execute and deliver an Assignment
Agreement, dated as of _________ 1, 2020 (the “Assignment Agreement”), pursuant to which the Authority will
grant, transfer and assign to the Trustee: (i) all the Authority’s rights to receive the Base Rental Payments under
and pursuant to the Facility Lease, (ii) the right to take all actions under the Facility Lease, (iii) the right of access
more particularly described in the Facility Lease, and (iv) any and all other rights and remedies of the Authority
in the Facility Lease as lessor thereunder.
The City will covenant under the Facility Lease to take such action as may be necessary to include all
Base Rental Payments and Additional Payments due under the Facility Lease in its operating budget for each
fiscal year and to make all necessary appropriations for such Base Rental Payments and Additional Payments,
subject to abatement as provided in the Facility Lease. Additional Payments consist of fees, costs and expenses
and all administrative costs of the Authority relating to the Leased Property including, without limiting the
generality of the foregoing, salaries and wages of employees, overhead, insurance premiums, taxes and
assessments (if any), expenses, compensation and indemnification of the Trustee (to the extent not paid or
otherwise provided for out of the proceeds of the sale of the Bonds), fees of auditors, accountants, attorneys or
engineers, insurance premiums, and all other reasonable and necessary administrative costs of the Authority or
charges required to be paid by it to comply with the terms of the Bonds or the Indenture.
∗ Preliminary; subject to change.
Lynwood Public Financing Authority - Page 43 of 244 Agenda Item # 2
4850-9990-9831.3
2
Base Rental Payments and Additional Payments are subject to complete or partial abatement in the event
and to the extent that there is substantial interference with the City’s right to use and occupy the Leased Property
or any portion thereof. See “RISK FACTORS—Abatement.” Abatement of Base Rental Payments under the
Facility Lease, to the extent that payment is not made from alternative sources as set forth below, would result
in all Owners receiving less than the full amount of principal of and interest on the Bonds. To the extent that
proceeds of insurance are available, Base Rental Payments (or a portion thereof) may be made during periods of
abatement.
THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM
REVENUES AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE INDENTURE. NEITHER
THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE CITY OR THE
STATE OF CALIFORNIA (THE “STATE”), OR ANY POLITICAL SUBDIVISION THEREOF, IS
PLEDGED TO THE PAYMENT OF THE BONDS. THE AUTHORITY HAS NO TAXING POWER.
THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS DOES NOT
CONSTITUTE A DEBT OF THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS
WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR
RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY OR THE
STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY
OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
A Reserve Fund (the “Reserve Fund”) will be established under the Indenture for the Bonds in an
amount equal to the Reserve Requirement. The “Reserve Requirement” is defined as an amount equal to, at any
date of determination, the least of (i) ten percent (10%) of the sale proceeds (within the meaning of section 148
of the Code) of the Bonds, (ii) 125% of average annual debt service on the Bonds, for that and every succeeding
Bond Year, or (iii) Maximum Annual Debt Service. The Authority will satisfy the Reserve Requirement with
respect to the Bonds by depositing the Reserve Policy in the Reserve Fund in accordance with the Indenture.
“Reserve Policy” means the municipal bond debt service reserve insurance policy relating to the Bonds issued
by ____________ (“_______”). See “APPENDIX B – SUMMARY OF THE PRINCIPAL LEGAL
DOCUMENTS – Definitions.”
The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a
municipal bond insurance policy to be issued concurrently with the delivery of the Bonds by _______. See
“SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Bond Insurance.” herein.
The City has agreed to provide, or cause to be provided, to the Municipal Securities Rulemaking Board
for purposes of Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission certain annual financial
information and operating data and, in a timely manner, notice of certain listed events. These covenants have
been made in order to assist the Underwriter in complying with SEC Rule 15c2-12(b)(5). See “CONTINUING
DISCLOSURE” herein for a description of the specific nature of the annual report and notices of listed events
and a summary description of the terms of the disclosure certificate pursuant to which such reports are to be
made.
U.S. Bank National Association, Los Angeles, California, will act as Trustee with respect to the Bonds.
The Bonds, respectively, will be issued subject to the approval as to their legality by Nixon Peabody LLP, Bond
Counsel. Certain legal matters will be passed upon for the City and the Authority by Alvarez-Glassman &Colvin,
as City Attorney, and by Nixon Peabody LLP, as Disclosure Counsel. Certain legal matters will be passed upon
for the Underwriter by Kutak Rock LLP and for the Trustee by its counsel.
Certain events could affect the ability of the City to make the Base Rental Payments when due. See
“RISK FACTORS” for a discussion of certain factors that should be considered, in addition to other matters set
forth herein, in evaluating an investment in the Bonds.
Lynwood Public Financing Authority - Page 44 of 244 Agenda Item # 2
4850-9990-9831.3
3
The presentation of information, including tables of receipt of revenues, is intended to show recent
historical information and, except for a budget discussion for Fiscal Year 2020-21, is not intended to indicate
future or continuing trends in the financial position or other affairs of the City. No representation is made that
past experience, as it might be shown by such financial and other information, will necessarily continue or be
repeated in the future. See Appendix A for financial and operating information related to the City.
The summaries or references to the Indenture, the Facility Lease, the Site Lease, the Assignment
Agreement and other documents, agreements and statutes referred to herein, and the description of the Bonds
included in this Official Statement, do not purport to be comprehensive or definitive, and such summaries,
references and descriptions are qualified in their entireties by reference to each such document or statute. All
capitalized terms used in this Official Statement (unless otherwise defined herein) which are defined in the
Indenture or the Facility Lease shall have the meanings set forth therein, some of which are summarized in
APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS.”
SOURCES AND USES OF FUNDS
The sources and uses of funds with respect to the Bonds and certain funds held with respect to the 2010
Bonds are shown below.
Bonds
Sources
Principal Amount
Total Sources
Uses
Working Capital
Cost of Issuance(1)
Total Uses
(1) Includes legal, municipal advisory, rating agency, bond insurance premiums and reserve policy premiums,
underwriter’s discount, printing fees and other miscellaneous costs of issuance.
Lynwood Public Financing Authority - Page 45 of 244 Agenda Item # 2
4850-9990-9831.3
4
DEBT SERVICE SCHEDULE
Following is the annual debt service schedule with respect to the Bonds, assuming no redemptions prior
to maturity:
Bond Year
Ending Bonds Principal Bonds Interest Total Bonds
Total
Lynwood Public Financing Authority - Page 46 of 244 Agenda Item # 2
4850-9990-9831.3
5
THE LEASED PROPERTY
The Leased Property consists of the City Hall and Bateman Hall. The City Hall is a reinforced
masonry/concrete building of approximately 11,000 square feet and Bateman Hall is a reinforced
masonry/concrete/wood frame building of approximately 27,000 square feet. The City Hall and Bateman Hall
were built in 1953 and 1962, respectively. [DESCRIBE RETROFITTING IMPROVEMENTS DONE ON THE
BUILDINGS] The City Hall and Bateman Hall are used for general governmental services. The insured values
of the Leased Property totals $_________.
Under the Facility Lease, the City has the right to substitute or release all or portion of the Leased
Property subject to certain conditions precedent. See “SECURITY AND SOURCES OF PAYMENT FOR THE
BondsSubstitution, Addition and Removal of Property.”
THE BONDS
General
The Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any
integral multiple thereof. The Bonds shall bear interest from their date of delivery and such interest shall be
computed on the basis of a 360-day year of twelve 30-day months. Interest on the Bonds will be paid
semiannually on ________ 1 and ________ 1 (each, an “Interest Payment Date”) of each year, commencing
_______ 1, 20___.
The interest on the Bonds will be paid in lawful money of the United States. The interest on the Bonds
shall be payable on each Interest Payment Date by check sent by first class mail by the Trustee to the Owners of
the Bonds as of the Record Date for such Interest Payment Date at their addresses shown on the books required
to be kept by the Trustee pursuant to the provisions of the Indenture. The principal and premium, if any, of the
Bonds shall be payable upon presentation and surrender thereof on maturity or on redemption prior thereto at the
Principal Corporate Trust Office of the Trustee. The term “Record Date,” as defined in the Indenture, means the
close of business on the 15th day of the month preceding any Interest Payment Date, whether or not such day is
a Business Day.
The Owner of $1,000,000 or more in aggregate principal amount of the Bonds may request in writing
that the Trustee pay the interest on the Bonds by wire transfer to an account in the United States of America and
the Trustee shall comply with such request for all Interest Payment Dates following the 15th day after receipt of
such request.
Redemption
Optional Redemption. The Bonds maturing on or after ________ 1, 20___ are subject to optional
redemption prior to maturity on or after ________ 1, 20___ at the option of the City, in whole, or in part, on any
date, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued but unpaid
interest to the redemption date, without premium.
Mandatory Sinking Fund Redemption. The Bonds maturing on ________ 1, 20___ and ________ 1,
20___ (the “Term Bonds”) are subject to mandatory redemption on ________ 1 in each year shown below until
maturity, from sinking account payments made by the Authority, at a redemption price equal to the principal
amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium,
in the aggregate respective principal amounts and on the respective dates as set forth in the following table;
provided, however, that in lieu of redemption thereof, such Term Bonds may be purchased by the Authority and
tendered to the Trustee.
Lynwood Public Financing Authority - Page 47 of 244 Agenda Item # 2
4850-9990-9831.3
6
Term Bonds maturing on ________ 1, 20___
Sinking Fund
Redemption Date
(________ 1)
Principal Amount to be
Redeemed or Purchased
____________________
* Maturity.
Term Bonds maturing on ________ 1, 20___
Sinking Fund
Redemption Date
(________ 1)
Principal Amount to be
Redeemed or Purchased
____________________
* Maturity.
If some but not all of the Term Bonds have been redeemed pursuant to extraordinary or optional
redemptions, the total amount of sinking account payments to be made subsequent to such redemption shall be
reduced in an amount equal to the principal amount of the Term Bonds so redeemed by reducing each such future
sinking account payment on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, as shall be
designated pursuant to written notice filed by Authority with the Trustee.
Extraordinary Redemption from Condemnation Award or Insurance Proceeds. To the extent
permitted or required by the Indenture, the Bonds are subject to redemption on any date prior to their respective
maturity dates, as a whole, or in part, at the written direction of the City, from the net proceeds of any insurance
or condemnation award with respect to the Leased Property or portions thereof, at a redemption price equal to
the principal amount of the Bonds plus accrued interest thereon to the date fixed for redemption, without
premium.
Notice of Redemption. Notice of redemption shall be mailed by first class mail by the Trustee, on behalf
and at the expense of the City, not less than 30 nor more than 60 days prior to the redemption date to the respective
Owners of Bonds designated for redemption at their addresses appearing on the bond registration books of the
Trustee and, unless otherwise instructed by the Authority, provided by the Trustee to the MSRB. Each notice of
redemption shall state the date of such notice, the Bonds to be redeemed, the Series and date of issue of such
Bonds, the redemption date, the redemption price, the place or places of redemption (including the name and
appropriate address or addresses), the CUSIP number (if any) of the maturity or maturities, and, if less than all
of any such maturity are to be redeemed, the distinctive certificate numbers of the Bonds of such maturity to be
redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount
thereof to be redeemed. Each such notice of optional redemption shall also state that such redemption may be
rescinded by the City and that, unless such redemption is so rescinded, and provided that on said date funds are
available for payment in full of the Bonds then called for redemption, on said date there will become due and
payable on each of such Bonds the redemption price thereof or of said specified portion of the principal amount
thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the redemption
Lynwood Public Financing Authority - Page 48 of 244 Agenda Item # 2
4850-9990-9831.3
7
date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that
such Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice.
Failure by the Trustee to give notice of redemption pursuant to Indenture to any one or more of the
information services or securities depositories, or the insufficiency of any such notice shall not affect the
sufficiency of the proceedings for redemption. The failure of any Owner to receive any redemption notice mailed
to such Owner and any defect in the notice so mailed shall not affect the sufficiency of the proceedings for
redemption.
The City has the right to rescind any optional redemption by written notice to the Trustee on or prior to
the date fixed for redemption. Any notice of redemption shall be cancelled and annulled if for any reason funds
are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption,
and such cancellation shall not constitute an Event of Default under the Indenture. The Trustee shall mail notice
of such rescission of redemption in the same manner as the original notice of redemption was sent.
Partial Redemption of Bonds. Whenever less than all the Outstanding Bonds maturing on any one date
are called for redemption at any one time, the Trustee shall select the Bonds to be redeemed, from the Outstanding
Bonds maturing on such date not previously selected for redemption, by lot in any manner which the Trustee
deems appropriate.
Effect of Redemption. If notice of redemption has been duly given as set forth in the Indenture and
moneys for the payment of the redemption price of the Bonds to be redeemed are held by the Trustee, then on
the redemption date designated in such notice the Bonds so called for redemption shall become payable at the
redemption price specified in such notice; and from and after the date so designated interest on the Bonds so
called for redemption shall cease to accrue, such Bonds shall cease to be entitled to any benefit or security under
the Indenture and the Owners of such Bonds shall have no rights in respect thereof except to receive payment of
the redemption price represented thereby. The Trustee shall, upon surrender for payment of any of the Bonds to
be redeemed, pay such Bonds at the redemption price thereof.
Book-Entry Only System
General. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully
registered bonds, registered in the name of Cede & Co. as nominee of DTC, and will be available to actual
purchasers of the Bonds (the “Beneficial Owners”) in the denominations set forth above, under the book-entry
system maintained by DTC, only through brokers and dealers who are or act through DTC Participants (as defined
in Appendix F) as described herein. Beneficial Owners will not be entitled to receive physical delivery of the
Bonds.
Transfer and Exchange of Bonds. The following provisions regarding the exchange and transfer of the
Bonds apply only during any period in which the Bonds are not subject to DTC’s book-entry system. While the
Bonds are subject to DTC’s book-entry system, their exchange and transfer will be effected through DTC and
the Participants and will be subject to the procedures, rules and requirements established by DTC.
All Bonds may be presented for transfer by the Owner thereof, in person or by his attorney duly
authorized in writing, at the Principal Corporate Trust Office of the Trustee, on the books required to be kept by
the Trustee pursuant to the provisions of the Indenture, upon surrender of such Bonds for cancellation
accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Trustee.
The Trustee may treat the Owner of any Bond as the absolute owner of such Bond for all purposes, whether or
not such Bond shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary;
and payment of the principal of, premium, if any, and interest on such Bond shall be made only to such Owner,
which payments shall be valid and effectual to satisfy and discharge the liability of by such Bond to the extent
of the sum or sums so paid.
Lynwood Public Financing Authority - Page 49 of 244 Agenda Item # 2
4850-9990-9831.3
8
Whenever any Bond or Bonds shall be surrendered for transfer, the Trustee shall execute and deliver a
new Bond or Bonds in the same principal amount in Authorized Denominations. The Trustee shall require the
payment by any Owner requesting such transfer of any tax or other governmental charge required to be paid with
respect to such transfer.
Bonds may be presented for exchange at the Principal Corporate Trust Office of the Trustee, for a like
aggregate principal amount of Bonds of other Authorized Denominations. The Trustee shall require the payment
by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect
to such exchange.
The Trustee shall not be required to transfer or exchange any Bond during the period in which the Trustee
is selecting Bonds for redemption, nor shall the Trustee be required to transfer or exchange any Bond or portion
thereof selected for redemption from and after the date of mailing the notice of redemption thereof.
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
Pledge of Revenues
Under the Indenture, the City will irrevocably pledge and transfer to the Trustee, for the benefit of the
Owners, all of its right, title and interest in and to all amounts on deposit from time to time in the funds and
accounts established under the Indenture (other than the Rebate Fund), subject to the provisions thereof
permitting the disbursement thereof for or to the purposes and on the conditions and terms set forth therein, and
in and to the Revenues (as defined below), which shall be used for the punctual payment of the interest and
principal of the Bonds. The Revenues shall not be used for any other purpose while any of the Bonds remain
Outstanding.
It is the intent of the parties to the Indenture that the Authority shall not have any right, title, in or to the
Revenues. In the event, however, that it should be determined that the Authority has any right, title or interest in
or to the Revenues, then the Authority irrevocably pledges and transfers to the Trustee, for the benefit of the
Owners, all of such right, title and interest, which shall be used for the punctual payment of the interest and
principal of the Bonds. These pledges shall constitute a first and exclusive lien on the funds established under
the Indenture and the Revenues in accordance with the terms thereof.
Under the Indenture, “Revenues” includes all Base Rental Payments pursuant to the Facility Lease, and
all other benefits, charges, income, proceeds, profits, receipts, rents and revenues derived by the Authority from
the operation or use of the Leased Property, including interest or profits from the investment of money in any
account or fund (other than the Rebate Fund) pursuant to the Indenture. See “RISK FACTORS” and Appendix
A. The City will covenant in the Facility Lease to take such action as may be necessary to include all Base Rental
Payments and Additional Payments due under the Facility Lease as a separate line item in its annual budgets and
to make the necessary annual appropriations therefor, subject to abatement as provided in the Facility Lease.
The Authority, pursuant to the Assignment Agreement, will unconditionally grant, transfer and assign
to the Trustee without recourse (i) all its rights to receive the Base Rental Payments under and pursuant to the
Facility Lease, (ii) the right to take all actions under the Facility Lease, (iii) the right of access more particularly
described in the Facility Lease, and (iv) any and all other rights and remedies of the Authority in the Facility
Lease as lessor thereunder; provided, that so long as no default in payment of Base Rental Payments under the
Facility Lease shall have occurred or be continuing, the Authority shall have and may exercise all rights of the
Authority under the Facility Lease other than the right to receive the Base Rental Payments (which rights to
receive have been assigned to the Trustee). The City will pay Base Rental Payments directly to the Trustee, as
assignee of the Authority. See “—Base Rental Payments” below. Pursuant to the Indenture, the Authority may
issue Additional Bonds payable from the Base Rental Payments on a parity with the Bonds. See APPENDIX B—
“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—INDENTURE—Proceedings for Authorization
of Additional Bonds.”
Lynwood Public Financing Authority - Page 50 of 244 Agenda Item # 2
4850-9990-9831.3
9
THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM
REVENUES AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE INDENTURE. NEITHER
THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE CITY OR THE
STATE, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE
BONDS. THE AUTHORITY HAS NO TAXING POWER.
Base Rental Payments
The City will agree under the Facility Lease to pay to the Trustee, as assignee of the Authority, the Base
Rental Payments no later than the fifteen days prior to each Interest Payment Date (the “Base Rental Payment
Date”) on which such Base Rental Payment is due. All Base Rental Payments received by the Trustee will be
deposited by the Trustee in the Revenue Fund to be established under the Indenture (the “Revenue Fund”). Such
payments of Base Rental Payments will be paid or payable by the City for and in consideration of the right of the
use and possession of, and the continued quiet use and enjoyment of, the Leased Property.
Base Rental Payments for each Lease Year or portion thereof during the term of the Facility Lease shall
constitute, together with the Additional Payments, the total amount due for such Lease Year or portion thereof
and shall be paid or payable by the City for and in consideration of the right of the use and possession of, and the
continued quiet use and enjoyment of, the Leased Property. Pursuant to the Indenture, on each Interest Payment
Date, the Trustee will transfer amounts in the Revenue Fund as are necessary to the Interest Fund to provide for
the payment of the interest on the Bonds and on each Principal Payment Date, the Trustee will transfer amounts
in the Revenue Fund as are necessary to the Principal Fund to provide for the payment of principal of the Bonds.
The City will covenant in the Facility Lease to take such action as may be necessary to include all Base
Rental Payments and Additional Payments in its operating budget for each fiscal year and to make all necessary
appropriations for such Base Rental Payments and Additional Payments, subject to abatement as provided in the
Facility Lease.
Scheduled Base Rental Payments relating to the Bonds are set forth in the Facility Lease.
THE OBLIGATION OF THE CITY TO MAKE THE BASE RENTAL PAYMENTS DOES NOT
CONSTITUTE A DEBT OF THE CITY OR THE STATE OR OF ANY POLITICAL SUBDIVISION
THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR
RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY OR THE
STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY
OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
Additional Payments
The Facility Lease requires the City to pay to the Authority or the Trustee, as Additional Payments
thereunder, in addition to the Base Rental Payments, such amounts as shall be required for the payment all costs
and expenses incurred in connection with the execution, performance or enforcement of the Facility Lease or the
assignment thereof, the Indenture, or the respective interests in the Leased Property and the lease of the Leased
Property by the Authority to the City thereunder, including but not limited to all fees, costs and expenses and all
administrative costs of the Authority relating to the Leased Property. Such fees and costs include, without
limitation, salaries and wages of employees, overhead, insurance premiums, taxes and assessments (if any),
expenses, compensation and indemnification of the Trustee (to the extent not paid or otherwise provided for out
of the proceeds of the sale of the Bonds), fees of auditors, accountants, attorneys or engineers, insurance
premiums, and all other reasonable and necessary administrative costs of the Authority or charges required to be
paid by it to comply with the terms of the Bonds or the Indenture.
Additional Payments will be billed to the City by the appropriate party from time to time, together with
a statement certifying that the amount billed has been incurred or paid for one or more of the items constituting
Lynwood Public Financing Authority - Page 51 of 244 Agenda Item # 2
4850-9990-9831.3
10
Additional Payments, or that such amount is then so payable for such items. Amounts so billed shall be paid by
the City within 60 days after receipt of a bill by the City for such amounts.
Abatement
Base Rental Payments and Additional Payments are paid by the City in each Lease Year or portion
thereof for and in consideration of the right of the use and possession of, and the continued quiet use and
enjoyment of, the Leased Property. During any period in which, by reason of material damage, destruction, title
defect, or condemnation, there is substantial interference with the use and possession by the City of any portion
of the Leased Property, rental payments due under the Facility Lease with respect to the Leased Property shall
be abated to the extent that the annual fair rental value of the portion of the Leased Property in respect of which
there is no substantial interference is less than the annual Base Rental Payments, in which case rental payments
shall be abated only by an amount equal to the difference.
In the event the City assigns, transfers or subleases any or all of the Leased Property or other rights under
the Facility Lease, as permitted by the Facility Lease, for purposes of determining the annual fair rental value
available to pay Base Rental Payments, annual fair rental value of the Leased Property shall first be allocated to
the Facility Lease. The City waives the benefits of California Civil Code Sections 1932(2) and 1933(4) and any
and all other rights to terminate the Facility Lease by virtue of any such interference and the Facility Lease shall
continue in full force and effect.
Abatement shall continue for the period commencing with the date of such damage, destruction, title
defect or condemnation and ending with the substantial completion of the work of repair or replacement of the
portions of the Leased Property so damaged, destroyed, defective or condemned.
Notwithstanding the foregoing, to the extent there are (a) amounts held by the Trustee in the Revenue
Fund, (b) amounts received in respect of rental interruption insurance, and (c) amounts, if any, otherwise legally
available to the Trustee for payments in respect of the Bonds, Base Rental Payments and Additional Payments
will not be abated as provided above but, rather, will be payable by the City as a special obligation payable solely
from said funds and accounts.
Any abatement of rental payments pursuant to the Facility Lease is not considered an Event of
Default as defined in the Facility Lease.
See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—FACILITY
LEASE—Rental Abatement.”
Substitution, Addition and Removal of Property
The City may amend the Facility Lease to substitute other real property and/or improvements (the
“Substituted Property”) for existing Leased Property and/or to remove real property (including undivided
interests therein) and/or improvements from the definition of Leased Property, upon compliance with all of the
conditions set forth in the Facility Lease. After a Substitution or Removal, the part of the Leased Property for
which the Substitution or Removal has been effected shall be released from the leasehold under the Facility Lease
and under the Site Lease. No Substitution or Removal shall take place under the Facility Lease until the City
delivers to the Authority and the Trustee the following:
(a) A Certificate of the City containing a description of all or part of the Leased Property to be
released and, in the event of a Substitution, a description of the Substituted Property to be substituted in its place;
(b) A Certificate of the City (A) stating that the annual fair rental value of the Leased Property after
a Substitution or Removal, in each year during the remaining term of the Facility Lease, is at least equal to the
maximum annual Base Rental Payments payable thereunder attributable to the Leased Property prior to said
Substitution or Removal, as determined by the City on the basis of commercially reasonable evidence of the fair
Lynwood Public Financing Authority - Page 52 of 244 Agenda Item # 2
4850-9990-9831.3
11
rental value of the Leased Property after said Substitution or Removal; and (B) demonstrating that the useful life
of the Leased Property after Substitution or Removal equals or exceeds the remaining term of the Facility Lease;
(c) An Opinion of Counsel to the effect that the amendments to the Facility Lease and to the Site
Lease contemplating Substitution or Removal have been duly authorized, executed and delivered and constitute
the valid and binding obligations of the City and the Authority enforceable in accordance with their terms;
(d) (1) In the event of a Substitution, a policy of title insurance in an amount equal to the same
proportion of the principal amount as the principal portion of the Base Rental Payments for the Substituted
Property bears to the total principal portion of the Base Rental Payments payable under the Facility Lease,
insuring the City’s leasehold interest in the Substituted Property (except any portion thereof which is not real
property) subject only to Permitted Encumbrances, together with an endorsement thereto making said policy
payable to the Trustee for the benefit of the Owners of the Bonds, and (2) in the event of a partial Removal,
evidence that the title insurance in effect immediately prior thereto is not affected;
(e) In the event of a Substitution, an opinion of the City Attorney of the City to the effect that the
exceptions, if any, contained in the title insurance policy referred to in (d) above do not interfere with the
beneficial use and occupancy of the Substituted Property described in such policy by the City for the purposes
of leasing or using the Substituted Property; and
(f) Evidence that the City has complied with the covenants to secure and maintain the insurance
coverage with respect to the Substituted Property as set forth in the Facility Lease.
See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—FACILITY
LEASE—Substitution or Removal of Leased Property”
Action on Default
If the City defaults on its obligations to make Base Rental Payments with respect to any of the Leased
Property, the Trustee, as assignee of the Authority, shall have the option (i) without terminating the related
Facility Lease, to collect each installment of rent as it becomes due regardless of whether or not the City has
abandoned such Leased Property, or to exercise any and all rights of re-entry upon and to re-lease the Leased
Property, or (ii) to terminate the related Facility Lease and re-lease such Leased Property. The City shall remain
liable, if such Leased Property are not re-let, to pay the full amount of the rent to the end of the term of the related
Facility Lease or, in the event that such Leased Property are re-let, to pay any deficiency in rent that results
therefrom. In the event of a default, there is no available remedy of acceleration of Base Rental Payments which
have not become due and payable under the Facility Lease. The City will only be liable for rental payments on
an annual basis, and the Trustee may be required to seek a separate judgment in each fiscal year for that fiscal
year’s defaulted Base Rental Payments. In the event that the Trustee elects to terminate the Facility Lease, such
Leased Property may be re-let for the remaining term of such Lease.
It is uncertain what remedies will be practically available to the Trustee in the event of a default, and the
enforcement of any remedies may prove both expensive and time-consuming. Due to the specialized nature of
the Leased Property, no assurance can be given that the Trustee will be able to re-let the Leased Property so as
to provide rental income sufficient to make principal and interest payments on the Bonds in a timely manner, and
the Trustee is not empowered to sell the Leased Property for the benefit of the Owners of the Bonds. Due to the
governmental function of the Leased Property, it is not certain whether a court would permit the exercise of the
remedies of repossession and re-letting with respect thereto. Any suit for money damages would be subject to
limitations on legal remedies against cities in California, including a limitation on enforcement of judgments
against funds needed to serve the public welfare and interest.
For a description of the events of default and permitted remedies of the Trustee (as assignee of the
Authority) contained in the Facility Lease and the Indenture, see APPENDIX B—“SUMMARY OF THE
Lynwood Public Financing Authority - Page 53 of 244 Agenda Item # 2
4850-9990-9831.3
12
PRINCIPAL LEGAL DOCUMENTS—FACILITY LEASE—Maintenance; Taxes; Insurance and Other
Charges—Insurance.”
Reserve Fund
A Reserve Fund will be established under the Indenture for the Bonds in an amount equal to the Reserve
Requirement. The “Reserve Requirement” is defined as an amount equal to, at any date of determination, the
least of (i) ten percent (10%) of the sale proceeds (within the meaning of section 148 of the Code) of the Bonds,
(ii) 125% of average annual debt service on the Bond, for that and every succeeding Bond Year, or (iii) Maximum
Annual Debt Service.
The Authority will satisfy the Reserve Requirement with respect to the Bonds by depositing the Reserve
Policy in the Reserve Fund in accordance with the Indenture.
On or before each Interest Payment Date, the Trustee shall deposit in the Reserve Fund such amount as
may be necessary to maintain a balance therein equal to the Reserve Requirement. No deposit shall be made in
the Reserve Fund so long as there shall be on deposit therein the Reserve Policy or an amount equal to the Reserve
Requirement. All money in the Reserve Fund (or available to be drawn from a Qualified Reserve Fund Credit
Instrument) shall be used and withdrawn by the Trustee solely for the purpose of replenishing the Interest Fund
or the Principal Fund in such order, in the event of any deficiency at any time in either of such accounts, or for
the purpose of paying the interest on or principal of or redemption premiums, if any, on the Bonds in the event
that no other money of the Authority is lawfully available therefor. All moneys in the Reserve Fund (or available
to be drawn from a Qualified Reserve Fund Credit Instrument held in the Reserve Fund) in excess of the Reserve
Requirement may be applied to the retirement of all Bonds then Outstanding or as a credit against the next
following Base Rental Payment as directed in a Request by the City.
Neither the Authority nor the City will have an obligation to replace Reserve Policy, if any, or to
fund the Reserve Fund with cash if, at any time that the Bonds are Outstanding, amounts are not available
under the Reserve Policy, if any, other than in connection with a draw on the Reserve Policy, if any.
Bond Insurance
Concurrently with the issuance of the Bonds, __________ (“_______” or the “Insurer”) will issue its
municipal bond insurance policy (the “Insurance Policy”) for the Bonds. The Insurance Policy guarantees the
scheduled payment of principal of and interest on the Bonds when due as set forth in the form of the Insurance
Policy included as “APPENDIX G” to this Official Statement.
[TO COME]
Insurance
General. The Facility Lease requires that the City maintain certain insurance coverages on the Leased
Property for loss due to property damage, title defect, loss of use and other liability as described below. The
City self-insures up to certain amounts and purchases additional coverage from commercial carriers as described
in Appendix A hereto under “INFORMATION REGARDING THE CITY OF LYNWOOD—Risk
Management.”
Insurance. The Facility Lease requires the City to secure, maintain or cause to be secured and
maintained at all times with insurers of recognized responsibility insurance coverage on the Leased Property
which shall consist of: (a) standard commercial general liability insurance policy or policies or other comparable
Lynwood Public Financing Authority - Page 54 of 244 Agenda Item # 2
4850-9990-9831.3
13
coverage form in protection of the City and its respective members, officers, agents, employees and assigns. Said
policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for
damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the
Leased Property should the City be legally liable. Such policy or policies must provide coverage with limits and
subject to such deductibles as the City shall deem adequate and prudent, and in all events in form and amount
(including any deductibles). Such insurance may be maintained as part of or in conjunction with any other
insurance coverage carried by the City (including, a self-insurance program), and may be maintained in whole
or in part in the form of the participation by the City in a joint powers authority or other program providing
pooled insurance. The City will apply the proceeds of such liability insurance toward extinguishment or
satisfaction of the liability with respect to which such proceeds have been paid; and (b) property insurance against
loss or damage to all buildings situated on the Leased Property and owned by the City, in an amount at least
equal to the lesser of the replacement value of the insured buildings and the aggregate principal amount of the
Base Rental Payments outstanding. Such insurance must, as nearly as practicable, cover loss or damage by all
“special form” perils. Earthquake insurance will only be carried if available from reputable insurers at a
reasonable cost as determined by the Finance Director of the City. The City currently carries earthquake
insurance and the deductible for such insurance shall not to exceed 5% of replacement value, subject to a
minimum of $100,000. Such insurance may be maintained as part of or in conjunction with any other insurance
coverage carried by the City (including, a self-insurance program), and may be maintained in whole or in part in
the form of the participation by the City in a joint powers authority or other program providing pooled insurance.
See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—FACILITY LEASE—
Maintenance; Taxes; Insurance and Other Charges—Insurance.”
Rental Interruption Insurance. The Facility Lease requires the City to maintain, rental interruption or
use and occupancy insurance to cover loss, total or partial, of the use of the Leased Property and the
improvements situated thereon as a result of any of the hazards covered in the insurance required by Indenture,
in an amount at least equal to the maximum Base Rental Payments coming due and payable during any
immediately succeeding 24-month period. Such insurance may be maintained as part of or in conjunction with
any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the
participation by the City in a joint powers authority or other program providing pooled insurance; provided that
such rental interruption insurance shall not be self-insured by the City. The City will apply the Net Proceeds of
such insurance towards the payment of the Base Rental Payments allocable to the insured improvements as the
same become due and payable.
See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—FACILITY
LEASE—Maintenance; Taxes; Insurance and Other Charges—Insurance.”
Title Insurance. The City covenants and agrees to deliver or cause to be delivered to the Trustee on the
date of issuance of the Bonds, CLTA or ALTA leasehold owner’s policy or policies, or a commitment for such
policy or policies, with respect to the Leased Property with liability in the aggregate amount of the principal
component of all Base Rental Payments payable hereunder. Such policy or policies, when issued, shall name the
Trustee as the insured and shall insure the leasehold estate of the City in the Leased Property subject only to such
exceptions as do not materially affect the City’s right to the use and occupancy of the Leased Property
Use of Property and Title Insurance and Condemnation Proceeds. If prior to the termination of the
term of the Facility Lease (a) the Leased Property or any portion thereof is destroyed (in whole or in part) or is
damaged by fire or other casualty; or (b) title to, or the temporary use of, the Leased Property or any portion
thereof or the estate of the City or the Authority in the Leased Property or any portion thereof is defective or shall
be taken under the exercise of the power of eminent domain, then the City and the Authority will either: (i) cause
the net proceeds of any insurance claim or condemnation award to be applied to the prompt repair, restoration,
modification, improvement or replacement of the damaged, destroyed, defective or condemned portion of the
Leased Property, and any balance of the net proceeds remaining after such work has been completed shall be
paid to the City; or (ii) provided the proceeds of such insurance or condemnation award together with any other
moneys then available for the purpose are at least sufficient to prepay the aggregate annual amounts of principal
and interest components of the Base Rental Payments due under the Facility Lease attributable to the portion of
Lynwood Public Financing Authority - Page 55 of 244 Agenda Item # 2
4850-9990-9831.3
14
the Leased Property so destroyed, damaged, defective or condemned (determined by reference to the proportion
which the annual fair rental value of the destroyed, damaged, defective or condemned portion thereof bears to
the annual fair rental value of the Leased Property), the City may elect not to repair, reconstruct or replace the
damaged, destroyed, defective or condemned portion of the Leased Property and instead apply such proceeds to
the redemption of Outstanding Bonds pursuant to the Indenture.
The City shall only prepay less than all of the principal component of the then-remaining Base Rental
Payments if the annual fair rental value of the Leased Property after such damage, destruction, title defect or
condemnation is at least equal to the aggregate annual amount of the principal and interest components of the
Base Rental Payments not being prepaid.
In the event that the proceeds, if any, of said insurance or condemnation award are insufficient either to
(i) repair, rebuild or replace the Leased Property so that the fair rental value of the Leased Property would be at
least equal to the Base Rental Payments or (ii) to redeem all the Outstanding Bonds, then the City may, in its sole
discretion, budget and appropriate an amount necessary to effect such repair, rebuilding or replacement or
prepayment; provided that the failure of the City to so budget and/or appropriate shall not be a breach of or
default under the Facility Lease.
THE AUTHORITY
The Authority was formed pursuant to the provisions of Articles 1 through 4 of Chapter 5 of Division 7
of Title 1 of the Government Code of the State of California (the “Act”) and the Joint Exercise of Powers
Agreement, dated as of December 1, 1992, by and between the City and the Lynwood Redevelopment Agency,
to assist in financing public capital improvements undertaken by either member. The City Council of the City
serves as the Board of Directors of the Authority.
THE CITY
The City of Lynwood (the “City”) was incorporated in 1921 under the general laws of the State of
California (the “State”). The City is situated approximately 13 miles south of downtown Los Angeles at the
intersection of two major freeways. The local economy represents a diverse blend of industrial, commercial,
agricultural and residential development. The City cover 4.9 square miles and serves a population of 71,269.
For financial and demographic information regarding the City see APPENDIX A“THE CITY OF
LYNWOOD.”
State Audit
On April 9, 2018, the City received a letter from the California State Auditor under the “high-risk local
government agency audit program,” authorized under section 8546.10 of the Government Code of the State. The
California State Auditor released its audit report 2018-803 regarding the City (the “State Audit Report”) on
December 4, 2018. The full text of the State Audit Report may be found on the California State Auditor’s website
at: https://www.bsa.ca.gov/pdfs/reports/2018-803.pdf or by contacting the City Finance Director. On November
8, 2018, the City responded to the draft State Audit Report. The City’s concerns and disagreements with the
State Audit Report are discussed therein and should be read together with the State Audit Report. The State
Audit contains a section captioned “Lynwood is at Risk of Not Meeting its Future Financial Obligations.” The
City vigorously disputed this concern in its response dated November 8, 2018 set forth in the back of the State
Audit. Any failure of the City to meet its financial obligations could have a material adverse impact in the value
of the Bonds. See also “RISK FACTORS – Limitation on Remedies Available; Bankruptcy” herein.
In releasing the State Audit Report, the California State Auditor identified the following potential key
risks and made the following key recommendations. See, however, the full text of the State Audit Report.
Lynwood Public Financing Authority - Page 56 of 244 Agenda Item # 2
4850-9990-9831.3
15
Key Risks
• “Persistent operating deficits, inaccurate general fund balance estimates, and questionable use of one-
time revenues coupled with inadequate budgeting practices and questionable salary increases hinder the
city’s fiscal stability.”
• “Its lack of adequate policies for procurement and financial reporting makes the City susceptible to fraud
and waste in its operations. It has violated state law in the use of restricted funds and has not ensured the
best value for its contracts—the City council’s discretion to frequently forego competitive bidding and
its discretion to amend current contracts without any limitations places the City at risk of wasting
resources.”
• “Its lack of strategic direction, inability to effectively measure staffing needs, and significant turnover
in key positions place the City at high risk that it will lose institutional knowledge and experience a
disruption of core operations and services.”
Key Recommendations
• “Develop policies and procedures to improve its budgeting process and to safeguard the city against
waste, fraud, and inaccurate financial reporting.”
• “Cease the inappropriate use of restricted funds and tighten the procurement process by limiting the
ability to bypass the competitive bidding process and require competitive bidding on certain contract
amendments to ensure it obtains the best value for goods and services it procures.”
The City submitted a corrective action plan to the California State Auditor on January 31, 2019. The
City has also adopted fiscal and budget policies addressing budgeting and financial reporting.
RISK FACTORS
The following factors, along with the other information in this Official Statement, should be considered
by potential investors in evaluating the purchase of the Bonds. However, they do not purport to be an exhaustive
listing of risks and other considerations which may be relevant to an investment in the Bonds. In addition, the
order in which the following factors are presented is not intended to reflect the relative importance of any such
risks.
General Considerations – Security for the Bonds
The Bonds are special obligations of the Authority, payable solely from Revenues and the other assets
pledged under the Indenture. Neither the faith nor credit of the Authority, the City or the State, or any political
subdivision thereof, is pledged to the payment of the Bonds. The Authority has no taxing power.
The obligation of the City to make the Base Rental Payments does not constitute a debt of the City or
the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit
or restriction, and does not constitute an obligation for which the City or the State is obligated to levy or pledge
any form of taxation or for which the City or the State has levied or pledged any form of taxation.
Although the Facility Lease does not create a pledge, lien or encumbrance upon the funds of the City,
the City is obligated under the Facility Lease to pay the Base Rental Payments and Additional Payments from
any source of legally available funds, subject to abatement as provided in the Facility Lease, and the City will
covenant in the Facility Lease that it will take such action as may be necessary to include all Base Rental
Payments and Additional Payments due under the Facility Lease in its annual budgets and to make necessary
annual appropriations for all such Rental Payments, subject to abatement. The City is currently liable and may
become liable on other obligations payable from general revenues. See “CITY FINANCIAL INFORMATION—
Lynwood Public Financing Authority - Page 57 of 244 Agenda Item # 2
4850-9990-9831.3
16
Long Term Liabilities” in Appendix A attached hereto for a description of the City’s long-term and other
obligations payable from general revenues.
The City has the capacity to enter into other obligations which may constitute additional charges against
its revenues. To the extent that additional obligations are incurred by the City, the funds available to make Base
Rental Payments may be decreased. In the event the City’s revenue sources are less than its total obligations, the
City could choose to fund other activities before making Base Rental Payments and other payments due under
the Facility Lease. The same result could occur if, because of State constitutional limits on expenditures, the
City is not permitted to appropriate and spend all of its available revenues. However, the City’s appropriations
have never exceeded the limitation on appropriations under Article XIIIB of the State Constitution. See
“CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Article
XIIIB of the State Constitution.”
COVID-19
The recent global outbreak of the novel coronavirus COVID-19 (“COVID-19”), a respiratory disease
declared to be a pandemic (the “Pandemic”) by the World Health Organization, is significantly affecting the
national capital markets and national, state and local economies. The State has stated that the negative impact of
the Pandemic on revenues will be immediate, affecting the current fiscal year and several fiscal years in the
future. The May Revision to the 2020-21 State budget proposal reflected a shortfall of $54.3 billion, and
significant reductions in funding for many programs and services were ultimately made in the State’s adopted
budget for fiscal year 2020-21 in order to address this deficit. Unemployment in the United States has
dramatically increased as a result of the outbreak. The State, the County and the City have taken actions designed
to mitigate the spread of COVID-19, including requiring the temporary closure of nonessential businesses.
On August 28, 2020, the Governor released the “Blueprint for a Safer Economy,” a statewide, plan for
living with COVID-19 for the long haul (the “Blueprint”). The plan sets forth risk-based criteria on tightening
and loosening allowable activities and expands the length of time between changes to assess how any movement
affects the trajectory of the Pandemic. This new framework makes a number of changes to the state's previous
resilience roadmap. As described by the Governor, it includes:
1. At least 21 days to expand activities beyond the initial tier to ensure California better limits the spread
of the virus;
2. Mandatory metrics - case rates and test positivity - to measure how widespread COVID-19 is in each
county and guide what is allowed;
3. A uniform state framework, with four categories instead of 58 different sets of rules;
4. A more nuanced way of allowing activity: Instead of open vs. closed, sectors can be partially opened
and progressively add to their operations as disease transmission decreases; and
5. A new process for tightening back up again quickly when conditions worsen.
Based on recent data, each county will fall into one of four colored tiers - Purple (Widespread), Red
(Substantial), Orange (Moderate) and Yellow (Minimal) - based on how prevalent COVID-19 is in each county
and the extent of community spread. That color will indicate how business sectors and school districts, including
community college districts, can operate. Movement into different tiers relies on two leading health metrics:
number of cases per 100,000 residents and percentage of COVID-19 tests that come back positive. In addition,
counties will also be required to show they are targeting resources and making particular efforts to prevent and
address COVID-19 in communities with high risk individuals, and to demonstrate improvements in outcomes.
Counties must remain in each tier (except Purple) for a minimum of 21 days before being eligible to move into
the next tier. Each Tuesday, California will update each county's data for the previous week and make
corresponding changes to tiers. In order to move into a less restrictive tier, a county must meet that tier's criteria
for two straight weeks. Counties that fail to meet the metrics for their current tier for two consecutive weeks must
move to the next most restrictive tier. The plan also includes an "emergency brake" where the State can intervene
rapidly for concerning factors like hospitalizations. The County is currently in the Widespread tier, which
imposes the greatest restrictions on indoor operations.
Lynwood Public Financing Authority - Page 58 of 244 Agenda Item # 2
4850-9990-9831.3
17
The actual impact of COVID-19 on the City, its economy and its finances will depend on future events,
including future events outside of the control of the City, and actions by the federal government, the State and
the County. The City cannot predict the extent or duration of the outbreak or what overall impact it may have on
the City’s financial condition or operations. Any financial information, including projections, forecasts and
budgets presented herein do not account for all of the potential effects of COVID-19 unless specifically
referenced.
Abatement
In the event of substantial interference with the City’s right to use and occupy any portion of the Leased
Property by reason of damage to, or destruction or condemnation of the Leased Property, or any defects in title
to the Leased Property, Base Rental Payments will be subject to abatement. See “SECURITY AND SOURCES
OF PAYMENT FOR THE BONDS—Abatement.” In the event that such portion of the Leased Property, if
damaged or destroyed by an insured casualty, could not be replaced during the period of time in which proceeds
of the City’s rental interruption insurance will be available in lieu of Base Rental Payments, plus the period for
which funds are available from (a) amounts held by the Trustee in the Revenue Bond, and (b) amounts, if any,
otherwise legally available to the Trustee for payments in respect of the Bonds under the Indenture, or in the
event that casualty insurance proceeds are insufficient to provide for complete repair or replacement of such
portion of the Leased Property or redemption of the Bonds, there could be insufficient funds to make payments
to Owners in full.
If damage, destruction, title defect or eminent domain proceedings with respect to the Leased Property
results in abatement of the Base Rental Payments related to such Leased Property and if such abated Base Rental
Payments, if any, together with moneys from rental interruption or use and occupancy insurance (in the event of
any insured loss due to damage or destruction), and eminent domain proceeds, if any, are insufficient to make
all payments of principal and interest with respect to the Bonds during the period that the Leased Property is
being replaced, repaired or reconstructed, then all or a portion of such payments of principal and interest may
not be made. Under the Facility Lease and the Indenture, no remedy is available to the Owners for nonpayment
under such circumstances.
Limited Secondary Market
As stated herein, investment in the Bonds poses certain economic risks which may not be appropriate
for certain investors, and only persons with substantial financial resources who understand the risk of investment
in the Bonds should consider such investment. There can be no guarantee that there will be a secondary market
for purchase or sale of the Bonds or, if a secondary market exists, that the Bonds can or could be sold for any
particular price.
Seismic Activity
Generally, within the State, some level of seismic activity occurs on a regular basis. Periodically, the
magnitude of a single seismic event can cause significant ground shaking and damage to property located at or
near the center of such seismic activity. An earthquake along one of the faults in the vicinity, either known or
unknown, could cause a number of casualties and extensive property damage. The effects of such a quake could
be aggravated by aftershocks and secondary effects such as fires, landslides, dam failure, liquefaction and other
threats to public health, safety and welfare. The potential direct and indirect consequences of a major earthquake
can easily exceed the resources of the City and would require a high level of self-help, coordination and
cooperation.
Portions of the City are located above active earthquake faults, heightening the risks associated with
seismic events.
Lynwood Public Financing Authority - Page 59 of 244 Agenda Item # 2
4850-9990-9831.3
18
Hazardous Substances
The City knows of no existing hazardous substances which require remedial action on or near the Leased
Property. However, it is possible such substances do currently or potentially exist and that the City is not aware
of them.
Owners and operators of real property may be required by law to remedy conditions of the property
relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund
Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous
substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to
remedy a hazardous substance whether or not the owner (or operator) has anything to do with creating or
handling the hazardous substance. Further, such liabilities may arise not simply from the existence of a
hazardous substance but from the method of handling it. All of these possibilities could significantly and
adversely affect the operations and finances of the City, may result in the reduction in the assessed value of
property, and therefor property tax revenue.
Cybersecurity
The City relies on computers and technology to conduct its operations. The City and its departments
face cyber threats from time to time including, but not limited to, hacking, viruses, malware and other forms of
technology attacks. The City owns and operates its own enterprise class data network serving the municipal city
government and its operations. The City has retained information technology professionals to support, maintain
and protect these operations locally in a purpose-built and physically secure environment. This network and its
operations are governed by and in compliance with all applicable governmental regulations as well as the City’s
own administrative regulations. Within the City’s operations and guidance is an active cyber-security program
designed to protect from, and to quickly identify and mitigate, a multitude of complex security threats. While
no network is completely immune from all possible compromise, the City exercises its due diligence in
protecting the data it possesses and the systems it operates. To date, there have been no significant cyber-attacks
on the City’s computers and technologies.
While the City is routinely maintaining its technology systems and continuously implementing new
information security controls, no assurances can be given that the City’s security and operational control
measures will be successful in guarding against all cyber threats and attacks. The results of any attack on the
City’s computer and technology could negatively impact the City’s operations, but the City is prepared to quickly
restore services from daily backups thus minimizing costs related to downtime and data loss.
Limited Recourse on Default; No Acceleration of Base Rental
If the City defaults on its obligations to make Base Rental Payments with respect to any of the Leased
Property, the Trustee, as assignee of the Authority, shall have the option (i) without terminating the related
Facility Lease, to collect each installment of rent as it becomes due regardless of whether or not the City has
abandoned such Leased Property, or to exercise any and all rights of re-entry upon and to re-lease the Leased
Property, or (ii) to terminate the related Lease and re-lease such Leased Property. The City shall remain liable,
if such Leased Property are not re-let, to pay the full amount of the rent to the end of the term of the related
Facility Lease or, in the event that such Leased Property are re-let, to pay any deficiency in rent that results
therefrom. In the event of a default, there is no available remedy of acceleration of Base Rental Payments which
have not become due and payable under the Facility Lease. The City will only be liable for rental payments on
an annual basis, and the Trustee may be required to seek a separate judgment in each fiscal year for that fiscal
year’s defaulted Base Rental Payments. In the event that the Trustee elects to terminate the Facility Lease, such
Leased Property may be re-let for the remaining term of such Facility Lease.
Lynwood Public Financing Authority - Page 60 of 244 Agenda Item # 2
4850-9990-9831.3
19
It is uncertain what remedies will be practically available to the Trustee in the event of a default, and
the enforcement of any remedies may prove both expensive and time-consuming. Due to the specialized nature
of the Leased Property, no assurance can be given that the Trustee will be able to re-let the Leased Property so
as to provide rental income sufficient to make principal and interest payments on the Bonds in a timely manner,
and the Trustee is not empowered to sell the Leased Property for the benefit of the Owners of the Bonds. Due
to the governmental function of the Leased Property, it is not certain whether a court would permit the exercise
of the remedies of repossession and re-letting with respect thereto. Any suit for money damages would be subject
to limitations on legal remedies against cities in California, including a limitation on enforcement of judgments
against funds needed to serve the public welfare and interest. See “SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS” and APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL
DOCUMENTS—FACILITY LEASE—Default.”
Limitations on Remedies Available; Bankruptcy
The enforceability of the rights and remedies of the Owners and the obligations of the City may become
subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or
hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain
remedies; the exercise by the United States of America of the powers delegated to it by the Federal Constitution;
and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the
sovereignty of the State of California and its governmental bodies in the interest of servicing a significant and
legitimate public purpose.
Under Chapter 9 of the United States Bankruptcy Code (Title 11, United States Code) (the “Bankruptcy
Code”), which governs bankruptcy proceedings of public entities such as the City, no involuntary bankruptcy
petition may be filed against a public entity. However, upon satisfaction of certain prerequisite conditions, a
voluntary bankruptcy petition may be filed by the City. The filing of a bankruptcy petition results in a stay
against enforcement of remedies under agreements to which the bankrupt entity is a party. A bankruptcy filing
by the City could thus limit remedies under the Facility Lease. A bankruptcy debtor may choose to assume or
reject executory contracts and leases, such as the Facility Lease. In the event of rejection of a lease by debtor
lessee, the leased property is returned to the lessor and the lessor has a claim for a limited amount of the resulting
damages.
Under the Indenture, the Trustee holds a security interest in the Revenues, including Base Rental
Payments, for the benefit of the Owners of the Bonds, but such security interest arises only when the Base Rental
Payments are actually received by the Trustee following payment by the City. The Leased Property is not subject
to a security interest, mortgage or any other lien in favor of the Trustee for the benefit of Owners. In the event
of a bankruptcy filed by the City and the subsequent rejection of the Facility Lease by the City, the Authority
would recover possession of the Leased Property and the Trustee, as assignee of the Authority, would have a
claim for damages against the City. The Trustee’s claim would constitute a secured claim only to the extent of
Revenues in the possession of the Trustee; the balance of such claim would be unsecured.
Bankruptcy proceedings would subject the Owners of the Bonds to judicial discretion and interpretation
of their rights in bankruptcy or otherwise, and consequently entail risks of delay, limitation, or modification of
their rights with respect to the Bonds. In a bankruptcy case, the amount recovered by Owners of the Bonds could
be affected by whether the Facility Lease is determined to be a “true lease” or a loan or other financing
arrangement (a “financing lease”), and the Owners’ recovery could be reduced in either case. If the Facility
Lease is determined by the bankruptcy court to constitute a “true lease” (rather than a financing lease), the City
could choose not to perform under the Facility Lease by rejecting it and the claim of the Owners could be
substantially limited pursuant to Section 365 of the Bankruptcy Code to a fraction of the scheduled amount of
Base Rental Payments, and that reduced claim amount could be impaired as an unsecured claim under a plan of
adjustment. If a bankruptcy court were to treat the Facility Lease as a financing lease then, under a plan of
adjustment, the priority, payment terms, collateral, payment dates, payment sources, covenants and other terms
Lynwood Public Financing Authority - Page 61 of 244 Agenda Item # 2
4850-9990-9831.3
20
or provisions of the Facility Lease and the Bonds may be altered. Such a plan could be confirmed even over the
objections of the Trustee and the Owners, and without their consent. For example, the amount of the Base Rental
Payments from the City might be substantially reduced because of the power of the bankruptcy court under the
Bankruptcy Code to adjust secured claims to the value of their collateral, which, as described above, could be
limited to the Revenues held by the Trustee. In addition, there can be a substantial disparity in treatment based
on the nature of the Leased Property. Whether the Facility Lease is characterized by the bankruptcy court as a
true lease or a financing lease, either scenario could result in the Owners not receiving the full amount of the
principal and interest due on the Bonds.
Possible Insufficiency of Insurance Proceeds
The Facility Lease obligates the City to keep in force various forms of insurance, subject to deductibles,
for repair or replacement of the Leased Property in the event of damage, destruction or title defects, subject to
certain exceptions. The Authority and the City make no representation as to the ability of any insurer to fulfill
its obligations under any insurance policy obtained pursuant to the Facility Lease, and no assurance can be given
as to the adequacy of any such insurance to fund necessary repair or replacement or to pay principal of and
interest on the Bonds when due. In addition, insurance for certain risks, such as earthquakes and floods, are not
required under the Facility Lease, but are currently carried by the City. See “SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS—Insurance.”
No Liability of Authority to the Owners
Except as expressly provided in the Indenture, the Authority will not have any obligation or liability to
the Owners of the Bonds with respect to the payment when due of the Base Rental Payments by the City, or with
respect to the performance by the City of other agreements and covenants required to be performed by it
contained in the Facility Lease or the Indenture, or with respect to the performance by the Trustee of any right
or obligation required to be performed by it contained in the Indenture.
Dependence on State for Certain Revenues
In 2008, the State began experiencing the most significant economic downturn and financial pressure
since the Great Depression of the 1930s. Despite the recent significant budgetary improvements, according to
the State, there remain a number of major risks and pressures that threaten the State’s financial condition,
including a stock market correction, federal policy, slower global growth and an eventual U.S. recession. The
State’s revenues (particularly the personal income tax) can be volatile and correlate to overall economic
conditions. There can be no assurances that the State will not face fiscal stress and cash pressures again, or that
other changes in the State or national economies will not materially adversely affect the financial condition of
the State.
The City cannot predict the extent of any budgetary problems the State will encounter in future fiscal
years and it is not clear what measures would be taken by the State to balance its budget, as required by law. In
addition, the City cannot predict the impact that State budgets will have on the City’s finances and operations or
what actions will be taken in the future by the State Legislature and the Governor to deal with changing State
revenues and expenditures. Current and future State budgets will be affected by national and State economic
conditions and other factors, including the current economic downturn, over which the City has no control.
A number of the City’s revenues are collected and dispersed by the State (such as sales tax and motor-
vehicle license fees) or allocated in accordance with State law (most importantly, property taxes). Therefore,
State budget decisions can have an impact on City finances. In the event of a material economic downturn in the
State, there can be no assurance that any resulting revenue shortfalls to the State will not reduce revenues to local
governments (including the City) or shift financial responsibility for programs to local governments as part of
the State’s efforts to address any such related State financial difficulties.
Lynwood Public Financing Authority - Page 62 of 244 Agenda Item # 2
4850-9990-9831.3
21
See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND
APPROPRIATIONS—Proposition 1A” and “—Proposition 22” below.
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS
Principal of and interest on the Bonds are payable from Base Rental Payments made from the City’s
General Fund. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.” Articles
XIIIA, XIIIB, XIIIC and XIIID of the State Constitution, Propositions 62, 111, 218, 1A and 22, and certain other
provisions of law discussed below are included in this Official Statement to describe the potential effect of these
Constitutional and statutory measures on the ability of the City to levy taxes and spend tax proceeds for operating
and other purposes.
Article XIIIA of the State Constitution
On June 6, 1978, State voters approved Proposition 13, which added Article XIIIA to the State
Constitution. Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to 1% of the
full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service: (i) on
indebtedness approved by the voters prior to December 1, 1978; (ii) on bonded indebtedness approved by a
two-thirds vote on or after December 1, 1978, for the acquisition or improvement of real property; or (iii) bonded
indebtedness incurred by a school district, community college district or county office of education for the
construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and
equipping of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of
the voters voting on the proposition. Article XIIIA defines full cash value to mean “the county assessor’s
valuation of real property as shown on the 1975-76 tax bill 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.” This full cash value may be increased at a rate not to exceed 2% per year to account for inflation.
Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the
event of declining property values caused by damage, destruction or other factors, including a general economic
downturn, to provide that there would be no increase in the “full cash value” base in the event of reconstruction
of property damaged or destroyed in a disaster, and in other minor or technical ways.
Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA.
Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-
approved indebtedness). The 1% property tax is automatically levied by counties and distributed according to a
formula among taxing agencies.
Increases in assessed valuation resulting from reappraisals of property due to new construction, change
in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the “taxing area”
based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation
in future years.
All taxable property is shown at full cash value on the tax rolls. Consequently, the tax rate is expressed
as $1 per $100 of taxable value. All taxable property value included in this Official Statement is shown at 100
percent of taxable value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value.
Article XIIIB of the State Constitution
In addition to the limits that Article XIIIA imposes on property taxes that may be collected by local
governments, certain other revenues of the State and most local governments are subject to an annual
“appropriations limit” imposed by Article XIIIB which effectively limits the amount of such revenues that such
Lynwood Public Financing Authority - Page 63 of 244 Agenda Item # 2
4850-9990-9831.3
22
entities are permitted to spend. Article XIIIB, approved by the voters in June 1979, was modified substantially
by Proposition 111 in 1990. The appropriations limit of each government entity applies to “proceeds of taxes,”
which consist of tax revenues and the investment proceeds thereof, State subventions and certain other funds,
including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed
“the cost reasonably borne by such entity in providing the regulation, product or service.” “Proceeds of taxes”
excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the
appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain
other non-tax funds. Article XIIIB also does not limit appropriation of local revenues to pay debt service on
bonds existing or authorized as of January 1, 1979, or subsequently authorized by the voters, appropriations
required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay
projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor
vehicle weight fees above January 1, 1990 levels. The appropriations limit may also be exceeded in case of
emergency; however, the appropriations limit for the next three years following such emergency appropriation
must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or
natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body
of the local government.
The State and each local government entity has its own appropriations limit. Each year, the limit is
adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to
or from another government entity of financial responsibility for providing services. Proposition 111 requires
that each local government’s actual appropriations be tested against its limit every two years.
If the aggregate “proceeds of taxes” for the preceding two-year period exceeds the aggregate limit, the
excess must be returned to the agency’s taxpayers through tax rate or fee reductions over the following two
years.
The City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB.
Articles XIIIC and XIIID of the State Constitution
On November 5, 1996, State voters approved Proposition 218, known as the “Right to Vote on Taxes
Act.” Proposition 218 adds Articles XIIIC and XIIID to the State Constitution and contains a number of
interrelated provisions affecting the ability of the City to levy and collect both existing and future taxes,
assessments and property-related fees and charges. The interpretation and application of Proposition 218 will
ultimately be determined by the courts with respect to a number of the matters discussed below, and it is not
possible at this time to predict with certainty the outcome of such determination.
Article XIIIC requires that all new local taxes be submitted to the electorate before they become
effective. Taxes for general governmental purposes of the City require a majority vote and taxes for specific
purposes, even if deposited in the City’s General Fund, require a two-thirds vote. The voter approval
requirements of Proposition 218 reduce the flexibility of the City to raise revenues for the General Fund, and no
assurance can be given that the City will be able to impose, extend or increase such taxes in the future to meet
increased expenditure needs.
Article XIIID also adds several provisions making it generally more difficult for local agencies to levy
and maintain property-related fees, charges, and assessments for municipal services and programs, such as
hearings and stricter and more individualized benefit requirements and findings. These provisions include,
among other things: (i) a prohibition against assessments which exceed the reasonable cost of the proportional
special benefit conferred on a parcel; (ii) a requirement that assessments must confer a “special benefit,” as
defined in Article XIIID, over and above any general benefits conferred; (iii) a majority protest procedure for
assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a
public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the
affected party; and (iv) a prohibition against fees and charges which are used for general governmental services,
Lynwood Public Financing Authority - Page 64 of 244 Agenda Item # 2
4850-9990-9831.3
23
including police, fire or library services, where the service is available to the public at large in substantially the
same manner as it is to property owners. If the City is unable to continue to collect these revenues, the services
and programs funded with these revenues would have to be curtailed and/or the City’s General Fund might have
to be used to support them. The City is unable to predict whether or not in the future it will be able to continue
all existing services and programs funded by the fees, charges and assessments in light of Proposition 218 or, if
these services and programs are continued, which amounts (if any) would be used from the City’s General Fund
to continue to support such activities.
Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local
taxes, assessments, fees or charges. This extension of the initiative power is not limited to taxes imposed on or
after November 6, 1996, the effective date of Proposition 218, and could result in retroactive repeal or reduction
in any existing taxes, assessments, fees and charges, subject to overriding federal constitutional principles
relating to the impairments of contracts. Legislation implementing Proposition 218 provides that the initiative
power provided for in Proposition 218 “shall not be construed to mean that any owner or beneficial owner of a
municipal security, purchased before or after (the effective date of Proposition 218) assumes the risk of, or in
any way consents to, any action by initiative measure that constitutes an impairment of contractual rights”
protected by the United States Constitution. However, no assurance can be given that the voters of the City will
not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or
charges currently comprising a substantial part of the City’s General Fund.
Proposition 62
Proposition 62 was adopted by the voters at the November 4, 1986, general election and: (a) requires
that any new or higher taxes for general governmental purposes imposed by local governmental entities such as
the City be approved by a two-thirds vote of the governmental entity’s legislative body and by a majority vote
of the voters of the governmental entity voting in an election on the tax; (b) requires that any special tax (defined
as taxes levied for other than general governmental purposes) imposed by a local governmental entity be
approved by a two-thirds vote of the voters of the governmental entity voting in an election on the tax;
(c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was
imposed; (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except
as permitted by Article XIIIA; (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real
property by local governmental entities; and (f) requires that any tax imposed by a local governmental entity on
or after July 1, 1985, be ratified by a majority vote of the voters voting in an election on the tax within two years
of the adoption of the initiative or be terminated by November 15, 1988.
On September 28, 1995, the California Supreme Court, in the case of Santa Clara County Local
Transportation Authority v. Guardino, upheld the constitutionality of Proposition 62. In this case, the court held
that a countywide sales tax of one-half of one percent was a special tax that, under Section 53722 of the
Government Code, required a two-thirds voter approval. Because the tax received an affirmative vote of only
54.1%, this special tax was found to be invalid. The decision did not address the question of whether or not it
should be applied retroactively.
Following the California Supreme Court’s decision upholding Proposition 62, several actions were filed
challenging taxes imposed by public agencies since the adoption of Proposition 62, which was passed in
November 1986. On June 4, 2001, the California Supreme Court released its decision in one of these cases,
Howard Jarvis Taxpayers Association v. City of La Habra, et al. In this case, the court held that public agency’s
continued imposition and collection of a tax is an ongoing violation, upon which the statute of limitations period
begins anew with each collection. The court also held that, unless another statute or constitutional rule provided
differently, the statute of limitations for challenges to taxes subject to Proposition 62 is three years. Accordingly,
a challenge to a tax subject to Proposition 62 may only be made for those taxes received within three years of
the date the action is brought.
Lynwood Public Financing Authority - Page 65 of 244 Agenda Item # 2
4850-9990-9831.3
24
The City has not experienced any substantive adverse financial impact as a result of the passage of
Proposition 62.
Proposition 1A
Proposition 1A was approved by the voters at the November 2, 2004 election. Proposition 1A amended
the State Constitution to, among other things, reduce the Legislature’s authority over local government revenue
sources by placing restrictions on the State’s access to local governments’ property, sales, and vehicle license
fee revenues as of November 3, 2004. Beginning with Fiscal Year 2008-09, the State may borrow up to eight
percent of local property tax revenues, but only if the Governor proclaims such action is necessary due to a
severe State fiscal hardship and two–thirds of both houses of the Legislature approves the borrowing. The
amount borrowed is required to be paid back within three years. The State also will not be able to borrow from
local property tax revenues for more than two fiscal years within a period of 10 fiscal years. In addition, the
State cannot reduce the local sales tax rate or restrict the authority of local governments to impose or change the
distribution of the statewide local sales tax.
Many of the provisions of Proposition 1A have been superseded by Proposition 22 enacted in
November 2010 and described below.
Proposition 22
On November 2, 2010, the voters of the State approved Proposition 22, known as “The Local Taxpayer,
Public Safety, and Transportation Protection Act” (“Proposition 22”). Proposition 22, among other things,
broadens the restrictions established by Proposition 1A. While Proposition 1A permits the State to appropriate
or borrow local property tax revenues on a temporary basis during times of severe financial hardship, Proposition
22 amends Article XIII of the State Constitution to prohibit the State from appropriating or borrowing local
property tax revenues under any circumstances. The State can no longer borrow local property tax revenues on
a temporary basis even during times of severe financial hardship. Proposition 22 also prohibits the State from
appropriating or borrowing proceeds derived from any tax levied by a local government solely for the local
government’s purposes. Furthermore, Proposition 22 restricts the State’s ability to redirect redevelopment
agency property tax revenues to school districts and other local governments and limits uses of certain other
funds although this provision no longer has any meaningful impact given the statewide dissolution of
redevelopment agencies. Proposition 22 is intended to stabilize local government revenue sources by restricting
the State government’s control over local revenues. The City cannot predict whether Proposition 22 will have a
beneficial effect on the City’s financial condition.
Proposition 26
On November 2, 2010, State voters also approved Proposition 26. Proposition 26 amends Article XIIIC
of the State Constitution to expand the definition of “tax” to include “any levy, charge, or exaction of any kind
imposed by a local government” except the following: (a) a charge imposed for a specific benefit conferred or
privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the
reasonable costs to the local government of conferring the benefit or granting the privilege; (b) a charge imposed
for a specific government service or product provided directly to the payor that is not provided to those not
charged, and which does not exceed the reasonable costs to the local government of providing the service or
product; (c) a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and
permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the
administrative enforcement and adjudication thereof; (d) a charge imposed for entrance to or use of local
government property, or the purchase, rental or lease of local government property; (e) a fine, penalty or other
monetary charge imposed by the judicial branch of government or a local government as a result of a violation
of law; (f) a charge imposed as a condition of property development; and (g) assessments and property-related
fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local
government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction
Lynwood Public Financing Authority - Page 66 of 244 Agenda Item # 2
4850-9990-9831.3
25
is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity,
and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the
payor’s burdens on, or benefits received from, the governmental activity. The City does not believe that
Proposition 26 will adversely affect its General Fund revenues.
Possible Future Initiatives
Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 218, 111, 62, 1A, 22 and 26 were each adopted
as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time other
initiative measures could be adopted, further affecting revenues of the City or the City’s ability to expend
revenues. The nature and impact of these measures cannot be anticipated by the City.
TAX MATTERS
The following is a summary of certain anticipated United States federal income tax consequences of the
purchase, ownership and disposition of the Bonds. The summary is based upon the provisions of the Internal
Revenue Code of 1986, as amended (the “Code”), the Treasury Regulations promulgated thereunder and the
judicial and administrative rulings and decisions now in effect, all of which are subject to change. Such
authorities may be repealed, revoked, or modified, possibly with retroactive effect, so as to result in United States
federal income tax consequences different from those described below. The summary generally addresses Bonds
held as capital assets within the meaning of Section 1221 of the Code and does not purport to address all aspects
of federal income taxation that may affect particular investors in light of their individual circumstances or certain
types of investors subject to special treatment under the federal income tax laws, including but not limited to
financial institutions, insurance companies, dealers in securities or currencies, persons holding such Bonds as a
hedge against currency risks or as a position in a “straddle,” “hedge,” “constructive sale transaction” or
“conversion transaction” for tax purposes, or persons whose functional currency is not the United States dollar.
It also does not deal with holders other than original purchasers that acquire Bonds at their initial issue price
except where otherwise specifically noted. Potential purchasers of the Bonds should consult their own tax
advisors in determining the federal, state, local, foreign and other tax consequences to them of the purchase,
holding and disposition of the Bonds.
The City has not sought and will not seek any rulings from the Internal Revenue Service with respect to
any matter discussed herein. No assurance can be given that the Internal Revenue Service would not assert, or
that a court would not sustain, a position contrary to any of the tax characterizations and tax consequences set
forth below.
U.S. Holders. As used herein, the term “U.S. Holder” means a beneficial owner of Bonds that is (a) an
individual citizen or resident of the United States for federal income tax purposes, (b) a corporation, including
an entity treated as a corporation for federal income tax purposes, created or organized in or under the laws of
the United States or any State thereof (including the District of Columbia), (c) an estate whose income is subject
to federal income taxation regardless of its source, or (d) a trust if a court within the United States can exercise
primary supervision over the administration of the trust and one or more U.S. persons have the authority to
control all substantial decisions of the trust. Notwithstanding clause (d) of the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on August 20, 1996, and treated as United States
persons prior to that date that elect to continue to be treated as United States persons, also will be U.S. Holders. In
addition, if a partnership (or other entity or arrangement treated as a partnership for federal income tax
purposes) holds Bonds, the tax treatment of a partner in the partnership generally will depend upon the status of
the partner and the activities of the partnership. If a U.S. Holder is a partner in a partnership (or other entity or
arrangement treated as a partnership for federal income tax purposes) that holds Bonds, the U.S. Holder is urged
to consult its own tax advisor regarding the specific tax consequences of the purchase, ownership and
dispositions of the Bonds.
Lynwood Public Financing Authority - Page 67 of 244 Agenda Item # 2
4850-9990-9831.3
26
Taxation of Interest Generally. Interest on the Bonds is not excluded from gross income for federal
income tax purposes under Section 103 of the Code and so will be fully subject to federal income
taxation. Purchasers will be subject to federal income tax accounting rules affecting the timing and/or
characterization of payments received with respect to such Bonds. In general, interest paid on the Bonds and
recovery of any accrued original issue discount and market discount will be treated as ordinary income to a
bondholder, and after adjustment for the foregoing, principal payments will be treated as a return of capital to
the extent of the U.S. Holder’s adjusted tax basis in the Bonds and capital gain to the extent of any excess
received over such basis.
Recognition of Income Generally. Section 451 of the Code provides that purchasers using an accrual
method of accounting for U.S. federal income tax purposes may be required to include certain amounts in income
no later than the time such amounts are reflected on certain financial statements of such purchaser. In this regard,
the IRS issued proposed regulations which provide that, with the exception of certain fees, the rule in section
451(b) will generally not apply to the timing rules for original issue discount and market discount, or to the
timing rules for de minimis original issue discount and market discount. Prospective purchasers of the Bonds
should consult their own tax advisors regarding the potential applicability of these rules and their impact on the
timing of the recognition of income related to the Bonds under the Code.
Original Issue Discount. The following summary is a general discussion of certain federal income tax
consequences of the purchase, ownership and disposition of Bonds issued with original issue discount (“Discount
Bonds”). A Bond will be treated as having been issued with an original issue discount if the excess of its “stated
redemption price at maturity” (defined below) over its issue price (defined as the initial offering price to the
public at which a substantial amount of the Bonds of the same maturity have first been sold to the public,
excluding bond houses and brokers) equals or exceeds one quarter of one percent of such Bond’s stated
redemption price at maturity multiplied by the number of complete years to its maturity (or, in the case of an
installment obligation, its weighted average maturity).
A Bond’s “stated redemption price at maturity” is the total of all payments provided by the Bond that
are not payments of “qualified stated interest.” Generally, the term “qualified stated interest” includes stated
interest that is unconditionally payable in cash or property (other than debt instruments of the issuer) at least
annually at a single fixed rate or certain floating rates.
In general, the amount of original issue discount includible in income by the initial holder of a Discount
Bond is the sum of the “daily portions” of original issue discount with respect to such Discount Bond for each
day during the taxable year in which such holder held such Bond. The daily portion of original issue discount
on any Discount Bond is determined by allocating to each day in any “accrual period” a ratable portion of the
original issue discount allocable to that accrual period.
An accrual period may be of any length, and may vary in length over the term of a Discount Bond,
provided that each accrual period is not longer than one year and each scheduled payment of principal or interest
occurs at the end of an accrual period. The amount of original issue discount allocable to each accrual period is
equal to the difference between (i) the product of the Discount Bond’s adjusted issue price at the beginning of
such accrual period and its yield to maturity (determined on the basis of compounding at the close of each accrual
period and appropriately adjusted to take into account the length of the particular accrual period) and (ii) the
amount of any qualified stated interest payments allocable to such accrual period. The “adjusted issue price” of
a Discount Bond at the beginning of any accrual period is the sum of the issue price of the Discount Bond plus
the amount of original issue discount allocable to all prior accrual periods minus the amount of any prior
payments on the Discount Bond that were not qualified stated interest payments. Under these rules, holders
generally will have to include in income increasingly greater amounts of original issue discount in successive
accrual periods.
Holders utilizing the accrual method of accounting may generally, upon election, include in gross
income all interest (including stated interest, acquisition discount, original issue discount, de minimis original
Lynwood Public Financing Authority - Page 68 of 244 Agenda Item # 2
4850-9990-9831.3
27
issue discount, market discount, de minimis market discount, and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium) on a Bond by using the constant yield method applicable to
original issue discount, subject to certain limitations and exceptions.
Holders that use an accrual method of accounting may be required to include certain amounts in income
no later than the time such amounts are reflected on certain financial statements of such holder as discussed
under “Recognition of Income Generally” above. Prospective purchasers of the Bonds should consult their own
tax advisors regarding the potential applicability of this rule and its impact on the timing of the recognition of
income related to the Bonds under the Code.
Market Discount. A holder who purchases a Bond at a price which includes market discount (i.e., at a
purchase price that is less than its adjusted issue price in the hands of an original owner) in excess of a prescribed
de minimis amount will be required to recharacterize all or a portion of the gain as ordinary income upon receipt
of each scheduled or unscheduled principal payment or upon other disposition. In particular, such holder will
generally be required either (a) to allocate each such principal payment to accrued market discount not previously
included in income and to recognize ordinary income to that extent and to treat any gain upon sale or other
disposition of such a Bond as ordinary income to the extent of any remaining accrued market discount or (b) to
elect to include such market discount in income currently as it accrues on all market discount instruments
acquired by such holder on or after the first day of the taxable year to which such election applies.
The Code authorizes the Treasury Department to issue regulations providing for the method for accruing
market discount on debt instruments the principal of which is payable in more than one installment. Until such
time as regulations are issued by the Treasury Department, certain rules described in the legislative history of
the Tax Reform Act of 1986 will apply. Under those rules, market discount will be included in income either
(a) on a constant interest basis or (b) in proportion to the accrual of stated interest.
A holder of a Bond who acquires such Bond at a market discount also may be required to defer, until
the maturity date of such Bond or the earlier disposition in a taxable transaction, the deduction of a portion of
the amount of interest that the holder paid or accrued during the taxable year on indebtedness incurred or
maintained to purchase or carry a Bond in excess of the aggregate amount of interest (including original issue
discount) includable in such holder’s gross income for the taxable year with respect to such Bond. The amount
of such net interest expense deferred in a taxable year may not exceed the amount of market discount accrued
on the Bond for the days during the taxable year on which the holder held the Bond and, in general, would be
deductible when such market discount is includable in income. The amount of any remaining deferred deduction
is to be taken into account in the taxable year in which the Bond matures or is disposed of in a taxable transaction.
In the case of a disposition in which gain or loss is not recognized in whole or in part, any remaining deferred
deduction will be allowed to the extent gain is recognized on the disposition. This deferral rule does not apply
if the bondholder elects to include such market discount in income currently as described above.
Holders that use an accrual method of accounting may be required to include certain amounts in income
no later than the time such amounts are reflected on certain financial statements of such holder as discussed
under “Recognition of Income Generally” above. Prospective purchasers of the Bonds should consult their own
tax advisors regarding the potential applicability of this rule and its impact on the timing of the recognition of
income related to the Bonds under the Code.
Bond Premium. A holder of a Bond who purchases such Bond at a cost greater than its remaining
redemption amount will have amortizable bond premium. If the holder elects to amortize this premium under
Section 171 of the Code (which election will apply to all Bonds held by the holder on the first day of the taxable
year to which the election applies and to all Bonds thereafter acquired by the holder), such a holder must amortize
the premium using constant yield principles based on the holder’s yield to maturity. Amortizable bond premium
is generally treated as an offset to interest income, and a reduction in basis is required for amortizable bond
premium that is applied to reduce interest payments. Purchasers of Bonds who acquire such Bonds at a premium
Lynwood Public Financing Authority - Page 69 of 244 Agenda Item # 2
4850-9990-9831.3
28
should consult with their own tax advisors with respect to federal, state and local tax consequences of owning
such Bonds.
Surtax on Unearned Income. Section 1411 of the Code generally imposes a tax of 3.8% on the “net
investment income” of certain individuals, trusts and estates. Among other items, net investment income
generally includes gross income from interest and net gain attributable to the disposition of certain property, less
certain deductions. U.S. Holders should consult their own tax advisors regarding the possible implications of
this provision in their particular circumstances.
Sale or Redemption of Bonds. A bondholder’s adjusted tax basis for a Bond is the price such holder
pays for the Bond plus the amount of original issue discount and market discount previously included in income
and reduced on account of any payments received on such Bond other than “qualified stated interest” and any
amortized bond premium. Gain or loss recognized on a sale, exchange or redemption of a Bond, measured by
the difference between the amount realized and the bondholder’s tax basis as so adjusted, will generally give rise
to capital gain or loss if the Bond is held as a capital asset (except in the case of Bonds acquired at a market
discount, in which case a portion of the gain will be characterized as interest and therefore ordinary income).
If the terms of a Bond are materially modified, in certain circumstances, a new debt obligation would
be deemed “reissued”, or created and exchanged for the prior obligation in a taxable transaction. Among the
modifications which may be treated as material are those related to the redemption provisions and, in the case
of a nonrecourse obligation, those which involve the substitution of collateral. In addition, the defeasance of a
Bond under the defeasance provisions of the Resolution could result in a deemed sale or exchange of such Bond.
EACH POTENTIAL HOLDER OF BONDS SHOULD CONSULT ITS OWN TAX ADVISOR
CONCERNING (1) THE TREATMENT OF GAIN OR LOSS ON SALE, REDEMPTION OR DEFEASANCE
OF THE BONDS, AND (2) THE CIRCUMSTANCES IN WHICH BONDS WOULD BE DEEMED
REISSUED AND THE LIKELY EFFECTS, IF ANY, OF SUCH REISSUANCE.
Non-U.S. Holders. The following is a general discussion of certain United States federal income tax
consequences resulting from the beneficial ownership of Bonds by a person other than a U.S. Holder, a former
United States citizen or resident, or a partnership or entity treated as a partnership for United States federal
income tax purposes (a “Non-U.S. Holder”).
Subject to the discussion of backup withholding and the Foreign Account Tax Compliance Act
(“FATCA”), payments of principal by the Corporation or any of its agents (acting in its capacity as agent) to any
Non-U.S. Holder will not be subject to federal withholding tax. In the case of payments of interest to any Non-
U.S. Holder, however, federal withholding tax will apply unless the Non-U.S. Holder (1) does not own (actually
or constructively) 10 percent or more of the voting equity interests of the Corporation, (2) is not a controlled
foreign corporation for United States tax purposes that is related to the Corporation (directly or indirectly)
through stock ownership, and (3) is not a bank receiving interest in the manner described in Section 881(c)(3)(A)
of the Code. In addition, either (1) the Non-U.S. Holder must certify on the applicable IRS Form W-8 (series)
(or successor form) to the Corporation, its agents or paying agents or a broker under penalties of perjury that it
is not a U.S. person and must provide its name and address, or (2) a securities clearing organization, bank or
other financial institution, that holds customers’ securities in the ordinary course of its trade or business and that
also holds the Bonds must certify to the Corporation or its agent under penalties of perjury that such statement
on the applicable IRS Form W-8 (series) (or successor form) has been received from the Non-U.S. Holder by it
or by another financial institution and must furnish the interest payor with a copy.
Interest payments may also be exempt from federal withholding tax depending on the terms of an
existing Federal Income Tax Treaty, if any, in force between the U.S. and the resident country of the Non-U.S.
Holder. The U.S. has entered into an income tax treaty with a limited number of countries. In addition, the terms
of each treaty differ in their treatment of interest and original issue discount payments. Non-U.S. Holders are
urged to consult their own tax advisor regarding the specific tax consequences of the receipt of interest payments,
Lynwood Public Financing Authority - Page 70 of 244 Agenda Item # 2
4850-9990-9831.3
29
including original issue discount. A Non-U.S. Holder that does not qualify for exemption from withholding as
described above must provide the Corporation or its agent with documentation as to his, her, or its identity to
avoid the U.S. backup withholding tax on the amount allocable to a Non-U.S. Holder. The documentation may
require that the Non-U.S. Holder provide a U.S. tax identification number.
If a Non-U.S. Holder is engaged in a trade or business in the United States and interest on a Bond held
by such holder is effectively connected with the conduct of such trade or business, the Non-U.S. Holder, although
exempt from the withholding tax discussed above (provided that such holder timely furnishes the required
certification to claim such exemption), may be subject to United States federal income tax on such interest in the
same manner as if it were a U.S. Holder. In addition, if the Non-U.S. Holder is a foreign corporation, it may be
subject to a branch profits tax equal to 30% (subject to a reduced rate under an applicable treaty) of its effectively
connected earnings and profits for the taxable year, subject to certain adjustments. For purposes of the branch
profits tax, interest on a Bond will be included in the earnings and profits of the holder if the interest is effectively
connected with the conduct by the holder of a trade or business in the United States. Such a holder must provide
the payor with a properly executed IRS Form W-8ECI (or successor form) to claim an exemption from United
States federal withholding tax.
Generally, any capital gain realized on the sale, exchange, retirement or other disposition of a Bond by
a Non-U.S. Holder will not be subject to United States federal income or withholding taxes if (1) the gain is not
effectively connected with a United States trade or business of the Non-U.S. Holder, and (2) in the case of an
individual, the Non-U.S. Holder is not present in the United States for 183 days or more in the taxable year of
the sale, exchange, retirement or other disposition, and certain other conditions are met.
For newly issued or reissued obligations, such as the Bonds, FATCA imposes U.S. withholding tax on
interest payments and, for dispositions after December 31, 2018, gross proceeds of the sale of the Bonds paid to
certain foreign financial institutions (which is broadly defined for this purpose to generally include non-U.S.
investment funds) and certain other non-U.S. entities if certain disclosure and due diligence requirements related
to U.S. accounts or ownership are not satisfied, unless an exemption applies. An intergovernmental agreement
between the United States and an applicable non-U.S. country may modify these requirements. In any event,
bondholders or beneficial owners of the Bonds shall have no recourse against the Corporation, nor will the
Corporation be obligated to pay any additional amounts to “gross up” payments to such persons, as a result of
any withholding or deduction for, or on account of, any present or future taxes, duties, assessments or
government charges with respect to payments in respect of the Bonds. However, it should be noted that on
December 13, 2018, the IRS issued Proposed Treasury Regulation Section 1.1473-1(a)(1) which proposes to
remove gross proceeds from the definition of “withholdable payment” for this purpose.
Non-U.S. Holders should consult their own tax advisors with respect to the possible applicability of
federal withholding and other taxes upon income realized in respect of the Bonds.
Information Reporting and Backup Withholding. For each calendar year in which the Bonds are
outstanding, the Corporation, its agents or paying agents or a broker is required to provide the IRS with certain
information, including a holder’s name, address and taxpayer identification number (either the holder’s Social
Security number or its employer identification number, as the case may be), the aggregate amount of principal
and interest paid to that holder during the calendar year and the amount of tax withheld, if any. This obligation,
however, does not apply with respect to certain U.S. Holders, including corporations, tax-exempt organizations,
qualified pension and profit-sharing trusts, and individual retirement accounts and annuities.
If a U.S. Holder subject to the reporting requirements described above fails to supply its correct taxpayer
identification number in the manner required by applicable law or under-reports its tax liability, the Corporation,
its agents or paying agents or a broker may be required to make “backup” withholding of tax on each payment
of interest or principal on the Bonds. This backup withholding is not an additional tax and may be credited
against the U.S. Holder’s federal income tax liability, provided that the U.S. Holder furnishes the required
information to the IRS.
Lynwood Public Financing Authority - Page 71 of 244 Agenda Item # 2
4850-9990-9831.3
30
Under current Treasury Regulations, backup withholding and information reporting will not apply to
payments of interest made by the Corporation, its agents (in their capacity as such) or paying agents or a broker
to a Non-U.S. Holder if such holder has provided the required certification that it is not a U.S. person (as set
forth in the second paragraph under “Non-U.S. Holders” above), or has otherwise established an exemption
(provided that neither the Corporation nor its agent has actual knowledge that the holder is a U.S. person or that
the conditions of an exemption are not in fact satisfied).
Payments of the proceeds from the sale of a Bond to or through a foreign office of a broker generally
will not be subject to information reporting or backup withholding. However, information reporting (but not
backup withholding) may apply to those payments if the broker is one of the following: (i) a U.S. person; (ii) a
controlled foreign corporation for U.S. tax purposes; (iii) a foreign person 50-percent or more of whose gross
income from all sources for the three-year period ending with the close of its taxable year preceding the payment
was effectively connected with a United States trade or business; or (iv) a foreign partnership with certain
connections to the United States.
Payment of the proceeds from a sale of a Bond to or through the United States office of a broker is
subject to information reporting and backup withholding unless the holder or beneficial owner certifies as to its
taxpayer identification number or otherwise establishes an exemption from information reporting and backup
withholding.
The preceding federal income tax discussion is included for general information only and may not be
applicable depending upon a holder’s particular situation. Holders should consult their tax advisors with respect
to the tax consequences to them of the purchase, ownership and disposition of the Bonds, including the tax
consequences under federal, state, local, foreign and other tax laws and the possible effects of changes in those
tax laws.
State Taxes. Nixon Peabody LLP, Bond Counsel, is also of the opinion that, under existing statutes,
interest on the Bonds is exempt from personal income taxes of the State of California. Nixon Peabody LLP, Bond
Counsel, expresses no opinion as to other State or local tax consequences arising with respect to the Bonds nor
as to the taxability of the Bonds or the income therefrom under the laws of any state other than the State of
California.
Changes in Law and Post Issuance Events. Legislative or administrative actions and court decisions,
at either the federal or state level, could have an impact on the inclusion in gross income of interest on the Bonds
for federal or state income tax purposes, and thus on the value or marketability of the Bonds. This could result
from changes to federal or state income tax rates, changes in the structure of federal or state income taxes
(including replacement with another type of tax), or otherwise. It is not possible to predict whether any such
legislative or administrative actions or court decisions will occur or have an adverse impact on the federal or
state income tax treatment of holders of the Bonds. Prospective purchasers of the Bonds should consult their
own tax advisors regarding the impact of any change in law or proposed change in law on the Bonds.
IN ALL EVENTS, ALL INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS IN
DETERMINING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES TO
THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE BONDS.
CONSIDERATIONS FOR ERISA AND OTHER U.S. BENEFIT PLAN INVESTORS
The Employee Retirement Income Security Act of 1974, as amended (“ERISA”), imposes certain
fiduciary obligations and prohibited transaction restrictions on employee pension and welfare benefit plans
subject to Title I of ERISA (“ERISA Plans”). Section 4975 of the Code imposes essentially the same prohibited
transaction restrictions on tax-qualified retirement plans described in Section 401(a) and 403(a) of the Code,
which are exempt from tax under Section 501(a) of the Code, other than governmental and church plans as
defined herein (“Qualified Retirement Plans”), and on Individual Retirement Accounts (“IRAs”) described in
Lynwood Public Financing Authority - Page 72 of 244 Agenda Item # 2
4850-9990-9831.3
31
Section 408(b) of the Code (collectively, “Tax-Favored Plans”). Certain employee benefit plans such as
governmental plans (as defined in Section 3(32) of ERISA) (“Governmental Plans”), and, if no election has been
made under Section 410(d) of the Code, church plans (as defined in Section 3(33) of ERISA) (“Church Plans”),
are not subject to ERISA requirements. Additionally, such Governmental and Church Plans are not subject to
the requirements of Section 4975 of the Code but may be subject to applicable federal, state or local law (“Similar
Laws”) which is, to a material extent, similar to the foregoing provisions of ERISA or the Code. Accordingly,
assets of such plans may be invested in the Bonds without regard to the ERISA and Code considerations
described below, subject to the provisions of Similar Laws.
In addition to the imposition of general fiduciary obligations, including those of investment prudence
and diversification and the requirement that a plan’s investment be made in accordance with the documents
governing the plan, Section 406 of ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving assets of ERISA Plans and Tax-Favored Plans and entities whose underlying assets include plan assets
by reason of ERISA Plans or Tax-Favored Plans investing in such entities (collectively, “Benefit Plans”) and
persons who have certain specified relationships to the Benefit Plans (“Parties In Interest” or “Disqualified
Persons”), unless a statutory or administrative exemption is available. The definitions of “Party in Interest” and
“Disqualified Person” are expansive. While other entities may be encompassed by these definitions, they
include, most notably: (1) fiduciary with respect to a plan; (2) a person providing services to a plan; (3) an
employer or employee organization any of whose employees or members are covered by the plan; and (4) the
owner of an IRA. Certain Parties in Interest (or Disqualified Persons) that participate in a prohibited transaction
may be subject to a penalty (or an excise tax) imposed pursuant to Section 502(i) of ERISA (or Section 4975 of
the Code) unless a statutory or administrative exemption is available. Without an exemption an IRA owner may
disqualify his or her IRA.
Certain transactions involving the purchase, holding or transfer of the Bonds might be deemed to
constitute prohibited transactions under ERISA and Section 4975 of the Code if assets of the Issuer were deemed
to be assets of a Benefit Plan. Under final regulations issued by the United States Department of Labor (the
“Plan Assets Regulation”), the assets of the Issuer would be treated as plan assets of a Benefit Plan for the
purposes of ERISA and Section 4975 of the Code if the Benefit Plan acquires an “equity interest” in the Issuer
and none of the exceptions contained in the Plan Assets Regulation is applicable. An equity interest is defined
under the Plan Assets Regulation as an interest in an entity other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity features. Although there is little
guidance on this matter, it appears that the Bonds should be treated as debt without substantial equity features
for purposes of the Plan Assets Regulation. This determination is based upon the traditional debt features of the
Bonds, including the reasonable expectation of purchasers of Bonds that the Bonds will be repaid when due,
traditional default remedies, as well as the absence of conversion rights, warrants and other typical equity
features.
However, without regard to whether the Bonds are treated as an equity interest for such purposes,
though, the acquisition or holding of Bonds by or on behalf of a Benefit Plan could be considered to give rise to
a prohibited transaction if the Issuer or the Issuing and Paying Agent, or any of their respective affiliates, is or
becomes a Party in Interest or a Disqualified Person with respect to such Benefit Plan.
Most notably, ERISA and the Code generally prohibit the lending of money or other extension of credit
between an ERISA Plan or Tax-Favored Plan and a Party in Interest or a Disqualified Person, and the acquisition
of any of the Bonds by a Benefit Plan would involve the lending of money or extension of credit by the Benefit
Plan. In such a case, however, certain exemptions from the prohibited transaction rules could be applicable
depending on the type and circumstances of the plan fiduciary making the decision to acquire a Bond. Included
among these exemptions are: Prohibited Transaction Class Exemption (“PTCE”) 96-23, regarding transactions
effected by certain “in-house asset managers”; PTCE 90-1, regarding investments by insurance company pooled
separate accounts; PTCE 95-60, regarding transactions effected by “insurance company general accounts”;
PTCE 91-38, regarding investments by bank collective investment funds; and PTCE 84-14, regarding
transactions effected by “qualified professional asset managers.” Further, the statutory exemption in Section
Lynwood Public Financing Authority - Page 73 of 244 Agenda Item # 2
4850-9990-9831.3
32
408(b)(17) of ERISA and Section 4975(d)(20) of the Code provides for an exemption for transactions involving
“adequate consideration” with persons who are Parties in Interest or Disqualified Persons solely by reason of
their (or their affiliate’s) status as a service provider to the Benefit Plan involved and none of whom is a fiduciary
with respect to the Benefit Plan assets involved (or an affiliate of such a fiduciary). There can be no assurance
that any class or other exemption will be available with respect to any particular transaction involving the Bonds,
or that, if available, the exemption would cover all possible prohibited transactions.
By acquiring a Bond (or interest therein), each purchaser and transferee (and if the purchaser or
transferee is a plan, its fiduciary) is deemed to represent and warrant that either (i) it is not acquiring the Bond
(or interest therein) with the assets of a Benefit Plan, Governmental plan or Church plan; or (ii) the acquisition
and holding of the Bond (or interest therein) will not give rise to a nonexempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code or Similar Laws. A purchaser or transferee who acquires
Bonds with assets of a Benefit Plan represents that such purchaser or transferee has considered the fiduciary
requirements of ERISA, the Code or Similar Laws and has consulted with counsel with regard to the purchase
or transfer.
Because the City, Trustee, Underwriters or any of their respective affiliates may receive certain benefits
in connection with the sale of the Bonds, the purchase of the Bonds using plan assets of a Benefit Plan over
which any of such parties has investment authority or provides investment advice for a direct or indirect fee may
be deemed to be a violation of the prohibited transaction rules of ERISA or Section 4975 of the Code or Similar
Laws for which no exemption may be available. Accordingly, any investor considering a purchase of Bonds
using plan assets of a Benefit Plan should consult with its counsel if the City, the Trustees or the Underwriters
or any of their respective affiliates has investment authority or provides investment advice for a direct or indirect
fee with respect to such assets or is an employer maintaining or contributing to the Benefit Plan.
Any ERISA Plan fiduciary considering whether to purchase the Bonds on behalf of an ERISA Plan
should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited
transaction provisions of ERISA and Section 4975 of the Code to such an investment and the availability of any
of the exemptions referred to above. Persons responsible for investing the assets of Tax-Favored Plans that are
not ERISA Plans should seek similar counsel with respect to the prohibited transaction provisions of the Code
and the applicability of any similar state or federal law.
CERTAIN LEGAL MATTERS
The validity of the Bonds and certain other legal matters are subject to the respective approving opinions
of Nixon Peabody LLP, Bond Counsel. Nixon Peabody LLP, is also acting as Disclosure Counsel for the City.
Complete copies of the proposed forms of opinion of Bond Counsel are contained in Appendix D hereto. Bond
Counsel and Disclosure Counsel will receive compensation from the City contingent upon the sale and delivery
of the Bonds. From time to time, Bond Counsel and Disclosure Counsel represents the Underwriter on matters
unrelated to the Bonds. Certain legal matters will be passed upon for the Underwriter by Kutak Rock LLP.
Counsel to the Underwriter will receive compensation contingent upon that issuance of the Bonds.
ABSENCE OF LITIGATION
To the best knowledge of the City and the Authority, there is no action, suit or proceeding pending or
threatened either restraining or enjoining the execution or delivery of the Bonds, the Site Lease, the Facility
Lease, the Assignment Agreement or the Indenture, or in any way contesting or affecting the validity of the
foregoing or any proceedings of the Authority or the City taken with respect to any of the foregoing.
UNDERWRITING
The Bonds are being purchased by Raymond James & Associates, Inc. (the “Underwriter”). The
Underwriter will purchase the Bonds from the Authority at an aggregate purchase price of $_________
Lynwood Public Financing Authority - Page 74 of 244 Agenda Item # 2
4850-9990-9831.3
33
(representing the principal amount of the Bonds, less $________ of Underwriter’s discount). The Bond Purchase
Agreement for the Bonds provides that the Underwriter will purchase all of the Bonds, if any of such bonds are
purchased.
The Bonds are offered for sale at the initial yields stated on the pages following the cover page of this
Official Statement, which may be changed from time to time by the Underwriter. The Bonds may be offered
and sold to certain dealers at yield higher than the public offering yield
RATINGS
S&P Global Ratings (“S&P”) is expected to assign its municipal bond rating of “____” on the Bonds,
with the understanding that upon delivery of the Bonds, the Insurance Policy insuring the payment when due of
the principal of and interest on the Bonds will be issued by the Insurer. See “SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS – Bond Insurance.” In addition, S&P has assigned its underlying municipal
bond rating of “____” on the Bonds without giving effect to the above-described Insurance Policy. Such ratings
reflect only the views of S&P and any desired explanation of the significance of such ratings should be obtained
from S&P. Generally, a rating agency bases its ratings on the information and materials furnished to it and on
investigations, studies and assumptions of its own. There is no assurance such ratings will continue for any
given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agency,
if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal
of either rating may have an adverse effect on the market price of the Bonds. Neither the City nor the Underwriter
has undertaken any responsibility either to bring to the attention of the owners of the Bonds a proposed change
in or proposed withdrawal of any rating or to oppose any such proposed revision or withdrawal.
MUNICIPAL ADVISOR
Willdan Financial Services, Temecula, California, served as municipal advisor (the “Municipal
Advisor”) to the Authority and the City with respect to the sale of the Bonds. The Municipal Advisor will receive
compensation contingent upon the sale and delivery of the Bonds. The Municipal Advisor is not obligated to
undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the
accuracy, completeness or fairness of the information contained in this Official Statement.
The Municipal Advisor is an independent advisory firm and is not engaged in the business of
underwriting, trading or distributing municipal or other public securities.
CONTINUING DISCLOSURE
The Authority has determined that no financial or operating data concerning the Authority is material
to any decision to purchase, hold or sell the Bonds and the Authority will not provide any such information.
The City will covenant for the benefit of the owners and beneficial owners of the Bonds to provide
certain financial information and operating data relating to the City by not later than not later than not later than
nine (9) months after the end of each fiscal year (the “Annual Report”), commencing with the fiscal year ending
June 30, 2020 and to provide notices of the occurrence of certain enumerated events. The Annual Report will be
filed by Willdan Financial Services, as dissemination agent (the “Dissemination Agent”), on behalf of the City,
with the Municipal Standards Rulemaking Board (the “MSRB”). The specific nature of the information to be
contained in the Annual Report and the notices of certain enumerated events is set forth in the Continuing
Disclosure Agreement. See APPENDIX E – “FORM OF CONTINUING DISCLOSURE AGREEMENT.”
These covenants are being made in order to assist the Underwriter of the Bonds in complying with Rule 15c2-
12, as amended (the “Rule”) of the U.S. Securities and Exchange Commission promulgated under the Securities
Exchange Act of 1934, as amended.
Lynwood Public Financing Authority - Page 75 of 244 Agenda Item # 2
4850-9990-9831.3
34
In the last five years, the City did not timely file audited financial statements in connection with (i) the
Lease Revenue Refunding Bonds, Series 2003A (Public Capital Improvement Project) (the “2003A Lease
Revenue Bonds”) for Fiscal Years 2014-15 and 2015-16, (ii) the Authority’s Lease Revenue Bonds, Series
2010A (Civic Center Improvement Project) (the “2010 Lease Revenue Bonds”) for Fiscal Year 2016-17 and (iii)
the California Communities Local Measure R Sales Tax Revenue (Installment Sale) Certificates of Participation,
Series 2012 (T.R.I.P. – Total Road Improvement Program) (the “2012 Certificates”) for Fiscal Year 2016-17. In
addition, in the past five years the City failed to timely file certain operating data in connection with (i) the 2010
Lease Revenue Bonds for Fiscal Years 2013-14 through 2016-17, (ii) the 2012 Certificates for Fiscal Year 2016-
17, and (iii) the 2003A Lease Revenue Bonds for Fiscal Years 2013-14 through 2015-16. The City also failed to
timely file notices of a rating change and to timely file notices of late annual financial information in connection
with certain of its bonds.
In addition, the City has had continuing disclosure obligations in connection with certain bonds issued
by the Lynwood Utility Authority (the “Utility Authority” and “Utility Authority Bonds”). With respect to these
Utility Authority Bonds and within the past five years, the City failed to file in a timely manner its audited
financial statements for Fiscal Years 2015-16 for the Utility Authority’s Enterprise Revenue Bonds, Series 2008-
A and its Enterprise Revenue Bonds, Series 2009. It has also failed to file in a timely manner its audited financial
statements and certain operating data for Fiscal Year 2016-17 in connection with its Enterprise Revenue Bonds,
2017 Series B.
The Dissemination Agent will assist the City in timely filing the Annual Reports and notices of certain
enumerated events in the future.
FINANCIAL STATEMENTS OF THE CITY
Included herein as Appendix C are the audited financial statements of the City as of and for the year
ended June 30, 2019 (the “Financial Statements”), together with the report thereon dated January 31, 2020 of
The Pun Group, Santa Ana, California, certified public accountants (the “Auditor”). Such audited financial
statements have been included herein in reliance upon the report of the Auditor. The Auditor has not been
engaged to perform and has not performed, since the date of its report (January 31, 2020) included in Appendix
C to this Official Statement, any procedures on the financial statements addressed in such report. The Auditor
also has not performed any procedures relating to this Official Statement.
MISCELLANEOUS
References are made herein to certain documents and reports which are brief summaries thereof which
do not purport to be complete or definitive and reference is made to such documents and reports for full and
complete statements of the contents thereof. Copies of the Indenture, the Facility Lease, the Site Lease and other
documents are available, upon request, and upon payment to the City of a charge for copying, mailing and
handling, from the City Clerk at the City of Lynwood, 11330 Bullis Road, Lynwood, California 90262.
Any statements in this Official Statement involving matters of opinion, whether or not expressly so
stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as
a contract or agreement between the Authority or the City and the purchasers or Owners of any of the Bonds.
Lynwood Public Financing Authority - Page 76 of 244 Agenda Item # 2
4850-9990-9831.3
35
The execution and delivery of this Official Statement have been duly authorized by the Authority and
the City.
LYNWOOD PUBLIC FINANCING AUTHORITY
By:
Chief Administrative Officer
CITY OF LYNWOOD
By:
City Manager
Lynwood Public Financing Authority - Page 77 of 244 Agenda Item # 2
4850-9990-9831.3
A-1
APPENDIX A
THE CITY OF LYNWOOD
Lynwood Public Financing Authority - Page 78 of 244 Agenda Item # 2
4850-9990-9831.3
B-1
APPENDIX B
SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS
Lynwood Public Financing Authority - Page 79 of 244 Agenda Item # 2
4850-9990-9831.3
C-1
APPENDIX C
AUDITED FINANCIAL STATEMENTS OF THE CITY
FOR THE YEAR ENDED JUNE 30, 2019
Lynwood Public Financing Authority - Page 80 of 244 Agenda Item # 2
4850-9990-9831.3
D-1
APPENDIX D
PROPOSED FORM OF BOND COUNSEL OPINION
Upon issuance of the Bonds, Nixon Peabody LLP, Bond Counsel to the Authority, proposes to
render its final approving opinion with respect to the Bonds in substantially the following form:
[Date of Delivery]
City of Lynwood Financing Authority
Lynwood, California
City of Lynwood
Lynwood, California
$_________
LYNWOOD PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS
SERIES 2020A (FEDERALLY TAXABLE)
Ladies and Gentlemen:
We have acted as Bond Counsel to the City of Lynwood Financing Authority (the “Authority”) in
connection with the issuance of $________ aggregate principal amount of its Lease Revenue Bonds, Series
2020A (Federally Taxable) (the “Taxable Bonds”), issued pursuant to an Indenture, dated as of _________
1, 2020 (the “Indenture”), by and among the Authority, the City of Lynwood (the “City”) and U.S. Bank,
National Association, as trustee (the “Trustee”). Capitalized terms used but not defined herein shall have
the meaning ascribed to such term as set forth in the Indenture.
As Bond Counsel, we have examined copies, certified to us as being true and complete, of the
Indenture, the Facility Lease, dated as of ________ 1, 2020 (the “Facility Lease”), between the City and
the Authority, the Site Lease, dated as of ________ 1, 2020, (the “Site Lease”), between the Authority and
the City, the Assignment Agreement, dated as of ________ 1, 2020 (the “Assignment Agreement”),
between the Authority and the Trustee, the Tax Certificate, dated the date hereof (the “Tax Certificate”),
opinions of counsel to the Authority, the City and the Trustee, certificates of the Authority, the City, the
Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to
render the opinions set forth herein. We have not undertaken to verify independently the accuracy of the
factual matters represented, warranted or certified therein, and we have assumed the genuineness of all
signatures thereto. The Facility Lease, the Site Lease, the Indenture and the Assignment Agreement are
collectively referred to herein as the “Legal Documents.”
We have, with your approval, assumed that all items submitted to us as originals are authentic
and that all items submitted as copies conform to the originals.
On the basis of such examination, our reliance upon the assumptions contained herein and our
consideration of such questions of law as we considered relevant, and subject to the limitations and
qualifications in this opinion, we are of the opinion that:
1. The Bonds constitute the valid and binding limited obligations of the Authority.
Lynwood Public Financing Authority - Page 81 of 244 Agenda Item # 2
4850-9990-9831.3
D-2
2. The Indenture has been duly executed and delivered by, and, assuming due authorization,
execution and delivery by the other parties thereto, constitutes the legally valid and binding
obligation of, the Authority, enforceable in accordance with its terms. The Indenture establishes a
valid lien on and a pledge of the Revenues (as defined in the Indenture) for the security of the
Bonds. Enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws or equitable principles affecting the enforcement of creditors' rights generally, the
exercise of judicial discretion, the application of equitable principles if equitable remedies are
sought and limitations on remedies against counties in the State of California.
3. The Facility Lease, the Site Lease and the Assignment Agreement have been duly executed
and delivered by, and, assuming due authorization, execution and delivery by the other parties
thereto, constitute the legally valid and binding obligations of, the City (except with respect to the
Assignment Agreement) and the Authority, enforceable in accordance with their terms.
Enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles affecting the enforcement of creditors' rights generally, the
exercise of judicial discretion, the application of equitable principles if equitable remedies are
sought and limitations on remedies against counties in the State of California.
4. Interest on the Bonds is not excluded from gross income for federal income tax purposes.
5. Interest on the Bonds is exempt from personal income taxes of the State of California under
present state law.
The opinions set forth in paragraphs 1, 2 and 3 above are subject to (a) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting creditors’ rights
generally (including, without limitation, fraudulent conveyance laws), (b) the effect of general
principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith
and fair dealing and the possible unavailability of specific performance or injunctive relief, regardless
of whether considered in a proceeding in equity or at law, and (c) the limitations on legal remedies
against government entities in the State of California. We express no opinion with respect to any
indemnification, contribution, choice of law, choice of forum or waiver provisions contained in the Legal
Documents, and we express no opinion on the laws of any jurisdiction other than the State of California
and the United States of America.
Except as stated in paragraphs 4 and 5, we express no opinion as to any other federal, state or
local tax consequences of the ownership or disposition of the Bonds. Furthermore, we express no
opinion as to any federal, state or local tax law consequences with respect to the Bonds, or the interest
thereon, if any action is taken with respect to the Bonds or the proceeds thereof upon the advice or
approval of other counsel.
No opinion is expressed herein on the accuracy, completeness or sufficiency of any offering
material relating to the Bonds. This opinion is expressly limited to the matters set forth above and we
render no opinion, whether by implication or otherwise, as to any other matters.
We do not undertake to advise you of any subsequent events or developments which might affect
the statements contained herein. Our engagement with respect to this matter has ended as of the date hereof,
and we disclaim any obligation to update this letter.
Respectfully submitted,
Lynwood Public Financing Authority - Page 82 of 244 Agenda Item # 2
4850-9990-9831.3
E-1
APPENDIX E
FORM OF CONTINUING DISCLOSURE AGREEMENT
[TO COME]
Lynwood Public Financing Authority - Page 83 of 244 Agenda Item # 2
4850-9990-9831.3
F-1
APPENDIX F
BOOK-ENTRY ONLY SYSTEM
The following information has been provided by DTC for use in securities offering documents, and the
Authority and the City take no responsibility for the accuracy or completeness thereof. Neither the Authority
nor the City can give or does give any assurances that DTC, DTC Direct Participants or DTC Indirect
Participants will distribute to the Beneficial Owners either (a) payments of interest, principal or premium, if
any, with respect to the Bonds or (b) certificates representing ownership interest in or other confirmation of
ownership interest in the Bonds, or that they will so do on a timely basis or that DTC, DTC Direct Participants
or DTC Indirect Participants will act in the manner described in this Official Statement. The current “Rules”
applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of
DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository
for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co.
(DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC.
One fully-registered Bond certificate will be issued for each issue of the Bonds, each in the aggregate principal
amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue
exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and
an additional certificate will be issued with respect to any remaining principal amount of such issue.
2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized
under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform
Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S.
equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that
DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement
among Direct Participants of sales and other securities transactions in deposited securities, through electronic
computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need
for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities
brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a
wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding
company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of
which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the
DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks,
trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly (“Indirect Participants”). DTC has an S&P Global Ratings rating of
AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission.
More information about DTC can be found at www.dtcc.com. The information on such website is not
incorporated herein.
3. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which
will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each
Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial
Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however,
expected to receive written confirmations providing details of the transaction, as well as periodic statements of
their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books
of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
Lynwood Public Financing Authority - Page 84 of 244 Agenda Item # 2
4850-9990-9831.3
F-2
certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry
system for the Bonds is discontinued.
4. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by
an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede
& Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to
whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and
Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners
will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in
effect from time to time. None of the Authority, the City or the Trustee will have any responsibility or obligation
to such Direct Participants and Indirect Participants or the persons for whom they act as nominees with respect
to the Bonds. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them
of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed
amendments to the Indenture and the Facility Lease. For example, Beneficial Owners of Bonds may wish to
ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to
Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the
registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are
being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in
such maturity to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts
the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Principal and interest payments with respect to the Bonds will be made to Cede & Co., or such
other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct
Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Trustee, on
payable dates in accordance with their respective holdings shown on DTC’s records. Payments by Participants
to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in “street name,” and will be the
responsibility of such Participant and not of DTC, the Authority, the City or the Trustee, subject to any statutory
or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede &
Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of
the Authority, the City or the Trustee, disbursement of such payments to Direct Participants will be the
responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility
of Direct and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a
successor depository is not obtained, Bond certificates are required to be printed and delivered.
10. The Authority may decide to discontinue use of the system of book-entry transfers through DTC
(or a successor securities depository). In that event, Bond certificates will be printed and delivered.
Lynwood Public Financing Authority - Page 85 of 244 Agenda Item # 2
4850-9990-9831.3
F-3
11. The information in this section concerning DTC and DTC’s book-entry system has been obtained
from sources that the Authority and the City believe to be reliable, but the Authority and the City take no
responsibility for the accuracy thereof.
The foregoing description of the procedures and record keeping with respect to beneficial ownership
interests in the Bonds, payment of principal of and interest and other payments with respect to the Bonds to
Direct Participants, Indirect Participants or Beneficial Owners, confirmation and transfer of beneficial ownership
interest in such Bonds and other related transactions by and between DTC, the Direct Participants, the Indirect
Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no
representations can be made concerning these matters and neither the Direct Participants, the Indirect
Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters but
should instead confirm the same with DTC or the Participants, as the case may be.
In the event that the book-entry system is discontinued as described above, the requirements of the
Indenture will apply.
THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE Bonds,
WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS TO ONLY DTC. ANY
FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY
ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT
THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF
THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH
NOTICE.
Lynwood Public Financing Authority - Page 86 of 244 Agenda Item # 2
4850-9990-9831.3
G-1
APPENDIX G
SPECIMEN MUNICIPAL BOND INSURANCE POLICY
Lynwood Public Financing Authority - Page 87 of 244 Agenda Item # 2
4837-5399-7255.4
APPENDIX A
THE CITY OF LYNWOOD
Lynwood Public Financing Authority - Page 88 of 244 Agenda Item # 2
4837-5399-7255.4
TABLE OF CONTENTS
Page
i
INFORMATION REGARDING THE CITY OF LYNWOOD .................................................................................... 1
General ..................................................................................................................................................................... 1
City Council and Management............................................................................................................................... 1
City Management .................................................................................................................................................... 1
Employee Relations ................................................................................................................................................. 2
Risk Management .................................................................................................................................................... 2
CITY FINANCIAL INFORMATION ........................................................................................................................... 3
Accounting and Financial Reporting ..................................................................................................................... 3
City Blended Component Units .............................................................................................................................. 3
COVID-19 ................................................................................................................................................................ 4
Budget Procedure, Current Budget and Historical Budget Information ........................................................... 4
Comparative Change in Fund Balance of the City General Fund ...................................................................... 7
Comparative General Fund Balance Sheets of the City ....................................................................................... 8
Major Revenues ....................................................................................................................................................... 9
Property Taxes......................................................................................................................................................... 9
Utility Users Taxes ................................................................................................................................................ 12
Sales and Use Taxes ............................................................................................................................................... 12
Franchise Tax ........................................................................................................................................................ 12
Business License Tax ............................................................................................................................................. 12
Other Taxes ............................................................................................................................................................ 12
Long-Term Debt .................................................................................................................................................... 13
Capital Improvement Projects ............................................................................................................................. 13
Retirement System ................................................................................................................................................ 13
Other Post-Employment Benefits ........................................................................................................................ 18
CITY FINANCIAL POLICIES ................................................................................................................................... 19
Reserve Policy ........................................................................................................................................................ 19
Debt Policy ............................................................................................................................................................. 20
City Investment Policy .......................................................................................................................................... 20
ECONOMIC AND DEMOGRAPHIC INFORMATION ........................................................................................... 21
Population .............................................................................................................................................................. 21
Building Activity .................................................................................................................................................... 21
Personal Income .................................................................................................................................................... 22
Employment ........................................................................................................................................................... 24
Industry .................................................................................................................................................................. 26
Commercial Activity ............................................................................................................................................. 26
Lynwood Public Financing Authority - Page 89 of 244 Agenda Item # 2
4837-5399-7255.4
A-1
INFORMATION REGARDING THE CITY OF LYNWOOD
General
The City of Lynwood (the “City”) was incorporated in 1921 under the general laws of the State of
California (the “State”). The City is situated approximately 13 miles south of downtown Los Angeles at the
intersection of two major freeways. The local economy represents a diverse blend of industrial, commercial,
agricultural and residential development. The City covers 4.9 square miles and serves a population of 71,269.
The City provides the full range of municipal services contemplated by statute, including those functions
delegated to cities under State law. These services including public safety (which are contracted to Los Angeles
County), public works, recreational and cultural activities, public improvements, planning, zoning, and general
administrative services. Other services-such as sanitation, flood control and transportation-are provided by
special districts with the City being a member.
City Council and Management
The City Council is the governing body of the City and is comprised of five elected officials. The five
City Council members, including the Mayor, are elected to four year terms on alternate slates every two years.
The Mayor, selected annually by a majority of the City Council, presides over the meetings and has one vote.
The City Council appoints a City Manager. The City Treasurer and City Clerk are elected.
The members of the City Council and the expiration dates of their respective terms are as follows:
CITY OF LYNWOOD
City Council
Name Term Expires
Aide Castro, Mayor December 2020
Jorge Casanova, Mayor Pro Tem December 2022
Salvador Alatorre, Council Member December 2020
Marisela Santana, Council Member December 2022
Jose Luis Solache, Council Member December 2022
City Management
City Manager. The City Manager’s office, under the leadership of the City Manager, coordinates the
activities of the City’s Departments to ensure that City services are performed to the highest standard in
accordance with the City Council policies. The City Manager directs administrative operations; appoints the
City’s executive directors; advises the City Council on matters of policies impacting the community and
accountable to the City Council for the performance of all administrative departments. The City Manager is
responsible for the submission of the City’s budget to ensure that it is balanced, accountable, and improves the
quality of life of the Lynwood residents.
City Manager Mr. José E. Ometeotl is currently on a leave of absence. Mr. Ometeotl began his career
with the City as Finance Director and Assistant City Manager. Mr. Ometeotl has earned a Bachelor’s and a
Master’s degree from Cornell University and the University of Southern California, respectively.
The Acting City Manager is Michelle G. Ramirez. Ms. Ramirez has over 30 years in government
service. Ms. Ramirez has been with the City since 2018, as the Director of Community Development. Ms.
Ramirez has earned a Bachelor’s degree from California State University, Fullerton.
Lynwood Public Financing Authority - Page 90 of 244 Agenda Item # 2
4837-5399-7255.4
A-2
City Treasurer. It is the mission of the City Treasurer’s office to receive and safely keep all monies
coming to the treasurer’s office, cash management, invest public funds in a manner which will provide the
highest investment return with the maximum security, (while meeting the daily cash flow demands of the entity
and conforming to all state province and local statutes governing the investment of public funds) and to secure
the deposit of funds. The City Treasurer is required to keep records showing all monies received, the source of
which it was received, and the purpose for which it was paid out and to keep an accurate account of all debts due
to the City.
The current City Treasurer is Ms. Gabriela Camacho. Ms. Camacho was elected as City Treasurer in
2015. She has earned a Bachelor’s and a Master’s degree from Amherst College and the University of Southern
California, respectively.
Director of Finance. The Director of Finance serves as fiscal advisor to the City Manager, City Council
and City departments. The Director of Finance assures the integrity of the City’s resources by managing the
fiscal and financial responsibilities of the City. The Director of Finance is responsible for the City’s financial
operations, internal controls and financial policies.
The current Director of Finance is Mr. John Downs. Mr. Downs is a Certified Public Accountant (CPA)
with over twenty years of municipal finance experience that includes working with many cities and special
districts within the Southern California region. He has earned his Bachelor’s degree from Loyola Marymount
University. Mr. Downs has been with the City since 2018.
Employee Relations
As of June 30, 2019, the City had approximately 125 full-time employees and 62 part-time employees.
In accordance with the provisions of California Government Code Section 3500, the City participates in labor
negotiations with its employee associations. The results of the negotiations processes are memorialized in
memoranda of understanding (MOU) reached between the City and the City employee associations. The table
below lists the City’s two employee associations and the approximate membership as of June 30, 2019, as well
as the unrepresented executive employees.
Unit/Affiliation
Number of
Members
Lynwood Employees’ Association/AFSCME Local 1920, AFL-CIO 109
Lynwood Employees Management Group 16
Total 125
Source: City.
All of the MOUs with such employee associations expire on June 30, 2020. The City expects to finalize
the negotiation process and reach new MOUs before the current MOUs expire. MOU with the City’s employee
associations typically have two to four year terms. The City has not experienced a strike or work stoppage in
the last ten years.
Risk Management
To finance its risks of general liability and workers’ compensation, the City maintains its membership
in the Independent Cities Risk Management Authority (ICRMA). The ICRMA is a Joint Powers Authority which
consists of neighboring southern California cities, whose purpose is to arrange and administer programs for the
pooling of self-insured losses, to purchase excess insurances or reinsurances, and to arrange for group-purchased
insurance for property, liability, flood, cyber, workers’ compensation and other coverage.
Lynwood Public Financing Authority - Page 91 of 244 Agenda Item # 2
4837-5399-7255.4
A-3
The City participates in programs for workers’ compensation and general liability coverage
administered by ICRMA. The workers’ compensation limit is $100,000,000 with the City’s retention of
$500,000 for each occurrence. General liability coverage is $30,000,000 with the City’s retention set at $500,000
for each occurrence. The City Attorney believes that the above designation is adequate to cover any losses. Cost
related to litigation of claims are expensed as incurred.
In addition, the City participates in the ICRMA Property Insurance Program including earthquake and
flood insurance. The “all risk,” including earthquake and flood, property coverage is $125,000,000 with $10,000
for each occurrence deductible. The property coverage limit is shared by 13 cities. Premiums for these policies
are paid annually and not subject to retroactive adjustments.
During the past three fiscal (claim) years, none of the above programs of protection have had statements
or judgements that exceeded pooled or insured coverage nor have there been any significant reductions in pooled
or insured liability coverage from the prior year.
CITY FINANCIAL INFORMATION
Accounting and Financial Reporting
The basic financial statements of the City are prepared in conformity with accounting principles
generally accepted in the United States of America (GAAP).
The City’s government-wide financial statements (i.e., the statement of net position and the statement
of activities) present an overview of the City’s financial operations, and fund financial statements that present
the financial information of each of the City’s major funds, as well as non-major governmental funds.
Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business-type activities, which rely, to a significant extent, on fees and charges for support.
The statement of net position and statement of activities provide information about the activities of the
City as a whole and present a longer-term view of the City financials. Fund financial statements explain how
these serves were financed in the short-term as well as what remains for future spending. These statements also
report the City’s operation in more detail than the government-wide statements, by providing information about
the City’s most significant funds.
Most of the City’s basic services are reported in governmental funds, which focus on how money flows
into and out of those funds, and the balance left at year-end that is available for spending. These funds are
reported using an accounting method called the modified accrual basis of accounting, which measures cash and
all other financial assets that can readily be converted to cash. The governmental fund statements provide a
detailed short-term view of the City’s general government operations and the basic services it provides.
Governmental fund information helps to determine whether there are more or less financial resources that can
be spent in the near future to finance the City’s programs.
City Blended Component Units
General. Component units of a primary government (i.e. the City) generally include those that are
legally separate entities but raises and holds economic resources for the direct benefit of the primary government.
Blended component units, although separate legal entities are, in substance, part of the government’s operations.
Their funds are treated similarly to funds of the primary government (other than the General Fund). The City
currently presents three blended component units in its audited financial statements – the Lynwood Public
Financing Authority (the “Financing Authority”), and the Lynwood Utility Authority (the “Utility Authority”)
and the Lynwood Housing Authority (the “Housing Authority”). Brief descriptions of the Financing Authority,
and the Utility Authority and the Housing Authority are provided below.
Lynwood Public Financing Authority - Page 92 of 244 Agenda Item # 2
4837-5399-7255.4
A-4
Lynwood Public Financing Authority. The Financing Authority was formed in 1993, by a joint powers
agreement between the City of Lynwood and the former Lynwood Redevelopment Agency. It was created to
acquire and finance the acquisition of public capital improvements necessary or convenient for the operation of
the City or Agency.
Lynwood Utility Authority. The Utility Authority was formed in 2003, by a joint powers agreement
between the City of Lynwood and the former Lynwood Redevelopment Agency. It was created to acquire,
operate and maintain the utility system.
Lynwood Housing Authority. The Housing Authority was formed under the California Health and
Safety Code. The objective of the Housing Authority is to aid low-income families in obtaining decent, safe and
sanitary housing through federal assistance programs and low/moderate income housing programs. The Housing
Authority was included within the scope of the reporting entity of the City because its governing body is
composed in its entirety of City Council members. The Housing Authority is blended in as a special revenue
fund.
COVID-19
The recent global outbreak of the novel coronavirus COVID-19 (“COVID-19”), a respiratory disease
declared to be a pandemic (the “Pandemic”) by the World Health Organization, is significantly affecting the
national capital markets and national, state and local economies. See “RISK FACTORS – COVID-19
Pandemic” herein.
The City has held recent meetings of its Council remotely, unhindered by the COVID-19 Pandemic.
The City’s employees and consultants have continued to work on site and remotely, leveraging available
technology to continue City operations. The City currently does not expect its business operations to be
materially curtailed.
[DESCRIBE IMPACT ON GENERAL FUND FOR 2019-20 AND EXPECTED IMPACT FOR
2020-21]
[DESCRIBE FUNDING RECEIVED UNDER THE CARES ACT]
Budget Procedure, Current Budget and Historical Budget Information
The City Council approves each fiscal year's budget submitted by the City Manager prior to the
beginning of the new two-fiscal year cycle. Public hearings are conducted prior to its adoption by the City
Council. Supplemental appropriations, where required during the period, are also approved by the City Council.
Budget transfers that affect the total appropriations for any fund require City Council approval. Budget transfers
within a budget code with no change in appropriation are approved by the City Manager only and do not require
approval by the City Council.
A budget code could be a program or a division of a department or a department. In most cases,
expenditures may not legally exceed appropriations at the budget code level for the General fund, and fund level
for Special Revenue, Capital Projects, and Debt Service Funds.
Legally adopted budgets for all governmental funds are established on a basis consistent with accounting
principles generally accepted in the United States of America. At fiscal year-end, all operating budget
appropriations lapse with the exception of encumbered and continuing appropriations. During the fiscal year,
several supplementary appropriations were necessary. Generally, budgets are adopted for all general, special
revenue, capital projects, and debt service funds.
Lynwood Public Financing Authority - Page 93 of 244 Agenda Item # 2
4837-5399-7255.4
A-5
The budget for fiscal years 2019-20 and 2020-21 was approved on July 2, 2019 (the “Adopted Budget”).
The Adopted Budget for the fiscal year 2020-21 projects General Fund revenues to be approximately $36.58
million, an increase of approximately 0.34% from the fiscal year 2019-20 Adopted Budget of $36.45 million.
The Adopted Budget for fiscal year 2020-21 projects General Fund expenditures of approximately $36.72
million, an increase of approximately 2.06% from General Fund expenditures in the fiscal year 2019-20 Adopted
Budget of $35.97 million. Any modifications to the fiscal year 2020-21 Adopted Budget will be considered in
February 2021. [DESCRIBE ANY KNOWN ESTIMATED CHANGES]
Set forth below is the adopted and revised General Fund budget for fiscal year 2019-20 and the adopted
fiscal year 2020-21 General Fund budget. Based on current estimates, the City expects the fiscal year 2019-20
actual results to be approximately 3% lower than what was budgeted.
Lynwood Public Financing Authority - Page 94 of 244 Agenda Item # 2
4837-5399-7255.4
A-6
TABLE 1
CITY OF LYNWOOD
GENERAL FUND BUDGETS
2019-20
Original Budget
2019-20
Unaudited Actual
Adopted
Fiscal Year
2020-21 Budget
Revenues:
Taxes and assessments $27,374,934 $26,806,601 $28,226,247
Licenses and Permits 688,700 942,376 688,700
Fines, forfeitures and penalties 1,286,600 1,654,693 1,286,600
Use of money and property 455,497 618,797 455,497
Intergovernmental revenues 131,038 137,311 131,038
Current service charges 1,678,028 1,907,408 1,579,539
Administrative support 1,118,674
Miscellaneous 4,844,514 369,638 4,216,669
Total Revenues 36,459,311 33,555,498 36,584,290
Current Expenditures
General Government:
City Council 273,632 263,968 274,399
City Clerk 279,901 616,438 350,815
City Treasurer 184,106 205,437 189,964
City Manager 1,414,113 1,263,291 1,493,651
Finance & Administration 1,277,143 1,385,592 1,152,501
Human Resources 914,177 828,736 920,094
Technology and Media Support 623,765 546,918 575,581
Total General Government: 4,966,837 5,110,380 4,957,005
Public Safety:
Police and Fire 19,540,064 18,744,412 20,007,225
Development Services 3,578,718 – 2,861,248
Public Relations – – –
Total Public Safety 23,118,782 18,744,412 22,868,473
Public Works:
Water and Sanitation 167,042 184,163 169,308
Development Services 2,858,673 6,636,133 2,917,568
Total Public Works: 3,025,715 6,820,296 3,086,876
Community Development 835,721 – 1,649,911
Parks and Recreation 3,791,107 3,376,533 3,924,286
Capital Outlay 238,942 83,100 240,602
Total Expenditures 35,977,104 34,134,721 36,727,153
Excess of Revenues Over (Under) Expenditures 482,207 (579,223) (142,863)
Other Financing Sources (Uses):
Transfers In 1,912,010 1,105,160 2,535,290
Transfers Out 2,812,825 2,052,818 3,298,113
Total Other Financing Sources (Uses) (900,815) (947,658) (762,823)
Net Change in Fund Balance $(418,608) $(1,526,881) $(905,686)
Source: City.
Lynwood Public Financing Authority - Page 95 of 244 Agenda Item # 2
4837-5399-7255.4
A-7
Comparative Change in Fund Balance of the City General Fund
The table below presents the City’s audited General Fund Statement of Revenues, Expenditures and
Change in Fund Balance for fiscal years 2015-16 through 2018-19 and unaudited General Fund Statement of
Revenues, Expenditures and Change in Fund Balance for fiscal year 2019-20.
TABLE 2
CITY OF LYNWOOD GENERAL FUND STATEMENT OF
REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE
FIVE YEAR COMPARISON
Fiscal Year Ending June 30,
2016 2017 2018 2019 2020
Revenues:
Taxes and assessments $18,930,742 $20,005,982 $24,941,479 $28,505,748 $26,806,601
Licenses and Permits 1,336,968 943,700 815,194 945,896 942,376
Fines, Forfeitures and penalties 1,524,942 1,601,620 1,751,217 2,344,777 1,654,693
Use of money and property 316,332 298,652 346,348 588,774 618,797
Intergovernmental 236,624 131,653 118,915 119,595 137,311
Charges for services 1,066,112 1,720,903 1,546,418 1,872,551 1,907,408
Administrative support 1,118,246 1,118,246 1,118,246 1,118,246 1,118,674
Miscellaneous 1,190,870 1,086,943 1,924,946 1,192,765 369,638
Total Revenues 25,720,836 26,907,699 32,562,763 36,688,352 33,555,498
Expenditures:
Current:
General government 3,839,190 4,306,522 5,330,570 4,433,873 5,110,380
Public Safety 17,779,555 16,326,446 17,437,065 17,729,040 18,744,412
Public works 2,050,235 4,293,658 5,495,132 6,841,748 6,820,296
Community Development 401,627 113,187 48,519 138,816 –
Parks and Recreation 2,865,986 2,935,450 3,377,729 3,453,952 3,376,533
Capital Outlay – 1,191 7,893 138,883 83,100
Total Expenditures 26,936,593 27,976,454 31,696,908 32,736,312 34,134,721
Excess of Revenues Over (Under)
Expenditures (1,215,757) (1,068,755) 865,855 3,952,040 (579,223)
Other Financing Sources (Uses):
Transfers In 2,638,611 2,635,588 3,094,178 2,677,967 1,105,160
Transfers Out (1,422,838) (1,457,756) (1,650,331) (4,446,163) (2,052,818)
Total Other Financing 1,215,773 1,177,832 1,443,847 (1,768,196) (947,658)
Net change in fund balances (2,082,829) 109,077 2,309,702 2,183,844 (1,526,881)
Fund Balances, July 1 4,543,523 2,460,694 2,569,771 4,879,473 7,063,317
Fund Balances, June 30 $ 2,460,694 $ 2,569,771 $ 4,879,473 $ 7,063,317 $ 5,536,436
Source: Audited financial statements for the City for fiscal years 2015-16 and the City for fiscal year 2019-20.
Lynwood Public Financing Authority - Page 96 of 244 Agenda Item # 2
4837-5399-7255.4
A-8
Comparative General Fund Balance Sheets of the City
The table below presents the City’s audited General Fund Balance Sheets for fiscal years 2015-16
through 2018-19 and unaudited General Fund Balance Sheet for fiscal year 2019-20.
TABLE 3
CITY OF LYNWOOD
GENERAL FUND BALANCE SHEETS
FIVE YEAR COMPARISON
Fiscal Year Ending June 30,
2016 2017 2018 2019 2020
Assets
Cash and investments $3,336,978 $4,454,157 $4,644,238 $9,177,157 $5,516,506
Receivables:
Accounts 881,841 1,161,134 1,329,982 1,374,808 1,170,756
Interest 5,375 8,160 12,927 97,159 40,433
Intergovernmental 1,307,288 1,299,671 2,076,734 1,936,313 2,289,577
Notes and loans –
Due from Other Funds 4,377,804 3,604,714 5,021,046 3,125,668 4,843,407
Other assets – 19,161 – – –
Restricted cash and investments:
Cash and investments 7,329 7,329 7,330 7,330 7,331
Total Assets $9,916,615 $10,554,326 $13,092,257 $15,718,435 $13,868,010
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts Payable and accrued liabilities $2,624,851 $3,074,338 $3,171,269 $3,755,016 $3,513,809
Deposits 1,364,507 1,242,826 1,314,035 1,344,057 1,109,862
Due to other funds – – – – 161,956
Advances from Successor Agency 3,040,225 3,040,225 3,040,225 3,040,225 3,040,225
Total Liabilities 7,029,583 7,357,389 7,525,529 8,139,298 7,825,852
Deferred Inflows of Resources
Unavailable revenues 426,338 627,166 687,255 515,820 505,722
Total Deferred Inflows of Resources 426,338 627,166 687,255 515,820 505,722
Fund Balances
Restricted:
Public Works 7,329 7,329 7,330 7,330 7,331
Committed – 75,372 561,594 1,621,084 3,159,083
Unassigned (deficit) 2,453,365 2,487,070 4,310,549 5,434,903 2,370,022
Total Fund Balances 2,460,694 2,569,771 4,879,473 7,063,317 5,536,436
Total Liabilities, Deferred Inflows of Resources
and Fund Balances $9,916,615 $10,554,326 $13,092,257 $15,718,435 $13,868,010
Source: Audited financial statements for the City for fiscal years 2015-16 and the City for fiscal year 2019-20.
Lynwood Public Financing Authority - Page 97 of 244 Agenda Item # 2
4837-5399-7255.4
A-9
Major Revenues
The City derives its General Fund revenues from a variety of sources including ad valorem property
taxes, utility taxes, sales and use tax, franchise tax, business license tax, and other taxes.
TABLE 4
CITY OF LYNWOOD
SELECTED MAJOR REVENUE SOURCES
Revenue Category 2015-16 2016-17 2017-18 2018-19 2019-20
Property Taxes(1) $ 9,054,582 $ 9,265,676 $ 9,795,477 $10,683,709 $10,877,603
Utility user 5,155,837 5,169,598 5,196,640 5,014,483 4,736,649
Sales and use taxes 4,095,298 4,814,034 9,176,594 10,236,088 10,107,253
Franchise taxes 657,966 577,959 671,343 673,766 702,844
Business license taxes 587,116 570,992 575,619 610,043 544,917
Other taxes 158,525 185,814 143,648 192,692 201,617
Total $19,709,324 $20,584,073 $25,559,321 $27,410,781 $27,170,883
(1) Includes Department of Motor Vehicles license fees in-lieu payments.
Source: City.
Property Taxes
Property taxes have historically provided the largest tax revenue source for the City. In California,
property which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The secured
classification includes property on which any property tax levied by a county becomes a lien on that property.
A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become
a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has
priority over all other liens, arising pursuant to State Law, on the secured property, regardless of the time of the
creation of other liens. The valuation of property is determined as of January 1 each year, and installments of
taxes levied upon secured property become delinquent on the following December 10th and April 10th of the
subsequent calendar year. Taxes on unsecured property are due July 1, and become delinquent August 31.
Secured and unsecured properties are entered separately on the assessment roll maintained by the county
assessor. The method of collecting delinquent taxes is substantially different for the two classifications of
property. The exclusive means of forcing the payment of delinquent taxes with respect to property on the secured
roll is the sale of the property securing the taxes for the amount of taxes that are delinquent. The taxing authority
has four methods of collecting unsecured personal property taxes: (1) a civil action against the taxpayer;
(2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien
on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder’s
Office in order to obtain a lien on certain property of the taxpayer, and (4) seizure and sale of personal property,
improvement or possessory interest belonging or taxable to the assessee.
A ten percent penalty is added to delinquent taxes which have been levied with respect to property on
the secured roll. In addition, beginning on the July 1 following a delinquency, interest begins accruing at the
rate of 1 1/2% per month on the amount delinquent. Such property may thereafter be redeemed by the payment
of the delinquent taxes and the ten percent penalty, plus interest at the rate of 1 1/2% per month to the time of
redemption. If taxes are unpaid for a period of five years or more, the property is subject to sale by the county
tax collector. A ten percent penalty also applies to the delinquent taxes or property on the unsecured roll, and
further, an additional penalty of 1 1/2% per month accrues with respect to such taxes beginning on the varying
dates related to the tax billing date.
Lynwood Public Financing Authority - Page 98 of 244 Agenda Item # 2
4837-5399-7255.4
A-10
Legislation enacted in 1984 (Section 75 et seq. of the Revenue and Taxation Code of the State of
California), provides for the supplemental assignment and taxation of property as of the occurrence of a change
in ownership or completion of new construction. Previously, statutes enabled the assessment of such changes
only as of the next tax lien date following the change and thus delayed the realization of increased property taxes
from the new assessment for up to 14 months. Collection of taxes based on supplemental assessments occurs
throughout the year. Taxes due are prorated according to the amount of time remaining in the tax year, with the
exception of tax bills dated January 1 through May 31, which are calculated on the basis of the remainder of the
current fiscal year and the full 12 months of the next fiscal year.
In the past, the State Legislature has shifted property taxes from cities, counties and special districts to
the Educational Revenue Augmentation Fund. The term “ERAF” is often used as a shorthand reference for this
shift of property taxes. In 1992-93 and 1993-94, in response to serious budgetary shortfalls, the State Legislature
and administration permanently redirected over $3 billion of property taxes from cities, counties, and special
districts to schools and community college districts. The 2004-05 State budget included an additional $1.3
billion shift of property taxes from certain local agencies, including the City, to occur in fiscal years 2004-05
and 2005-06. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND
APPROPRIATIONS—Proposition 1A” and “—Proposition 22” for a description of certain limitations on the
State’s authority over local government revenue sources.
Certain counties in the State operate under a statutory program entitled Alternate Method of Distribution
of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”). Under the Teeter Plan local taxing
entities receive 100% of their tax levies net of delinquencies, but do not receive interest or penalties on delinquent
taxes collected by the county. The County has not adopted the Teeter Plan, and consequently the Teeter Plan is
not available to local taxing entities within the County, such as the City. The City’s receipt of property taxes is
therefore subject to delinquencies and the County will pay to the City only actual amounts collected.
The table below sets forth the secured and unsecured assessed valuations for property in the City for the
fiscal years 2016-17 through 2020-21.
TABLE 5
CITY OF LYNWOOD
ASSESSED VALUATION
FISCAL YEARS 2016-17 THROUGH 2020-21
Fiscal Year Local Secured Utility Unsecured Total
2016-17 $2,960,766,716 $159 $ 87,435,655 $3,048,202,530
2017-18 3,112,901,366 153 86,372,576 3,199,274,095
2018-19 3,388,317,977 0 125,816,908 3,514,134,885
2019-20 3,475,747,092 0 131,942,448 3,607,689,540
2020-21 3,761,035,322 0 98,013,824 3,859,049,146
Source: California Municipal Statistics, Inc.
The table below sets forth secured property tax collections and delinquencies in the City as of June 30
for fiscal years 2015-16 through 2019-20. The City’s receipt of its property tax revenues is impacted by
delinquencies in payment, as well as by the collection of interest and penalties on past delinquencies.
Lynwood Public Financing Authority - Page 99 of 244 Agenda Item # 2
4837-5399-7255.4
A-11
TABLE 6
CITY OF LYNWOOD
SECURED PROPERTY TAX LEVIES AND COLLECTIONS
FISCAL YEARS 2015-16 THROUGH 2019-20
Fiscal Year
Secured Tax
Charge(1)
Amount Delinquent
June 30
% Delinquent
June 30
2015-16 $3,361,943.70 $47,669.85 1.42
2016-17 3,504,433.67 41,620.71 1.19
2017-18 3,694,410.57 45,896.21 1.24
2018-19 4,035,343.98 55,151.38 1.37
2019-20 4,157,736.12 93,766.39 2.26
(1) 1% General Fund apportionment. Excludes redevelopment agency impounds.
Source: California Municipal Statistics, Inc.
The principal property taxpayers in the City as shown on the fiscal year 2020-21 secured tax roll, the
land use, the assessed valuation and the percentage of the City’s total assessed valuation attributable to each are
shown in the below table.
TABLE 7
CITY OF LYNWOOD
PRINCIPAL PROPERTY TAXPAYERS
Property Owner Primary Land Use
2020-21
Assessed Valuation
% of
Total(1)
1. Duke Lynwood LP Industrial $ 71,674,950 1.91%
2. Terreno Lynwood LLC Industrial 64,222,263 1.71
3. Plamex Investment LLC Shopping Center 47,726,430 1.27
4. Duke Realty LP Industrial 41,346,159 1.10
5. Rexford Industrial Industry Way Industrial 24,176,657 0.64
6. Earl M. Jorgensen Co. Industrial 20,470,409 0.54
7. Albi Lynwood Investments LLC Commercial 20,036,147 0.53
8. NHP PMB St. Francis Lynwood Professional Building 19,467,135 0.52
9. EK Lynwood LLC Shopping Center 16,469,947 0.44
10. 805 Property LLC Shopping Center 14,664,229 0.39
11. Economic Resources Corp. Industrial 12,257,605 0.33
12. Urban LLC Shopping Center 12,086,627 0.32
13. Shapco Partnership Industrial 11,742,823 0.31
14. Sohail S. Bahboubian Trust Professional Building 11,117,469 0.30
15. Jones Holdings I, II & III LLC Industrial 10,988,104 0.29
16. El Segundo Boulevard Property Apartments 10,632,040 0.28
17. Deborah Drooz Commercial 8,623,046 0.23
18. Tony Trinh Trust Commercial 8,551,208 0.23
19. Nova Storage Lynwood LP Industrial 8,230,892 0.22
20. NP Wright LLC Industrial 8,043,720 0.21
$442,527,860 11.77%
(1) 2020-21 Local Secured Assessed Valuation: $3,761,035,322.
Source: California Municipal Statistics, Inc.
Lynwood Public Financing Authority - Page 100 of 244 Agenda Item # 2
4837-5399-7255.4
A-12
Utility Users Taxes
Currently, a 9% utility users tax is imposed on the City’s water, telephone, gas, electricity and cable
television services.
Sales and Use Taxes
A sales tax is imposed on retail sales or consumption of personal property. The basic sales tax rate is
established by the State Legislature, and local overrides may be approved by voters. The current sales tax rate
in the City is 10.25%.
Measure PS. On November 8, 2016, Lynwood voters approved Measure PS “Penny Tax”, which
established a one percent (1.0%) Transactions and Use Tax (“TUT”) within the incorporated territory of the City,
for ten (10) years. The revenue generated from the increase in sales tax was to provide funding for improvements
in public safety, public infrastructure, and parks and recreation services. Measure PS also required that a five-
member General Tax Citizen Oversight Advisory Committee be established to oversee expenditure of the
proceeds of the transactions and use tax; to review, make recommendations, and report, at least once annually,
upon the expenditures to the City Council; and, to perform any other functions as directed by the City Council
from time to time. As part of Measure PS, City voters also approved the establishment of a budget stabilization
(“rainy day') fund into which ten percent (10%) of the new general transaction and use tax, be deposited and
may only be spent in cases of City fiscal hardship declared by 4/5ths vote of the City Council.
Measure PS has generated a substantial amount of monies that has aided in the funding of key costs. In
Fiscal Year 2018-19, Measure PS generated $5.45 million. It is estimated that Measure PS generated $5.37
million in Fiscal Year 2019-20 and will generate $5.49 million in revenue for Fiscal Year 2020-21. For many
years, services have been impacted by the City’s ongoing structural deficits requiring reductions to the
operational budget. Prior to the passing of Measure PS, the City’s revenue growth remained flat, while operating
costs continued to increase.
On August 8, 2019, the City Council declared a fiscal emergency, as required by law, to allow a ballot
measure to eliminate the Measure PS sunset provision to be submitted to the voters at a special municipal election
held on November 5, 2019. On November 5, 2019, the voters approved Measure PS, thereby extending the Penny
Tax.
Franchise Tax
The City levies a franchise tax on its pipelines, cable, towing, and gas services franchises. A franchise
tax of 5% (of gross revenues) is imposed on any franchise holder operating within the boundaries of the City.
Business License Tax
The City collects fees for licenses and permits provided by the City, including, but not limited to,
regulatory permits, conditional use permits, development permits, plan check and permitting, building permits
and inspections and other development fees. The taxes are charged annually, and is applied to either gross
receipts of payroll for each business or more commonly, the number of employees per business depending on
the type of business. There are some exceptions and additional fees that may apply to certain specialty or
professional businesses (i.e. professional medical practice).
Other Taxes
The City collects other taxes which provide a smaller source of revenue for the General Fund. Such
taxes include, but are not limited to property transfer taxes, pass through tax, dwelling unit taxes, construction
taxes and condominium taxes.
Lynwood Public Financing Authority - Page 101 of 244 Agenda Item # 2
4837-5399-7255.4
A-13
Long-Term Debt
The following table summarizes the City’s outstanding long-term indebtedness, paid for by General
Fund revenues, as of June 30, 2020.
TABLE 8
CITY OF LYNWOOD
LONG-TERM DEBT
Final Maturity
Original Par
Amount
Par Amount
Outstanding
Long Term Debt:
Lease Revenue Bonds, Series 2017 2035 $ 7,685,000 $ 6,492,240
Lease Revenue Refunding Bonds, Series 2019A 2040 8,465,000 8,465,000
Lease Revenue Bonds, Series 2019B 2049 13,955,000 13,955,000
Total $30,105,000 $28,914,240
Source: City.
Capital Improvement Projects
The City adopts an annual capital improvement projects (“CIP”) which covers capital improvement
needs. The fiscal year 2020-21 capital improvement program includes $2.2 million of projects plus $___ million
in carry-over projects. Major projects include improvements to the City’s streets, sidewalks, and traffic needs
of approximately $565,310, investments in water and sewer infrastructure of approximately $1.27 million, and
park facilities and city facility improvements of approximately $361,990. The City expects to pay for such
improvement from grants, water and sewer fees, impact fees, transportation funds, and bonds.
Retirement System
This caption contains certain information relating to the California Public Employees Retirement
System (“CalPERS”). The information is primarily derived from information produced by CalPERS, its
independent accountants and actuaries. Neither the Authority nor the City has independently verified the
information provided by CalPERS and makes no representations nor expresses any opinion as to the accuracy
of the information provided by CalPERS.
The comprehensive annual financial reports of CalPERS are available on its Internet website at
www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports
and other information concerning benefits and other matters. Such information is not incorporated by reference
herein. The City cannot guarantee the accuracy of such information. Actuarial assessments are “forward-
looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety
of assumptions, one or more of which may not materialize or be changed in the future. Actuarial assessments
will change with the future experience of the pension plans.
[UPDATE]
Summary of Plans. All qualified permanent and probationary employees of the City are eligible to
participate in the City’s separate Safety and Miscellaneous CalPERS plans, which are agent multiple-employer
defined benefit pension plans administered by CalPERS, which acts as a common investment and administrative
agent for its participating member employers. Benefit provisions under the City’s CalPERS plans are established
by the State statute and City Council resolution. CalPERS issues publicly available reports that include a full
description of the pension plans regarding benefit provisions, assumptions and membership information that can
be found on the CalPERS website.
Lynwood Public Financing Authority - Page 102 of 244 Agenda Item # 2
4837-5399-7255.4
A-14
Effective November 1, 2000, the City’s fire department was transferred to Los Angeles County (the
“County”). As a result, certain safety members (employees of the fire department) of CalPERS have ceased to
be employed by the fire department of the City and have been employed by the County, and upon such transfer,
these safety members have become members of Los Angeles County Employees Retirement Association
(“LACERA”). This transfer did not apply to safety members who have retired on or before the effective date of
the transfer. Those retirees will continue to receive their pension benefits from the City's Safety Plan with
CalPERS. The City of Lynwood’s Safety Plan is currently part of the CalPERS Inactive Agency Risk Pool, a
cost-sharing multiple-employer defined benefit plan.
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death
benefits to plan members, who must be public employees and beneficiaries.
AB 340, Public Employee Pension Reform Act of 2013 (PEPRA). On September 12, 2012, the
California Governor signed Assembly Bill 340 (“AB 340”), which implements pension reform in California.
Effective January 1, 2013, AB 340: (i) requires public retirement system and their participating employers to
share equally with employees the normal cost rate for such retirement systems; (ii) prohibit employers from
paying employer-paid member contribution to such retirement system for employees hired after January 1, 2013;
(iii) establishes a compulsory maximum non-safety benefit formula of 2.5% at age 67; (iv) defines final
compensation as the highest average annual pensionable compensation earned during a 36-month period; and
(v) caps pensionable income at $126,291 ($151,549 for employees not enrolled in Social Security) subject to
Consumer Price Index increases. Other provisions reduce the risk of the City incurring additional unfunded
liabilities, including prohibiting retroactive benefits increases, generally prohibiting contribution holidays, and
prohibiting purchases of additional non-qualified service credit.
The City participates in separate CalPERS plans for employees based on hire date. The City’s plans are
part of CalPERS risk pools. Benefit provisions for each plan are set forth below.
Miscellaneous
Hire Date Prior to January 1, 2013 January 1, 2013 and after
Benefit Formula 3% @ 60 2% @ 62
Benefit vesting schedule 5 years service 5 years service
Benefit payments monthly for life monthly for life
Retirement Age 50 to 67 years 52 to 67 years
Benefit per year of service, as percentage of salary 2.0% to 3% 1.0% to 2.5%
Required employee contribution rates 8% 5.250%(2)
Required contribution during measurement period 30.919% 27.244%
Source: City.
At June 30, 2019, the valuation date, the following employee were cover by the benefit terms of the
plans:
Number of members
Description Miscellaneous Plan Safety Plan
Active employees 124 0
Transferred and terminated employees 187 6
Retired Employees and Beneficiaries 250 112
Total 561 118
Contributions. Section 20814(c) of the California Public Employee’s Retirement Law requires that the
employer contribution rates for all public employers be determined on an annual basis by the CalPERS actuary
Lynwood Public Financing Authority - Page 103 of 244 Agenda Item # 2
4837-5399-7255.4
A-15
and shall be effective on the July 1 following notice of a change in the rate. The actuarially determined rate is
the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an
additional amount to finance any unfunded accrued liability. The employer is required to contribute the
difference between the actuarially determined rate and the contribution rate of employees.
Required Contributions
(Miscellaneous)
Fiscal Year
Required Employer Contributions 2020-21
Employer Normal Cost Rate 11.003%
Plus, Either
1) Monthly Employer Dollar UAL Payment $ 220,196
or
2) Annual UAL Prepayment Option* $2,554,458
Required PEPRA Member Contribution Rate 5.75%
The total minimum required employer contribution is the sum of the Plan’s Employer Normal Cost Rate
(expressed as a percentage of payroll) plus the Employer Unfunded Accrued Liability (UAL) Contribution
Amount (billed monthly in dollars).
Fiscal Year
2019-20
Fiscal Year
2020-21
Normal Cost Contribution as a Percentage of Payroll
Total Normal Cost 18.480% 18.745%
Employee Contribution(1) 7.740% 7.742%
Employer Normal Cost(2) 10.740% 11.003%
Projected Annual Payroll for Contribution Year $5,542,143 $5,579,098
Estimated Employer Contributions Based On Projected Payroll
Total Normal Cost $1,024,188 $1,045,802
Employee Contribution(1) 428,962 431,934
Employer Normal Cost(2) 595,226 613,868
Unfunded Liability Contribution 2,471,630 2,642,352
% of Projected Payroll (illustrative only) 44.597% 47.362%
Estimated Total Employer Contribution $3,066,856 $3,256,220
% of Projected Payroll (illustrative only) 55.337% 58.365%
(1) For classic members, this is the percentage specified in the Public Employees’ Retirement Law, net of any reduction from the
use of a modified formula or other factors. For PEPRA members, the member contribution rate is based on 50 percent of the
normal cost.
(2) The Employer Normal Cost is a blended rate for all benefit groups in the plan.
Source: City.
Lynwood Public Financing Authority - Page 104 of 244 Agenda Item # 2
4837-5399-7255.4
A-16
Required Employer Contributions
(Safety)
Fiscal Year
Required Employer Contributions 2020-21
Employer Normal Cost Rate 0.000%
Plus, Either
1) Monthly Employer Dollar UAL Payment $61,824.23
or
2) Annual UAL Prepayment Option* $717,213
The total minimum required employer contribution is the sum of the Plan’s Employer Normal Cost Rate
(expressed as a percentage of payroll) plus the Employer Unfunded Accrued Liability (UAL) Contribution
Amount (billed monthly in dollars).
Fiscal Year
2019-20
Fiscal Year
2020-21
Development of Normal Cost as a Percentage of Payroll(1)
Base Total Normal Cost for Formula 0.000% 0.000%
Surcharge for Class 1 Benefits
None 0.000% 0.000%
Phase out of Normal Cost Difference(2) 0.000% 0.000%
Plan’s Total Normal Cost 0.000% 0.000%
Formula’s Expected Employee Contribution Rate 0.000% 0.000%
Employer Normal Cost Rate 0.000% 0.000%
Projected Payroll for the Contribution Fiscal Year $ 0 $ 0
Estimated Employer Contributions Based on Projected Payroll
Plan’s Estimated Employer Normal Cost $ 0 $ 0
Plan’s Payment on Amortization Bases 682,764 741,891
% of Projected Payroll (illustrative only) 0.000% 0.000%
Estimated Total Employer Contribution $682,764 $741,891
% of Projected Payroll (illustrative only) 0.000% 0.000%
(1) The results shown for Fiscal Year 2019-20 reflect the prior year valuation and may not take into account any lump sum payment,
side fund payoff, or rate adjustment made after April 30, 2018.
(2) The normal cost difference is phased out over a five-year period. The phase out of normal cost difference is 100 percent for the
first year of pooling, and is incrementally reduced by 20 percent of the original normal cost difference for each subsequent year.
This is non-zero only for plans that joined a pool within the past 5 years. Most plans joined a pool June 30, 2003, when risk
pooling was implemented.
Plan’s Funded Status. The following tables shows the changes in UAL for the City’s miscellaneous
and safety plan.
Lynwood Public Financing Authority - Page 105 of 244 Agenda Item # 2
4837-5399-7255.4
A-17
Plan’s Funded Status
(Miscellaneous)
June 30, 2017 June 30, 2018
1. Present Value of Projected Benefits $99,271,635 $106,129,817
2. Entry Age Normal Accrued Liability 91,833,272 98,338,645
3. Market Value of Assets (MVA) $67,155,164 70,958,787
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $24,678,108 $ 27,379,858
5. Funded Ratio [(3) / (2)] 73.1% 72.2%
Plan’s Funded Status
(Safety)
June 30, 2017 June 30, 2018
1. Present Value of Projected Benefits (PVB) $21,244,806 $20,965,985
2. Entry Age Normal Accrued Liability (AL) 21,244,806 20,965,985
3. Plan’s Market Value of Assets (MVA) 13,990,449 13,130,338
4. Unfunded Accrued Liability (UAL) [(2) - (3)] 7,254,357 7,835,647
5. Funded Ratio [(3) / (2)] 65.9% 62.6%
This measure of funded status is an assessment of the need for future employer contributions based on
the selected actuarial cost method used to fund the plan. The UAL is the present value of future employer
contributions for service that has already been earned and is in addition to future normal cost contributions for
active members.
CalPERS Plan Actuarial Methods. In December of 2016 the CalPERS Board of Administration
lowered the discount rate from 7.50 percent to 7.00 percent using a three-year phase-in beginning with the June
30, 2016 actuarial valuation. The minimum employer contributions for Fiscal Year 2020-21 determined in this
valuation were calculated using a discount rate of 7.00 percent, payroll growth of 2.75 percent and an inflation
rate of 2.50 percent. The projected employer contributions are calculated under the assumption that the discount
rate remains at 7.00 percent going forward and that furthermore the realized rate of return on assets for Fiscal
Year 2018-19 is 7.00 percent.
The decision to reduce the discount rate was primarily based on reduced capital market assumptions
provided by external investment consultants and CalPERS investment staff. The specific decision adopted by
the Board reflected recommendations from CalPERS staff and additional input from employer and employee
stakeholder groups. Based on the investment allocation adopted by the Board and capital market assumptions,
the reduced discount rate assumption provides a more realistic assumption for the long-term investment return
of the fund.
CalPERS has implemented a new actuarial valuation software system for the June 30, 2018 valuation.
With this new system we have refined and improved some of our calculation methodology. Any difference in
liability between the old software and new software calculations is captured as a method change line item.
The CalPERS Board of Administration has adopted a new amortization policy effective with the June
30, 2019 actuarial valuation. The new policy shortens the period over which actuarial gains and losses are
amortized from 30 years to 20 years with the payments computed using a level dollar amount. In addition, the
new policy removes the 5-year ramp-up and ramp-down on UAL bases attributable to assumption changes and
non-investment gains/losses. The new policy removes the 5-year ramp-down on investment gains/losses. These
changes will apply only to new UAL bases established on or after June 30, 2019.
Lynwood Public Financing Authority - Page 106 of 244 Agenda Item # 2
4837-5399-7255.4
A-18
Pension Tax Override. On April 16, 1946, the voters in the City approved a retirement tax to support
the City employees’ and former public safety employees’ retirement costs and contributions to CalPERS. In
accordance with a settlement of a lawsuit relating to such retirement tax, the City fixed the rate of the tax at
$0.125 per $100 of assessed valuation. Retirement tax revenues in fiscal year ended June 30, 2018 were
$3,519,312.
Other Post-Employment Benefits
Summary of Plan. The City provides other post-employment benefits (OPEB) for healthcare and life
insurance benefits in accordance with memorandum of understanding, to eligible retired employees. The City
joined and contributed to the CalPERS California Employers’ Retiree Benefit Trust (“CERBT”) Fund. As of
June 2018, there is no separate audited financial report available for such plan.
Membership in the OPEB plan consisted of the following at June 30, 2019:
Inactive employees or beneficiaries currently receiving benefit payments 116
Inactive employees entitled to but not yet receiving benefit payments 30
Active employees 124
Total 270
Contributions. The City contributed $1,445,958 between July 1, 2016 to June 30, 2017, and $1,121,366
during the fiscal year ended June 30, 2018.
Total OPEB Liability. The City’s total OPEB Liability was determined by an actuarial valuation as of
June 30, 2017, which is also the measurement date. The total OPEB liability as of June 30, 2017 was determined
using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise
specified:
Actuarial Cost Method Entry-Age Normal
Actuarial Assumptions
Contribution Policy City contributed $500,000 to the CERBT starting
in fiscal year 2018-19
Discount Rate and Long Term Expected Rate of Return(1) 6.75%
General Inflation 2.75%
Salary Increases 3.0%
Mortality(2) CalPERS 1997-2015 Experience Study
Termination
Healthcare Trend(2)
PEMHCA Minimum 4.25
Healthcare participation for future retirees Medical- 100% for full benefit; 50% for
PEMHCA minimum only benefit; Other- 55%
for dental, 60% for vision, 60% for life
Waived retiree re-election Medical- 10% re-elect at age 65, dental ,vision
life- none
(1) Expected City contributions projected to keep sufficient plan assets to pay all benefits from trust.
(2) The probabilities of mortality are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Pre-retirement
and post-retirement mortality rates include 20 years of projected mortality improvement using Scall BB published by the Society
of Actuaries. The underlying mortality assumptions and all other actuarial assumptions used in June 30, 2015 were based on the
results of an actuarial experience study for the period 1997 to 2011, including updates to salary increase, mortality and retirement
rates.]
(3) Non-Medicare Plans: The annual cost of healthcare is expected to decrease from 6.5% in 2020, decreasing to an ultimate rate of
4% in 2076 and later years (23.88% for 2020 PERSCare Non-Medicate increase).
Lynwood Public Financing Authority - Page 107 of 244 Agenda Item # 2
4837-5399-7255.4
A-19
In June 2015, GASB issued Statement No. 75, which became effective for fiscal years beginning after
June 15, 2017. The primary objective of Statement No. 75 is to improve accounting and financial reporting by
state and local governments for postemployment benefits other than pensions (i.e. OPEB). Statement No. 75 is
also intended to improve information provided by state and local governmental employers about financial
support for OPEB that is provided by other entities. Statement No. 75 results from a comprehensive review of
the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits
(pensions and OPEB) with regard to providing decision-useful information, supporting assessments of
accountability and inter-period equity, and creating additional transparency.
More specifically, Statement No. 75 requires the liability of employers to be measured as the portion of
the present value of projected benefit payments to be provided to current active and inactive employees that is
attributed to those employees’ past periods of service (total OPEB liability), less the amount of the OPEB plan’s
fiduciary net position. Statement No. 75 requires the recognition of the total OPEB liability in the Statement of
Net Position.
The following table shows the changes in total OPEB liability recognized over the measurement period.
Increase (Decrease)
Total OPEB
Liability
(a)
Plan Fiduciary
Net Position
(b)
Net OPEB
Liability/(Asset)
(c) = (a) - (b)
Balance at June 30, 2016 $24,930,281 $2,983,329 $21,946,952
Changes recognized for the measurement period:
Service cost 589,190 – 589,190
Interest on the total OPEB liability 1,690,724 – 1,690,724
Changes of benefit terms – – –
Difference between expected and actual experience – – –
Changes of assumptions – – –
Contributions from the employer – 1,445,958 (1,445,958)
Contributions from employees – – –
Net investment income, net of administrative expense 337,328 (337,328)
Benefit payments, including refunds of employee
contributions (943,414) (943,414) –
Administrative expense (4,227) 4,227
Net Changes during July 1, 2016 to June 30, 2017 1,336,500 835,645 500,855
Balance at June 30, 2017 (Measurement Date) $26,266,781 $3,818,974 $22,447,807
Source: City.
For additional information with respect to the discount rate and deferred outflows/(inflows) of resources,
see Note 11 to the City’s audited financial statements for fiscal year 2017-18 attached to the Official Statement
as Appendix C.
CITY FINANCIAL POLICIES
Reserve Policy
Pursuant to the City’s adopted fiscal and budget policies, the City maintains General Operating Reserves
at a level equal to at least 10% of the total General Fund budgeted revenue. These reserves are created and
maintained to provide sufficient cash flow to meet daily financial needs and sustain City services in the event of
a catastrophic event such as a natural/manmade disaster (e.g. earthquake, windstorm, flood, terrorist attack) or a
major downturn in the economy.
Lynwood Public Financing Authority - Page 108 of 244 Agenda Item # 2
4837-5399-7255.4
A-20
In general, the City endeavors to support ongoing operations with ongoing revenues, but uses reserves
on a one-time basis to support City services pending the development of a longer term financial solution.
However, in no event will reserves be used longer than one biennium to support City operations. If reserves are
used, the City will begin to replenish these reserves at the end of the biennium if a surplus exists, but no later
than the biennium following their use.
Biennium surplus balances in the General Fund are used to fund one-time operations and capital
expenditures, dedicated to the Capital Improvement Program or placed in an economic contingency account if
there are surplus balances remaining after all current expenditure obligations and reserve requirements are met
and if the City has made a determination that revenues for the ensuing biennium are sufficient to support
budgeted General Fund operations.
Debt Policy
The City has adopted Debt Management Policies in compliance with California Government Code
Section 8855. The Debt Management Policies sets forth the purposes for which long-term debt financings may
be undertaken (i.e. for projects that will provide benefit to constituents over multiple years). The Debt
Management Policies provide that short-term financings may be undertaken for operational cash flow purposes
and for short-lived capital projects (i.e. equipment leases).
City Investment Policy
To maximize interest income and maintain liquidity, the City pools operating cash for its various funds
and invests the monies in securities of various maturities. City and Agency funds are invested pursuant to the
City's Investment Policy in compliance with Section 53601 of the California Government Code. The investment
types authorized for investment by the City include the Local Agency Investment Fund (State Pool), U.S.
Treasury Obligations, U.S. Government Agency Issues, Certificates of Deposit, Commercial Paper, as well as
Mutual Funds and Money Market Funds comprised of eligible securities. The objectives of the Investment Policy
are to preserve capital, provide adequate liquidity to meet cash disbursements of the City, and to achieve market-
average rates of return. Investments are secured by collateral as required under law, with maturity dates staggered
to ensure that cash is available as needed. The City Council receives regular reports from the City Treasurer on
the performance of the City's pooled investment program.
Investment of debt proceeds held by bond trustees are governed by provisions of the debt agreements,
rather than the general provisions of the California Government Code or the City's Investment Policy.
The City manages its exposure to interest rate risk by purchasing a combination of shorter term and
longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing
or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for
operations.
The City Treasurer is required to provide a report to the City Manager and the City Council showing
the type of investment, date of maturity, amount invested, current market value, rate of interest, and other such
information as may be required by the City Council. As of June 30, 2019, the City had an investment portfolio
with a market value of $32.1 million. As of such date, the City had invested approximately 65.43% of its
investment portfolio in LAIF, 7.37% in federal agencies, 0.77% in U.S. Treasuries, and 10.34% of its investment
portfolio in corporate securities. For additional information with respect to the City’s cash and investments, see
Note 3 to the audited financial statements for fiscal year 2017-18 attached to the Official Statement as Appendix
C.
Lynwood Public Financing Authority - Page 109 of 244 Agenda Item # 2
4837-5399-7255.4
A-21
ECONOMIC AND DEMOGRAPHIC INFORMATION
Population
The following table offers population figures for the City, the County and the State for 2016 through
2020.
Area 2016 2017 2018 2019 2020
City of Lynwood 71,863 71,895 71,497 71,549 71,269
County of Los Angeles 10,185,851 10,226,920 10,254,658 10,184,378 10,172,951
State of California 39,214,803 39,504,609 39,740,508 39,695,376 39,782,870
Source: California State Department of Finance, Demographic Research Unit. 2010 Census Benchmark.
Building Activity
Residential building activity for calendar years 2015 through 2020(1) for the City is shown in the
following tables.
City of Lynwood
New Housing Units Building Permits
2015 2016 2017 2018 2019 2020(1)
Single Family Units 0 4 14 8 10 0
Multifamily Units 4 0 3 0 0 0
Total Units 4 4 17 8 10 0
(1) Figures for the first eight months of 2020.
Source: Construction Industry Research Board and California Homebuilding Foundation.
Lynwood Public Financing Authority - Page 110 of 244 Agenda Item # 2
4837-5399-7255.4
A-22
City of Lynwood
Building Permit Valuations
(Dollars in Thousands)
2015 2016 2017 2018 2019 2020(2)
Residential
New Single Family $ 0 $1,260,000 $2,806,000 $ 1,587,000 $1,458,800 $ 0
New Multifamily 950,000 0 565,000 0 0 0
Res. Alt. & Adds 0 0 0 4,468,041 906,302 210,000
Total Residential $ 950,000 $1,260,000 $3,371,000 $ 6,055,041 $2,365,102 $ 210,000
Nonresidential
New Industrial $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
New Commercial 0 0 0 0 200,000 0
New Other(1) 0 0 0 1,035,425 3,959,148 45,000
Alters. & Adds. 70,000 135,000 0 12,238,000 751,000 115,000
Total Non-Residential $ 70,000 $ 135,000 $ 0 $13,273,425 $4,910,148 $ 160,000
Total All Building $1,020,000 $1,395,000 $3,371,000 $19,328,466 $7,275,250 $ 370,000
(1) Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential
garages, public works and utilities buildings.
(2) Figures for the first eight months of 2020.
Note: “Total All Building” is the sum of Residential and Nonresidential Building Permit Valuations. Totals may not add to sum
because of independent rounding.
Source: Construction Industry Research Board and California Homebuilding Foundation.
Personal Income
Personal Income is the income that is received by all persons from all sources. Personal Income is
calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors’ income
with inventory valuation and capital consumption adjustments, rental income of persons with capital
consumption adjustment, personal dividend income, personal interest income, and personal current transfer
receipts, less contributions for government social insurance.
The personal income of an area is the income that is received by, or on behalf of, all the individuals who
live in the area; therefore, the estimates of personal income are presented by the place of residence of the income
recipients.
Lynwood Public Financing Authority - Page 111 of 244 Agenda Item # 2
4837-5399-7255.4
A-23
The following tables show the personal income and per capita personal income for the County, the State
and United States from 2011 through 2019.
PERSONAL INCOME
County of Los Angeles, State of California, and United States
2011-2019
Year
County of
Los Angeles California United States
2011 $459,098,093 $1,738,413,100 $13,315,478,000
2012 492,424,430 1,853,467,200 13,998,383,000
2013 491,016,518 1,885,672,400 14,175,503,000
2014 525,088,691 2,021,640,000 14,983,140,000
2015 560,484,548 2,173,299,700 15,711,634,000
2016 577,071,787 2,259,413,900 16,115,630,000
2017 593,741,110 2,634,129,400 16,820,250,000
2018 628,808,732 2,514,503,400 17,839,255,000
2019(1) Not Available 2,632,279,800 18,542,262,000
(1) Preliminary figures, County figures not yet available.
Note: Dollars in Thousands.
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
The following table summarizes per capita personal income for the City, the County, the State and the
United States for the years 2011 through 2019. This measure of income is calculated as the personal income of
the residents of the area divided by the resident population of the area.
PER CAPITA PERSONAL INCOME(1)
City of Lynwood, County of Los Angeles, State of California, and United States
2011-2019
Year
City of
Lynwood
County of
Los Angeles California United States
2011 $11,941 $46,439 $46,183 $42,735
2012 12,034 49,459 48,826 44,599
2013 12,259 49,010 49,259 44,851
2014 12,517 52,130 52,340 47,060
2015 12,484 55,366 55,793 48,985
2016 12,787 56,851 57,625 49,883
2017 13,402 58,419 60,004 51,731
2018 14,255 62,224 63,720 54,606
2019(2) – – 66,619 56,490
(1) Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S. Bureau
of the Census. All dollar estimates are in current dollars (not adjusted for inflation).
(2) Preliminary figures, City and County figures not yet available.
Source: U.S. Department of Commerce, Bureau of Economic Analysis and the City of Lynwood.
Lynwood Public Financing Authority - Page 112 of 244 Agenda Item # 2
4837-5399-7255.4
A-24
Employment
The following table summarizes the labor force, employment and unemployment figures over the past
five years for the City, the County of Los Angeles, the State of California and the nation as a whole.
LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT
Yearly Average for Years 2015 through 2019
Year and Area Labor Force Employment(1) Unemployment(2)
Unemployment
Rate (%)(3)
2015
City of Lynwood 28,800 26,400 2,400 8.3
County of Los
Angeles
4,989,800 4,659,700 330,100 6.6
State of California 18,851,100 17,681,800 1,169,200 6.2
United States(4) 157,130,000 148,834,000 8,296,000 5.3
2016
City of Lynwood 28,800 27,000 1,900 6.5
County of Los
Angeles
5,041,400 4,776,700 264,800 5.3
State of California 19,044,500 18,002,800 1,041,700 5.5
United States(4) 159,187,000 151,436,000 7,751,000 4.9
2017
City of Lynwood 28,600 27,000 1,600 5.6
County of Los
Angeles
5,096,500 4,853,800 242,700 4.8
State of California 19,205,300 18,285,500 919,800 4.8
United States(4) 160,320,000 153,337,000 6,982,000 4.4
2018
City of Lynwood 28,800 27,200 1,600 5.5
County of Los
Angeles
5,136,300 4,896,500 239,800 4.7
State of California 19,398,200 18,582,800 815,400 4.2
United States(4) 162,075,000 155,761,000 6,314,000 3.9
2018
City of Lynwood 28,600 27,100 1,500 5.1
County of Los
Angeles
5,121,600 4,894,300 227,300 4.4
State of California 19,411,600 18,627,400 784,200 4.0
United States(4) 169,518,000 163,517,000 6,001,000 3.7
(1) Includes persons involved in labor-management trade disputes.
(2) Includes all persons without jobs who are actively seeking work.
(3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded
figures in this table.
(4) Not strictly comparable with data for prior years.
Note: Data is not seasonally adjusted.
Source: California Employment Development Department, based on March 2019 benchmark and U.S. Department of Labor,
Bureau of Labor Statistics.
Lynwood Public Financing Authority - Page 113 of 244 Agenda Item # 2
4837-5399-7255.4
A-25
The table below summarizes employment by industry in the Los-Angeles-Long Beach-Glendale
Metropolitan Statistical Area (“MSA”) from 2015 to 2019. Service Providing, Professional and Business
Services and Government are the largest employment sectors in the Los-Angeles-Long Beach-Glendale MSA.
LOS ANGELES-LONG BEACH-GLENDALE STATISTICAL AREA
Annual Average Industry Employment 2014-2018
2015 2016 2017 2018 2019
Total Farm 5,000 5,300 5,700 4,800 4,500
Total Nonfarm 4,285,800 4,394,600 4,448,300 4,510,100 4,566,900
Total Private 3,717,300 3,817,900 3,862,200 3,920,500 3,972,700
Goods Producing 497,300 497,100 490,300 491,600 490,500
Natural Resources and Mining 2,900 2,400 2,000 1,900 2,000
Construction 126,100 133,90 138,400 146,000 149,300
Manufacturing 368,200 360,800 349,900 343,700 339,200
Service Providing 3,788,500 3,897,400 3,958,000 4,018,500 4,076,500
Trade, Transportation and Utilities 822,200 835,600 845,700 850,900 851,500
Wholesale Trade 222,400 222,100 221,500 222,800 220,500
Retail Trade 422,200 424,600 426,100 425,300 417,300
Transportation, Warehousing and Utilities 177,600 188,900 198,200 202,800 213,800
Information 207,600 229,400 214,900 217,400 217,300
Financial Activities 215,600 219,800 221,600 223,000 223,900
Professional and Business Services 591,000 600,100 608,800 620,000 642,800
Educational and Health Services 745,900 772,700 800,600 823,600 843,600
Leisure and Hospitality 486,600 510,000 524,600 534,300 544,700
Other Services 151,000 153,300 155,700 159,700 158,400
Government 568,500 576,700 586,100 589,600 594,200
Total, All Industries 4,290,700 4,399,900 4,454,000 4,514,900 4,571,400
Source: State of California, Employment Development Department, Labor Market Information Division, Los Angeles-Long
Beach-Glendale Annual Average Labor Force and Industry Employment, March 2019 Benchmark.
Lynwood Public Financing Authority - Page 114 of 244 Agenda Item # 2
4837-5399-7255.4
A-26
Industry
The following tables list the top ten payers of the City’s business tax for the fiscal year ended
June 30, 2019:
City of Lynwood
Principal Business Tax Payers
Fiscal Year 2018-19
Rank Employer
1. St. Francis Medical Center
2. Lynwood Unified School District
3. LA County Sheriff Department
4. City of Lynwood
5. CA PostAcute Care
6. PL Development
7. Earle M. Jorgensen Company
8. Superior Warehouse Grocers Inc.
9. El Super
10. Lynwood Health Care
Source: City.
Commercial Activity
The following table summarizes the annual volume of taxable transactions within the City for the years
2015 through 2019.
CITY OF LYNWOOD
TABLE OF TAXABLE SALES BY CATEGORY
For the Years 2015 Through 2019
Adjusted for Economic Data
(000’s)
2015 2016 2017 2018 2019
Motor Vehicle and Parts Dealers $ 23,637,564 $ 25,495,979 $ 23,702,594 $ 23,316,405 $26,372,906
Home Furnishings and Appliance Stores 5,680,705 6,353,508 6,776,344 11,044,264 18,886,979
Building Material and Garden Equipment
and Supplies Dealers 25,351,726 25,567,196 32,762,100 37,310,049 35,742,564
Food and Beverage Stores 40,110,630 40,410,262 41,736,031 42,863,164 43,469,119
Gasoline Stations 54,691,515 47,626,413 51,542,653 63,082,200 68,351,824
Clothing and Clothing Accessories Stores 24,086,126 24,861,213 26,020,437 26,989,591 25,892,092
General Merchandise Stores 18,443,746 17,632,103 17,089,087 14,057,079 5,524,057
Food Services and Drinking Places 75,296,653 79,853,731 85,633,971 88,206,070 93,985,071
Other Retail Group 21,035,655 20,679,413 22,322,803 24,145,624 24,717,198
Total Retail and Food Services $288,334,320 $288,479,818 $307,586,020 $331,014,446 $342,941,810
All Other Outlets 40,840,649 4,3266,036 43,604,758 40,402,719 44,506,515
Total All Outlets $329,174,969 $331,745,854 $351,190,778 $371,417,165 $387,448,325
Sources: California Department of Tax and Fee Administration.
Lynwood Public Financing Authority - Page 115 of 244 Agenda Item # 2
4838-0506-0039.1
Recording Requested By And )
When Recorded Mail To: )
)
Nixon Peabody LLP )
300 South Grand Avenue, Suite 4100 )
Los Angeles, California 90071 )
Attention: Danny Kim, Esq. )
(Space above for Recorder's Use)
This document is recorded for the benefit of the City of Lynwood and the recording is fee-exempt
under Section 6103 of the California Government Code and the recording is exempt under Section
27383 of the California Government Code and Section 11928 of the California Revenue and
Taxation Code.
ASSIGNMENT AGREEMENT
by and between
LYNWOOD PUBLIC FINANCING AUTHORITY,
as Assignor
and
U.S. BANK NATIONAL ASSOCIATION,
as Trustee and Assignee
relating to the
$_________
Lynwood Public Financing Authority
Lease Revenue Bonds, Series 2020A (Federally Taxable)
Dated as of _________ 1, 2020
Lynwood Public Financing Authority - Page 116 of 244 Agenda Item # 2
4838-0506-0039.1
ASSIGNMENT AGREEMENT
This Assignment Agreement (the “Assignment Agreement”), executed and
entered into as of _________ 1, 2020, by and between the Lynwood Public Financing Authority
(the “Authority”), a joint powers authority duly organized and existing under and pursuant to
California Government Code Sections 6500 et seq. and U.S. Bank National Association (the
“Trustee”), a national banking association existing under and by virtue of the laws of the United
States of America, as trustee under the Indenture (as hereinafter defined);
W I T N E S S E T H:
WHEREAS, the Authority and the City of Lynwood (the “City”) have executed
and entered into the Facility Lease (the “Facility Lease”), dated as of _________ 1, 2020 (which
is recorded concurrently herewith), pursuant to which the Authority has leased that certain real
property, as more particularly described in the Facility Lease (the “Leased Property”) to the City,
as described in Exhibit A attached hereto and incorporated herein; and
WHEREAS, under and pursuant to the Facility Lease, the City is obligated to
make rental payments to the Authority for the lease of the Leased Property to it; and
WHEREAS, the Authority desires to assign without recourse all its rights to
receive the Base Rental Payments (as defined in the Facility Lease) and certain other payments
scheduled to be paid by the City under and pursuant to the Facility Lease to the Trustee; and
WHEREAS, in consideration of such assignment and the execution and entering
into of an Indenture (the “Indenture”), dated as of _________ 1, 2020, among the Trustee, the
City and the Authority, the Authority will issue its Lease Revenue Bonds, Series 2020A
(Federally Taxable), in the aggregate principal amount of $__________; and
WHEREAS, all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in connection with the execution and
entering into of this Assignment Agreement do exist, have happened and have been performed in
regular and due time, form and manner as required by law, and the parties hereto are now duly
authorized to execute and enter into this Assignment Agreement;
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF
THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR
OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE
AS FOLLOWS:
SECTION 1. Assignment. The Authority, for good and valuable consideration,
the receipt of which is hereby acknowledged, does hereby unconditionally grant, transfer and
assign to the Trustee without recourse (i) all its rights to receive the Base Rental Payments (as
defined in the Facility Lease) under and pursuant to the Facility Lease, (ii) the right to take all
actions under the Facility Lease, (iii) the right of access more particularly described in the
Facility Lease, and (iv) any and all other rights and remedies of the Authority in the Facility
Lease as lessor thereunder; provided, that so long as no default in payment of Base Rental
Payments under the Facility Lease shall have occurred or be continuing, the Authority shall have
Lynwood Public Financing Authority - Page 117 of 244 Agenda Item # 2
4838-0506-0039.1
2
and may exercise all rights of the Authority under the Facility Lease other than the right to
receive the Base Rental Payments.
SECTION 2. Acceptance. The Trustee hereby accepts the foregoing assignment
for the benefit of the owners of the Bonds, as defined in the Indenture, subject to the conditions
and terms of the Indenture, and all such Base Rental Payments shall be applied and all such
rights so assigned shall be exercised by the Trustee as provided in the Indenture.
SECTION 3. Conditions. This Assignment Agreement shall confer no rights
and shall impose no obligations upon the Trustee beyond those expressly provided in the
Indenture.
SECTION 4. California Law. This Assignment Agreement shall be governed
by and construed and interpreted in accordance with the laws of the State of California.
SECTION 5. Severability. If any agreement, condition, covenant or term
hereof or any application hereof should be held by a court of competent jurisdiction to be invalid,
void or unenforceable, in whole or in part, all agreements, conditions, covenants and terms
hereof and all applications thereof not held invalid, void or unenforceable shall continue in full
force and effect and shall in no way be affected, impaired or invalidated thereby.
SECTION 6. Execution in Counterparts. This Assignment Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same Assignment Agreement.
[This space intentionally left blank]
Lynwood Public Financing Authority - Page 118 of 244 Agenda Item # 2
4838-0506-0039.1
3
IN WITNESS WHEREOF, the parties hereto have executed and entered into
this Assignment Agreement by their officers thereunto duly authorized as of the day and year
first above written.
LYNWOOD PUBLIC FINANCING
AUTHORITY
By:
Chief Administrative Officer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Signatory
Lynwood Public Financing Authority - Page 119 of 244 Agenda Item # 2
4838-0506-0039.1
A-1
EXHIBIT A
DESCRIPTION OF LEASED PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF
LYNWOOD, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS
DESCRIBED AS FOLLOWS:
Lynwood Public Financing Authority - Page 120 of 244 Agenda Item # 2
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On ________, 2020, before me, __________, Notary Public, personally appeared
_____________, who proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature [SEAL]
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
Lynwood Public Financing Authority - Page 121 of 244 Agenda Item # 2
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On _____________, 2020, before me, , Notary Public, personally
appeared ________________________, who proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature [SEAL]
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
Lynwood Public Financing Authority - Page 122 of 244 Agenda Item # 2
4814-4662-8551.1
CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (this “Disclosure Agreement”) is executed and delivered by the
City of Lynwood (the “City”) and Willdan Financial Services, as dissemination agent (the “Dissemination Agent”),
in connection with the issuance of $__________ Lynwood Public Financing Authority Lease Revenue Bonds,
Series 2020A (Federally Taxable), (the “Bonds”). The Bonds are being issued pursuant to an Indenture, dated as
of _________ 1, 2020 (the “Indenture”), among the Lynwood Public Financing Authority (the “Authority”), the
City and U.S. Bank, National Association, as trustee. Pursuant to the Indenture, the City and the Dissemination
Agent covenant and agree as follows:
Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and
delivered by the City for the benefit of the Beneficial Owners of the Bonds and to assist the Participating
Underwriter in complying with the Rule (as defined herein).
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any
capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following
capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the City pursuant to, and as described in,
Sections 3 and 4 of this Disclosure Agreement.
“Audited Financial Statements” means the audited financial results of the City for the applicable Fiscal
Year.
“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or
consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through
nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income
tax purposes.
“Business Day” shall mean a day, other than (a) Saturday or Sunday and (c) a day on which the New
York Stock Exchange is authorized or obligated by law or executive order to be closed.
“Disclosure Representative” shall mean the designee of the City designated to act as the Disclosure
Representative, or such other person as the City shall designate in writing to the Dissemination Agent from time
to time.
“Dissemination Agent” means an entity selected and retained by the City, or any successor thereto
selected by the City. The initial Dissemination Agent shall be Willdan Financial Services.
“EMMA” shall mean the Municipal Securities Rulemaking Board’s Electronic Municipal Market
Access System for Municipal Securities disclosures, maintained on the internet at http://emma.msrb.org.
“Listed Events” shall mean any of the events listed in Section 5(a) and (b) of this Disclosure Agreement.
“MSRB” shall mean the Municipal Securities Rulemaking Board established pursuant to
Section 15B(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the
SEC to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the SEC, filings with
the MSRB are to be made through the EMMA website of the MSRB, currently located at http://emma.msrb.org.
“Participating Underwriter” shall mean any original underwriter of the Bonds required to comply with
the Rule in connection with offering of the Bonds.
Lynwood Public Financing Authority - Page 123 of 244 Agenda Item # 2
4814-4662-8551.1
2
“Repository” shall mean, until otherwise designated by the SEC, EMMA.
“Rule” shall mean Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934, as
amended from time to time.
“State” shall mean the State of California.
“SEC” shall mean the U.S. Securities and Exchange Commission.
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than nine (9) months after
the end of each fiscal year, commencing with the fiscal year ending June 30, 2020, provide to the Repository an
Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual
Report may be submitted as a single document or as separate documents comprising a package, and may include
by reference other information as provided in Section 4 of this Disclosure Agreement. If the City’s fiscal year
changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(e).
(b) Not later than one Business Day prior to the date specified in subsection (a) for providing the
Annual Report to the Repository, the City shall provide the Annual Report to the Dissemination Agent (if other
than the City). The City shall provide, or cause the preparer of the Annual Report to provide, a written certificate
with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes
the Annual Report required to be furnished to it hereunder. The Dissemination Agent may conclusively rely
upon such certification and shall have no duty or obligation to review such Annual Report.
(c) If the City is unable to provide to the Repository an Annual Report by the date required in
subsection (a), the City in a timely manner shall send, or shall cause the Dissemination Agent to send, a notice
to the Repository or to the MSRB, in substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) determine the electronic filing address of, and then-current procedures for submitting
Annual Reports to, the MSRB each year prior to the date for providing the Annual
Report; and
(ii) file a report with the City certifying that the Annual Report has been provided to the
MSRB pursuant to this Disclosure Agreement, and stating the date it was provided.
Section 4. Content of Annual Reports. The Annual Report shall contain or include by reference the
following:
(a) The Audited Financial Statements of the City for the prior Fiscal Year, prepared in accordance
with generally accepted accounting principles as promulgated to apply to governmental entities from time to
time by the Governmental Accounting Standards Board. If the Audited Financial Statements are not available
by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain
unaudited financial statements in a format similar to the financial statements contained in the final Official
Statement, dated November 7, 2019 relating to the Bonds (the “Official Statement”) and the Audited Financial
Statements shall be filed in the same manner as the Annual Report when such Audited Financial Statements
become available.
(b) Updated information set forth in the following tables in [Appendix A to the Official Statement
titled: “TABLE 1—City of Lynwood General Fund Budgets,” “TABLE 2—Revenues, Expenditures and Change
in Fund Balance Five Year Comparison,” “TABLE 3—General Fund Balance Sheets Five Year Comparison,”
Lynwood Public Financing Authority - Page 124 of 244 Agenda Item # 2
4814-4662-8551.1
3
“TABLE 4—Selected Major Revenue Sources,” “TABLE 5—Assessed Valuation,” “TABLE 6—Secured
Property Tax Levies and Collections,” and “TABLE 7—Principal Property Taxpayers.”]
Any or all of the items listed above may be included by specific reference to other documents, including official
statements of debt issues of the City or related public entities, which have been submitted to the Repository or
the SEC. If the document included by reference is a final official statement, it must be available from the
Municipal Securities Rulemaking Board. The City shall clearly identify each such other document so included
by reference.
Section 5. Reporting of Listed Events. The City shall give, or cause to be given, notice of the
occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10)
Business Days after the event:
(1) principal and interest payment delinquencies;
(2) non-payment related defaults, if material;
(3) unscheduled draws on debt service reserves reflecting financial difficulties;
(4) unscheduled draws on credit enhancements reflecting financial difficulties;
(5) substitution of credit or liquidity providers, or their failure to perform;
(6) adverse tax opinions, the issuance by the Internal Revenue Service of a proposed or
final determination of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or
other material notices or determinations with respect to the tax- status of the Bonds, or
other material events affecting the tax status of the Bonds;
(7) modifications to the rights of Bond holders, if material;
(8) bond calls, if material, and tender offers;
(9) defeasances;
(10) release, substitution or sale of property securing repayment of the Bonds, if material;
(11) rating changes;
(12) bankruptcy, insolvency, receivership or similar event of the City;
For these purposes, any event described in the immediately preceding paragraph (12) is considered to
occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City
in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law
in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or
business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials
or officers in possession but subject to the supervision and orders of a court or governmental authority, or the
entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental
authority having supervision or jurisdiction over substantially all of the assets or business of the City.
(13) consummation of a merger, consolidation or acquisition involving the City or the sale
of all or substantially all of the assets of the City, other than in the ordinary course of
business, the entry into a definitive agreement to undertake such an action or the
Lynwood Public Financing Authority - Page 125 of 244 Agenda Item # 2
4814-4662-8551.1
4
termination of a definitive agreement relating to any such actions, other than pursuant
to its terms, if material;
(14) appointment of a successor or additional trustee or the change of the name of a trustee,
if material;
(15) incurrence of a financial obligation of the City, or agreement to covenants, events of
default, remedies, priority rights, or other similar terms of a financial obligation of the
City, any of which affect Bond holders, if material; and
(16) default, event of acceleration, termination event, modification of terms, or other similar
events under the terms of a financial obligation of the obligated person, any of which
reflect financial difficulties.
The term financial obligation means a (i) debt obligation; (ii) derivative instrument entered into in
connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (3)
guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final
official statement has been provided to the MSRB consistent with the Rule.
Section 6. Filings with the MSRB. All information, operating data, financial statements, notices and
other documents provided to the MSRB in accordance with this Disclosure Agreement shall be provided in an
electronic format prescribed by the MSRB and shall be accompanied by identifying information as prescribed
by the MSRB.
Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure
Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If
such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in
the same manner as for a Listed Event under Section 5(e).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination
Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such
Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent
may resign by providing thirty (30) days written notice to the City.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement,
the City may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived,
provided that in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by
the Rule.
Section 10. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent
the City from disseminating any other information, using the means of dissemination set forth in this Disclosure
Agreement or any other means of communication, or including any other information in any Annual Report or
notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If
the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in
addition to that which is specifically required by this Disclosure Agreement, the City shall have no obligation
under this Disclosure Agreement to update such information or include it in any future Annual Report or notice
of occurrence of a Listed Event.
Section 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure
Agreement, any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and
appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with
its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed
an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of
Lynwood Public Financing Authority - Page 126 of 244 Agenda Item # 2
4814-4662-8551.1
5
any failure of the City or the Dissemination Agent to comply with this Disclosure Agreement shall be an action
to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent
shall have only such duties as are specifically set forth in this Disclosure Agreement, and the City agrees
to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against
any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their
respective powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending
against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful
misconduct. The Dissemination Agent shall be paid compensation by the City for its services provided
hereunder in accordance with its schedule of fees as amended from time to time, and all expenses, legal fees
and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The
Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and
shall not be deemed to be acting in any fiduciary capacity for the City, the Authority, the Trustee, the Holders,
or any other party. The obligations of the City under this Section shall survive resignation or removal of the
Dissemination Agent and payment of the Bonds.
Section 13. Notices. Any notices or communications herein required or permitted to be given shall be
in writing and shall be delivered in such manner and to such addresses as are specified in the Indenture.
[Remainder of Page Intentionally Left Blank]
Lynwood Public Financing Authority - Page 127 of 244 Agenda Item # 2
4814-4662-8551.1
6
Section 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the
Dissemination Agent, the Participating Underwriter and the Owners from time to time of the Bonds, and shall
create no rights in any other person or entity.
Date: __________, 2020
CITY OF LYNWOOD
By:
City Manager
WILLDAN FINANCIAL SERVICES
By:
Authorized Officer
Lynwood Public Financing Authority - Page 128 of 244 Agenda Item # 2
4814-4662-8551.1
A-1
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Party: City of Lynwood (the “City”)
Name of Issue: $__________ Lynwood Public Financing Authority Lease Revenue Bonds,
Series 2020A (Federally Taxable)
Date of Issuance: ___________, 2020
NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with
respect to the above-captioned Bonds as required by the Continuing Disclosure Agreement, dated
as of __________ 1, 2020, between the City and Willdan Financial Services. The City anticipates
that the Annual Report will be filed by [date].
Dated: __________, 20__
Willdan Financial Services,
as Dissemination Agent
cc: City of Lynwood
Lynwood Public Financing Authority - Page 129 of 244 Agenda Item # 2
4828-6835-3991.1
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Nixon Peabody LLP
300 South Grand Avenue, Suite 4100
Los Angeles, California 90071
Attention: Danny Kim, Esq.
(Space above for Recorder’s use)
This document is recorded for the benefit of the City of Lynwood and the recording is fee-exempt
under Section 6103 of the California Government Code and the recording is exempt under Section
27383 of the California Government Code and Section 11928 of the California Revenue and
Taxation Code.
FACILITY LEASE
by and between the
LYNWOOD PUBLIC FINANCING AUTHORITY,
as Lessor
and the
CITY OF LYNWOOD,
as Lessee
relating to the
$___________
Lynwood Public Financing Authority
Lease Revenue Bonds, Series 2020A (Federally Taxable)
Dated as of _______ 1, 2020
Lynwood Public Financing Authority - Page 130 of 244 Agenda Item # 2
4828-6835-3991.1
TABLE OF CONTENTS
Page
-i-
ARTICLE I DEFINITIONS ........................................................................................................... 2
Section 1.01 Definitions ................................................................................................ 2
ARTICLE II THE LEASED PROPERTY ..................................................................................... 4
Section 2.01 Lease of the Leased Property ................................................................... 4
Section 2.02 Quiet Enjoyment ....................................................................................... 4
Section 2.03 Right of Entry and Inspection ................................................................... 4
Section 2.04 Prohibition Against Encumbrance or Sale ............................................... 4
Section 2.05 Liens ......................................................................................................... 5
Section 2.06 Substitution or Removal of Leased Property ............................................ 5
ARTICLE III TERM OF THE FACILITY LEASE ....................................................................... 6
Section 3.01 Commencement of the Facility Lease ...................................................... 6
ARTICLE IV USE OF PROCEEDS; TAX COVENANTS ........................................................... 7
Section 4.01 Use of Proceeds ........................................................................................ 7
Section 4.02 Tax Covenants .......................................................................................... 7
ARTICLE V RENTAL PAYMENTS ............................................................................................ 8
Section 5.01 Rental Payments ....................................................................................... 8
Section 5.02 Annual Budgets; Reporting Requirements ............................................. 10
Section 5.03 Application of Rental Payments ............................................................. 10
Section 5.04 Rental Abatement ................................................................................... 11
Section 5.05 Prepayment of Rental Payments ............................................................. 11
Section 5.06 Obligation to Make Rental Payments ..................................................... 12
Section 5.07 Additional Bonds .................................................................................... 12
ARTICLE VI MAINTENANCE; TAXES; INSURANCE AND OTHER CHARGES .............. 12
Section 6.01 Maintenance of the Leased Property by the City ................................... 12
Section 6.02 Taxes, Other Governmental Charges and Utility Charges ..................... 13
Section 6.03 Insurance ................................................................................................. 13
Section 6.04 Advances ................................................................................................ 14
Section 6.05 Title Insurance ........................................................................................ 15
Lynwood Public Financing Authority - Page 131 of 244 Agenda Item # 2
4828-6835-3991.1
TABLE OF CONTENTS
(continued)
Page
-ii-
ARTICLE VII DAMAGE, DESTRUCTION, TITLE DEFECT AND
CONDEMNATION ...................................................................................................................... 15
Section 7.01 Damage, Destruction, Title Defect and Condemnation; Use of
Net Proceeds ........................................................................................... 15
ARTICLE VIII DISCLAIMER OF WARRANTIES; VENDOR’S WARRANTIES; USE
OF THE LEASED PROPERTY ................................................................................................... 16
Section 8.01 Disclaimer of Warranties ........................................................................ 16
Section 8.02 Use of the Leased Property; Improvements ........................................... 16
ARTICLE IX ASSIGNMENT AND INDEMNIFICATION ....................................................... 16
Section 9.01 Assignment by Authority ....................................................................... 16
Section 9.02 Assignment by City ................................................................................ 17
Section 9.03 Indemnification ....................................................................................... 17
ARTICLE X DEFAULT............................................................................................................... 17
Section 10.01 Default .................................................................................................... 17
ARTICLE XI MISCELLANEOUS .............................................................................................. 20
Section 11.01 Notices .................................................................................................... 20
Section 11.02 Binding Effect ........................................................................................ 21
Section 11.03 Trustee and Insurer as Third Party Beneficiary ...................................... 21
Section 11.04 Net Lease ................................................................................................ 21
Section 11.05 Amendments ........................................................................................... 21
Section 11.06 Discharge of City .................................................................................... 22
Section 11.07 Partial Invalidity ..................................................................................... 22
Section 11.08 California Law ........................................................................................ 23
Section 11.09 Headings ................................................................................................. 23
Section 11.10 Execution ................................................................................................ 23
Section 11.11 Bond Insurance Provisions ..................................................................... 23
EXHIBIT A DESCRIPTION OF LEASED PROPERTY ....................................................... A-1
EXHIBIT B BASE RENTAL PAYMENTS SCHEDULE ..................................................... B-1
Lynwood Public Financing Authority - Page 132 of 244 Agenda Item # 2
4828-6835-3991.1
FACILITY LEASE
This Facility Lease (this “Facility Lease”), executed and entered into as of _______
1, 2020, by and between the LYNWOOD PUBLIC FINANCING AUTHORITY, a joint powers
authority duly organized and existing under and by virtue of the laws of the State of California
(the “Authority”), as lessor, and the CITY OF LYNWOOD, a political subdivision duly organized
and existing under the Constitution and laws of the State of California (the “City”), as lessee;
W I T N E S S E T H:
WHEREAS, concurrently with the execution of this Facility Lease, the City and
the Authority are entering into a Site Lease (the “Site Lease”), dated as of _______ 1, 2020 (which
is recorded concurrently herewith), whereby the Authority will lease certain real property and the
improvements thereon from the City, more particularly described in Exhibit A attached hereto (the
“Real Property”), (such Real Property and the improvements thereon being collectively referred
to herein as the “Leased Property”);
WHEREAS, the City will then sublease the Leased Property back from the
Authority pursuant to this Facility Lease;
WHEREAS, concurrently with the execution of this Facility Lease the Authority,
the City and U.S. Bank National Association, as trustee (the “Trustee”), are entering into an
Indenture, dated as of _______ 1, 2020 (the “Indenture”);
WHEREAS, the City desires to finance certain working capital for the City’s
general fund;
WHEREAS, to provide funds for the financing of working capital for the City’s
general fund, the Authority will issue its Lease Revenue Bonds, Series 2020A (Federally Taxable)
(the “Series 2020A Bonds”), in the aggregate principal amount of $__________;
WHEREAS, the Series 2020A Bonds will be secured by the payments to be made
by the City pursuant to this Facility Lease;
WHEREAS, the City is authorized by law to sublease the Leased Property and the
Leased Property is necessary and proper for public purposes; and
WHEREAS, all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in connection with the execution and
entering into of this Facility Lease do exist, have happened and have been performed in regular
and due time, form and manner as required by law, and the parties hereto are now duly authorized
to execute and enter into this Facility Lease;
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE
MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER
VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS
FOLLOWS:
Lynwood Public Financing Authority - Page 133 of 244 Agenda Item # 2
4828-6835-3991.1
2
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Unless the context otherwise requires, the terms
defined in this Section shall for all purposes hereof and of any amendment hereof have the
meanings defined herein, the following definitions to be equally applicable to both the singular
and plural forms of any of the terms defined herein. All other capitalized terms used herein without
definition shall have the meanings as set forth in the Indenture.
Additional Payments
“Additional Payments” means all amounts payable by the City pursuant to Section
5.01(b) hereof.
Base Rental Payment Date
The term “Base Rental Payment Date” means the date fifteen days preceding each
Interest Payment Date.
Base Rental Payments
“Base Rental Payments” means all amounts payable by the City as Base Rental
pursuant to Section 5.01(a) hereof.
Expiry Date
“Expiry Date” means ___________.
Insurance Consultant
“Insurance Consultant” means an individual or firm retained by the City as an
independent insurance consultant, experienced in the field of risk management.
Insurer
“Insurer” means __________________, or any successor thereto or assignee
thereof.
Leased Property
“Leased Property” means the Real Property and the improvements thereon (as the
same may be changed from time to time by Removal or Substitution).
Lease Year
The term “Lease Year” means the period from each _____ to and including the
following ______ during the term hereof; provided that the final Lease Year shall terminate on the
Expiry Date.
Lynwood Public Financing Authority - Page 134 of 244 Agenda Item # 2
4828-6835-3991.1
3
Net Proceeds
The term “Net Proceeds” means any insurance or eminent domain award (including any
proceeds of sale to a governmental entity under threat of the exercise of eminent domain powers),
paid with respect to the Leased Property, to the extent remaining after payment therefrom of all
expenses incurred in the collection thereof.
Permitted Encumbrances
“Permitted Encumbrances” means, as of any particular time: (i) liens for general
ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to
Section 6.02, permit to remain unpaid; (ii) the Assignment Agreement, as it may be amended from
time to time; (iii) this Facility Lease, as it may be amended from time to time; (iv) the Site Lease,
as it may be amended from time to time; (v) the Indenture, as it may be amended from time to
time; (vi) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or
perfected in the manner prescribed by law; (vii) easements, rights of way, mineral rights, drilling
rights and other rights, reservations, covenants, conditions or restrictions which exist of record as
of the date of recordation of the Facility Lease in the office of the County Recorder of the County
of Los Angeles; (viii) easements, rights of way, mineral rights, drilling rights and other rights,
reservations, covenants, conditions or restrictions, all of a non-monetary nature, established
following the date of recordation of this Facility Lease and to which the Authority and the City
consent in writing and certify to the Trustee and the Insurer will not materially impair the
ownership interests of the Authority or use of the Facilities by the City; and (ix) subleases and
assignments of the City which will not adversely affect the exclusion from gross income of interest
on the Bonds.
Real Property
“Real Property” means the real property described in Exhibit A hereto.
Removal
“Removal” means the release of all or a portion of the Leased Property from the
leasehold hereof and of the Site Lease as provided in Section 2.06.
Site Lease
“Site Lease” means that certain Site Lease, executed and entered into as of _______
1, 2020 (which is recorded concurrently herewith), by and between the City and the Authority, as
originally executed and entered into and as it may from time to time be amended in accordance
herewith and therewith.
Lynwood Public Financing Authority - Page 135 of 244 Agenda Item # 2
4828-6835-3991.1
4
Substitution
“Substitution” means the release of all or a portion of the Leased Property from the
leasehold hereof and of the Site Lease, and the lease of substituted real property and improvements
hereunder and under the Site Lease as provided in Section 2.06.
The singular form of any word used herein, including the terms defined in this
Section 1.01, shall include the plural, and vice versa, unless the context otherwise requires. The
use herein of a pronoun of any gender shall include correlative words of the other genders. All
references herein to “Sections” and other subdivisions hereof are to the corresponding Sections or
subdivisions of this Facility Lease as originally executed; and the words “herein,” “hereof,”
“hereunder” and other words of similar import refer to this Facility Lease as a whole and not to
any particular Section or subdivision hereof.
ARTICLE II
THE LEASED PROPERTY
Section 2.01 Lease of the Leased Property. The Authority hereby leases to the
City, and the City hereby rents and hires from the Authority, the Leased Property on the conditions
and terms hereinafter set forth. The City hereby agrees and covenants that during the term hereof,
except as hereinafter provided, it will use the Leased Property for public purposes so as to afford
the public the benefits contemplated hereby and so as to permit the Authority to carry out its
agreements and covenants contained herein and in the Indenture, and the City hereby further agrees
and covenants that during the term hereof that it will not abandon or vacate the Leased Property.
Section 2.02 Quiet Enjoyment. The parties hereto mutually covenant that the
City, so long as it observes and performs the agreements, conditions, covenants and terms required
to be observed or performed by it contained herein and is not in default hereunder, shall at all times
during the term hereof peaceably and quietly have, hold and enjoy the Leased Property without
suit, trouble or hindrance from the Authority.
Section 2.03 Right of Entry and Inspection. The Authority shall have the right
to enter the Leased Property and inspect the Leased Property during reasonable business hours
(and in emergencies at all times) for any purpose connected with the Authority’s rights or
obligations hereunder and for all other lawful purposes.
Section 2.04 Prohibition Against Encumbrance or Sale. The City and the
Authority will not create or suffer to be created any mortgage, pledge, lien, charge or encumbrance
upon the Leased Property, except Permitted Encumbrances, and except incident to the execution
and delivery of Additional Bonds as contemplated by Section 5.07 hereof. The City and the
Authority will not sell or otherwise dispose of the Leased Property or any property essential to the
proper operation of the Leased Property, except as otherwise provided herein. Notwithstanding
anything to the contrary herein contained, the City may assign, transfer or sublease any and all of
the Leased Property or its other rights hereunder, with the prior written consent of the Insurer,
provided that (a) the rights of any assignee, transferee or sublessee shall be subordinate to all rights
of the Authority hereunder, (b) no such assignment, transfer or sublease shall relieve the City of
Lynwood Public Financing Authority - Page 136 of 244 Agenda Item # 2
4828-6835-3991.1
5
any of its obligations hereunder, (c) the assignment, transfer or sublease shall not result in a breach
of any covenant of the City contained in any other Section hereof, (d) any such assignment, transfer
or sublease shall by its terms expressly provide that the fair rental value of the Leased Property for
all purposes shall be first allocated to this Facility Lease, as the same may be amended from time
to time before or after any such assignment, transfer or sublease and (e) no such assignment,
transfer or sublease shall confer upon the parties thereto any remedy which allows reentry upon
the Leased Property unless concurrently with granting such remedy the same shall be also granted
hereunder by an amendment to this Facility Lease which shall in all instances be prior to and
superior to any such assignment, transfer or sublease.
Section 2.05 Liens. In the event the City shall at any time during the term hereof
cause any improvements to the Leased Property to be constructed or materials to be supplied in or
upon or attached to the Leased Property, the City shall pay or cause to be paid when due all sums
of money that may become due or purporting to be due for any labor, services, materials, supplies
or equipment furnished or alleged to have been furnished to or for the City in, upon, about or
relating to the Leased Property and shall keep the Leased Property free of any and all liens against
the Leased Property or the Authority’s interest therein. In the event any such lien attaches to or is
filed against the Leased Property or the Authority’s interest therein, and the enforcement thereof
is not stayed or if so stayed such stay thereafter expires, the City shall cause each such lien to be
fully discharged and released at the time the performance of any obligation secured by any such
lien matures or becomes due. If any such lien shall be reduced to final judgment and such judgment
or any process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed
and such stay thereafter expires, the City shall forthwith pay and discharge or cause to be paid and
discharged such judgment. The City shall, to the maximum extent permitted by law, indemnify
and hold the Authority and its assignee and its directors, officers and employees harmless from,
and defend each of them against, any claim, demand, loss, damage, liability or expense (including
attorneys’ fees) as a result of any such lien or claim of lien against the Leased Property or the
Authority’s interest therein.
Section 2.06 Substitution or Removal of Leased Property.
(a) The City may amend this Facility Lease and the Site Lease to substitute
other real property and/or improvements (the “Substituted Property”) for existing Leased Property
and/or to remove real property (including undivided interests therein) and/or improvements from
the definition of Leased Property, and upon compliance with all of the conditions set forth in
subsection (b) below. After a Substitution or Removal, the part of the Leased Property for which
the Substitution or Removal has been effected shall be released from the leasehold hereunder and
under the Site Lease.
(b) No Substitution or Removal shall take place hereunder until the City
delivers to the Authority, the Insurer and the Trustee the following:
(1) A Certificate of the City containing a description of all or part of the
Leased Property to be released and, in the event of a Substitution, a description of the
Substituted Property to be substituted in its place;
Lynwood Public Financing Authority - Page 137 of 244 Agenda Item # 2
4828-6835-3991.1
6
(2) A Certificate of the City (A) stating that the annual fair rental value
of the Leased Property after a Substitution or Removal, in each year during the remaining
term of this Facility Lease, is at least equal to the maximum annual Base Rental Payments
payable hereunder attributable to the Leased Property prior to said Substitution or
Removal, as determined by the City on the basis of commercially reasonable evidence of
the fair rental value of the Leased Property after said Substitution or Removal;
(B) demonstrating that the useful life of the Leased Property after Substitution or Removal
equals or exceeds the remaining term of this Facility Lease;
(3) An Opinion of Counsel addressed to the City, the Authority and the
Trustee and the Insurer to the effect that the amendments hereto and to the Site Lease
contemplating Substitution or Removal have been duly authorized, executed and delivered
and constitute the valid and binding obligations of the City and the Authority enforceable
in accordance with their terms;
(4) (A) In the event of a Substitution, a policy of title insurance in an
amount equal to the same proportion of the principal amount as the principal portion of the
Base Rental Payments for the Substituted Property bears to the total principal portion of
the Base Rental Payments payable hereunder, insuring the City’s leasehold interest in the
Substituted Property (except any portion thereof which is not real property) subject only to
Permitted Encumbrances, together with an endorsement thereto making said policy
payable to the Trustee for the benefit of the Owners of the Series 2020A Bonds and any
Additional Bonds, and (B) in the event of a partial Removal, evidence that the title
insurance in effect immediately prior thereto is not affected;
(5) In the event of a Substitution, an opinion of the City Attorney of the
City to the effect that the exceptions, if any, contained in the title insurance policy referred
to in (4) above do not interfere with the beneficial use and occupancy of the Substituted
Property described in such policy by the City for the purposes of leasing or using the
Substituted Property;
(6) Evidence that the City has complied with the covenants contained
in clauses (1) and (2) of Section 6.03 hereof with respect to the Substituted Property; and
(7) The Insurer has delivered its prior written consent to the Substitution
or the Removal.
ARTICLE III
TERM OF THE FACILITY LEASE
Section 3.01 Commencement of the Facility Lease. The effective date of this
Facility Lease is the Closing Date, and the term of this Facility Lease shall expire on the later of
(i) the Expiry Date; (ii) the date the last Base Rental Payment is made under the provisions hereof;
or (iii) the date of discharge of all of the Bonds pursuant to Article X of the Indenture.
Notwithstanding the foregoing, the term of this Facility Lease shall automatically be extended for
a period of ten (10) years, if, on the Expiry Date, the Base Rental Payments have not been fully
Lynwood Public Financing Authority - Page 138 of 244 Agenda Item # 2
4828-6835-3991.1
7
paid or prepaid and any Additional Payment have not paid in full, and shall terminate on the date
when the Base Rental Payments and Additional Payments have been fully paid or prepaid in
accordance with the terms hereof.
ARTICLE IV
USE OF PROCEEDS; TAX COVENANTS
Section 4.01 Use of Proceeds. The parties hereto agree that the proceeds of the
Series 2020A Bonds will be used by the Authority to finance the working capital for the City’s
general fund, to pay the premiums of the Policy and the Reserve Policy and to pay costs of issuance
of the Series 2020A Bonds, as more fully set forth in the Indenture.
Section 4.02 Tax Covenants.
(a) The City will not take any action, or fail to take any action, if such action
or failure to take such action would adversely affect the exclusion from gross income of the interest
on the Tax-Exempt Bonds pursuant to Section 103 of the Code, and specifically the City will not
directly or indirectly use or make any use of the proceeds of the Tax-Exempt Bonds or any other
funds of the City or take or omit to take any action that would cause the Tax-Exempt Bonds to be
“arbitrage bonds” subject to federal income taxation by reason of Section 148 of the Code or
“private activity bonds” subject to federal income taxation by reason of Section 141(a) of the Code
or obligations subject to federal income taxation because they are “federally guaranteed” as
provided in Section 149(b) of the Code; and to that end the City, with respect to the proceeds of
the Tax-Exempt Bonds and such other funds, will comply with all requirements of such sections
of the Code to the extent that such requirements are, at the time, applicable and in effect; provided,
that if the City shall obtain an Opinion of Counsel to the effect that any action required under this
section is no longer required, or to the effect that some further action is required, to maintain the
exclusion from gross income of the interest on the Tax-Exempt Bonds pursuant to Section 103 of
the Code, the City may rely conclusively on such opinion in complying with the provisions hereof.
In the event that at any time the City is of the opinion that for purposes of this section it is necessary
to restrict or limit the yield on the investment of any moneys held by the Trustee under the
Indenture or otherwise the City shall so instruct the Trustee in writing, and the Trustee shall take
such action in accordance with such instructions.
(b) To the ends covenanted in this section, the City hereby specifically agrees
to ensure that the following requirements are met:
(1) The City will not invest or allow to be invested proceeds of the Tax-
Exempt Bonds at a yield in excess of the yield on the Tax-Exempt Bonds, except to the
extent allowed under the Tax Certificate.
(2) The City will rebate or cause to be rebated any amounts due to the
federal government, as provided in the Tax Certificate.
Lynwood Public Financing Authority - Page 139 of 244 Agenda Item # 2
4828-6835-3991.1
8
ARTICLE V
RENTAL PAYMENTS
Section 5.01 Rental Payments. The City agrees to pay to the Authority, its
successors or assigns, without deduction or offset of any kind, as rental for the use and occupancy
of the Leased Property, the following amounts at the following times:
(a) Base Rental. Subject to the immediately following sentence, the
City shall pay to the Authority rental hereunder as Base Rental Payments for the use and
occupancy of the Leased Property for each Lease Year or portion thereof, at the times and
in the amounts set forth in the Base Rental Payment Schedule attached hereto as Exhibit
B, and made a part hereof.
The interest components of the Base Rental Payments shall be paid by the
City as and constitute interest paid on the principal components of the Base Rental
Payments to be paid by the City hereunder. The obligation to make the Base Rental
Payments set forth on Exhibit B attached hereto shall commence as of the Closing Date.
If the term of this Facility Lease shall have been extended pursuant to
Section 3.01 hereof, Base Rental Payment installments shall continue to be payable on the
Base Rental Payment Dates, continuing to and including the date of termination of this
Facility Lease. Upon such extension of this Facility Lease, the City shall deliver to the
Trustee a Certificate setting forth the extended rental payment schedule, which schedule
shall establish the Base Rental Payments at an amount sufficient to pay all unpaid principal
and interest on the Bonds.
(b) Additional Payments. The City shall also pay in addition to the Base
Rental Payments, to the Authority or the Trustee, as hereinafter provided, such amounts
(“Additional Payments”) in each year as shall be required for the payment of all costs and
expenses incurred in connection with the execution, performance or enforcement of this
Facility Lease or the assignment hereof, the Indenture, or the respective interests in the
Leased Property and the lease of the Leased Property by the Authority to the City
hereunder, including but not limited to all fees, costs and expenses and all administrative
costs of the Authority relating to the Leased Property including, without limiting the
generality of the foregoing, salaries and wages of employees, overhead, insurance
premiums, taxes and assessments (if any), rebate payments, expenses, compensation and
indemnification of the Trustee (to the extent not paid or otherwise provided for out of the
proceeds of the sale of the Bonds), fees of auditors, accountants, attorneys or engineers,
insurance premiums, and all other reasonable and necessary administrative costs of the
Authority or charges required to be paid by it to comply with the terms of the Bonds or the
Indenture. The Authority also agrees to make payment of amounts due and payable to the
Insurer under this Facility Lease or the Indenture in respect of the Reserve Fund Policy or
the Policy not payable as Base Rental Payments.
Lynwood Public Financing Authority - Page 140 of 244 Agenda Item # 2
4828-6835-3991.1
9
Such Additional Payments shall be billed to the City by the Authority, the
Insurer or the Trustee from time to time. Amounts so billed shall be paid by the City within
sixty (60) days after receipt of the bill by the City.
Notwithstanding anything herein to the contrary, so long as the Policy and
the Reserve Policy are in effect and the Insurer is not in default in respect of its payment
obligations thereunder, the City shall be obligated to pay, as Additional Payments, to the
Trustee for deposit to the Reserve Fund an amount necessary to replenish the Reserve Fund
to the Reserve Requirement. Such payment shall be made on a priority immediately
subordinate to payment of debt service on the Series 2020A Bonds or any Additional Bonds
and senior to all other payments.
The Authority may enter into leases to finance facilities other than the
Project. The administrative costs of the Authority shall be allocated among said facilities
and the Project, as hereinafter in this paragraph provided. Any taxes levied against the
Authority with respect to the Leased Property, the fees of the Trustee, and any other
expenses directly attributable to the Leased Property shall be included in the Additional
Payments payable hereunder. Any taxes levied against the Authority with respect to real
property other than the Leased Property, the fees of any trustee or paying agent under any
resolution securing bonds of the Authority or any Indenture other than the Indenture, and
any other expenses directly attributable to any facilities other than the Leased Property
shall not be included in the administrative costs of the Leased Property and shall not be
paid from the Additional Payments payable hereunder. Any expenses of the Authority not
directly attributable to any particular project of the Authority shall be equitably allocated
among all such projects, including the Leased Property, in accordance with sound
accounting practice. In the event of any question or dispute as to such allocation, the
written opinion of an independent firm of certified public accountants, employed by the
Authority to consider the question and render an opinion thereon, shall be final and
conclusive determination as to such allocation. The Trustee may conclusively rely upon a
Certificate of the Authority in making any determination that costs are payable as
Additional Payments hereunder, and shall not be required to make any investigation as to
whether or not the items so requested to be paid are expenses of operation of the Leased
Property.
(c) Consideration.
(i) Such payments of Base Rental Payments for each Lease
Year or portion thereof during the term of this Facility Lease shall constitute,
together with the Additional Payments, the total amount due for such Lease Year
or portion thereof and shall be paid or payable by the City for and in consideration
of the right of the use and possession of, and the continued quiet use and enjoyment
of, the Leased Property. On the Closing Date, the City shall deliver a certificate to
the Authority and the Trustee, which shall set forth the annual fair rental value of
the Leased Property. The parties hereto have agreed and determined that the annual
fair rental value of the Leased Property is not less than the maximum Base Rental
Payments payable hereunder in any year. In making such determinations of annual
fair rental value, consideration has been given to a variety of factors including the
Lynwood Public Financing Authority - Page 141 of 244 Agenda Item # 2
4828-6835-3991.1
10
replacement costs of the existing improvements on the Leased Property, other
obligations of the parties under this Facility Lease, the uses and purposes which
may be served by the improvements on the Leased Property and the benefits
therefrom which will accrue to the City and the general public.
(ii) The parties hereto hereby acknowledge that the parties
hereto may amend this Facility Lease from time to time to increase the Base Rental
Payments payable hereunder so that Additional Bonds may be executed,
authenticated and issued pursuant to Section 5.07 hereof and Sections 2.11 and 2.12
of the Indenture. The proceeds of such Additional Bonds shall be used for any
lawful purpose. Notwithstanding anything to the contrary herein contained, this
Facility Lease may not be amended in a manner such that the sum of Base Rental
Payments, including Base Rental Payments payable pursuant to such amendment,
in any year is in excess of the annual fair rental value of the Leased Property and
other land and improvements leased to the City hereunder.
(d) Payment; Credit. Each installment of Base Rental Payments
payable hereunder shall be paid in lawful money of the United States of America to or upon
the order of the Authority at the corporate trust office of the Trustee in Los Angeles,
California, or such other place as the Authority shall designate. Any such installment of
rental accruing hereunder which shall not be paid when due shall remain due and payable
until received by the Trustee, except as provided in Section 5.04 hereof, and to the extent
permitted by law shall bear interest at the rate of ten percent per annum or such other rate
as specified in the Indenture or this Facility Lease from the date when the same is due
hereunder until the same shall be paid. Notwithstanding any dispute between the City and
the Authority, the City shall make all rental payments when due, without deduction or
offset of any kind, and shall not withhold any rental payments pending the final resolution
of any such dispute. In the event of a determination that the City was not liable for said
rental payments or any portion thereof, said payments or excess of payments, as the case
may be, shall, at the option of the City, be credited against subsequent rental payments due
hereunder or be refunded at the time of such determination. Amounts required to be
deposited by the City with the Trustee pursuant to this Section 5.01(d) on any date shall be
reduced to the extent of available amounts on deposit on such date in the Revenue Fund,
the Interest Fund or the Principal Fund. Any payment scheduled to be made on a date
which is not a Business Day shall be made on the next succeeding Business Day.
Section 5.02 Annual Budgets; Reporting Requirements. The City covenants
to take such action as may be necessary to include all Base Rental Payments and Additional
Payments due under this Facility Lease in its operating budget for each fiscal year commencing
after the date hereof (an “Operating Budget”) and to make all necessary appropriations for such
Base Rental Payments and Additional Payments.
Section 5.03 Application of Rental Payments. All Base Rental Payments
received shall be applied first to the interest components of the Base Rental Payments due
hereunder, then to the principal components (including any prepayment premium components) of
the Base Rental Payments due hereunder and thereafter to all Additional Payments due hereunder,
Lynwood Public Financing Authority - Page 142 of 244 Agenda Item # 2
4828-6835-3991.1
11
but no such application of any payments which are less than the total rental due and owing shall
be deemed a waiver of any default hereunder.
Section 5.04 Rental Abatement. Except to the extent of (a) amounts held by the
Trustee in the Revenue Fund, (b) amounts received in respect of rental interruption insurance, and
(c) amounts, if any, otherwise legally available to the Trustee for payments in respect of the Bonds,
during any period in which, by reason of material damage, destruction, title defect, or
condemnation, there is substantial interference with the use and possession by the City of any
portion of the Leased Property, rental payments due hereunder with respect to the Leased Property
shall be abated to the extent that the annual fair rental value of the portion of the Leased Property
in respect of which there is no substantial interference is less than the annual Base Rental
Payments, in which case rental payments shall be abated only by an amount equal to the difference.
In the event the City shall assign, transfer or sublease any or all of the Leased Property or other
rights hereunder, as permitted by Section 2.04 hereof, for purposes of determining the annual fair
rental value available to pay Base Rental Payments, annual fair rental value of the Leased Property
shall first be allocated to this Facility Lease as provided in clause (d) of Section 2.04 hereof. Any
abatement of rental payments pursuant to this Section shall not be considered an Event of Default
as defined in Article X hereof. The City waives the benefits of Civil Code Sections 1932(2) and
1933(4) and any and all other rights to terminate this Facility Lease by virtue of any such
interference and this Facility Lease shall continue in full force and effect. Such abatement shall
continue for the period commencing with the date of such damage, destruction, title defect or
condemnation and ending with the substantial completion of the work of repair or replacement of
the portions of the Leased Property so damaged, destroyed, defective or condemned.
In the event that rental is abated, in whole or in part, pursuant to this Section due to
damage, destruction, title defect or condemnation of any part of the Leased Property and the City
is unable to repair, replace or rebuild the Leased Property from the proceeds of insurance, if any,
the City agrees to apply for and to use its best efforts to obtain any appropriate state and/or federal
disaster relief in order to obtain funds to repair, replace or rebuild the Leased Property.
Section 5.05 Prepayment of Rental Payments. The City may prepay, from
eminent domain proceeds or net insurance proceeds received by it pursuant to Section 7.01 hereof,
all or any portion of the components of Base Rental Payments payable hereunder relating to any
portion of the Leased Property then unpaid, in whole on any date, or in part on any date in integral
multiples of an Authorized Denomination so that the aggregate annual amounts of principal
components of Base Rental Payments payable under this Facility Lease represented by the Series
2020A Bonds and any Additional Bonds which shall be payable after such prepayment date shall
each be in an integral multiple of an Authorized Denomination and shall be as nearly proportional
as practicable to the aggregate annual amounts of principal components of Base Rental Payments
payable under this Facility Lease represented by the Series 2020A Bonds and any Additional
Bonds.
The City may prepay, from any source of available moneys pursuant to
Section 4.01(b) of the Indenture, all or any part (in an integral multiple of an Authorized
Denomination) of the principal components of Base Rental Payments payable under this Facility
Lease then unpaid so that the aggregate annual amounts of principal components of Base Rental
Payments under this Facility Lease which shall be payable after such prepayment date shall be as
Lynwood Public Financing Authority - Page 143 of 244 Agenda Item # 2
4828-6835-3991.1
12
nearly proportional as practicable to the aggregate annual amounts of principal components
represented by the Series 2020A Bonds and any Additional Bonds unpaid prior to the prepayment
date, at a prepayment amount equal to the principal component prepaid plus accrued interest
thereon to the date of prepayment plus any applicable premium.
Before making any prepayment pursuant to this Section, at least 45 days before the
prepayment date the City shall give written notice to the Authority and the Trustee describing such
event, specifying the order of Principal Payment Dates and specifying the date on which the
prepayment will be made, which date shall be not less than 30 nor more than 60 days from the date
such written notice is given to the Authority and the Trustee.
Section 5.06 Obligation to Make Rental Payments. The agreements and
covenants on the part of the City contained herein shall be deemed to be and shall be construed to
be duties imposed by law and it shall be the duty of each and every public official of the City to
take such action and do such things as are required by law in the performance of the official duty
of such officials to enable the City to carry out and perform the agreements and covenants
contained herein agreed to be carried out and performed by the City.
THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS
AND TO PAY ADDITIONAL PAYMENTS DOES NOT CONSTITUTE AN OBLIGATION OF
THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF
TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF
TAXATION. NEITHER THE BONDS NOR THE OBLIGATION TO MAKE RENTAL
PAYMENTS AND TO PAY ADDITIONAL PAYMENTS CONSTITUTES AN
INDEBTEDNESS OF THE CITY, THE STATE OF CALIFORNIA OR ANY POLITICAL
SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR
STATUTORY DEBT LIMITATION OR RESTRICTION.
Section 5.07 Additional Bonds. In addition to the Series 2020A Bonds to be
executed, authenticated and issued under the Indenture the City and the Authority may, from time
to time, but only upon satisfaction of the conditions to the issuance of Additional Bonds set forth
in Sections 2.11 and 2.12 of the Indenture, enter into a Supplemental Indenture to issue Additional
Bonds on a parity with the Series 2020A Bonds and any previously executed, authenticated and
issued Additional Bonds (unless otherwise provided in the related Supplemental Indenture), the
proceeds of which may be used for any lawful purpose by the City, as provided in the Supplemental
Indenture; provided that prior to or concurrently with the execution and delivery of the Additional
Bonds, the City and the Authority shall have entered into an amendment to this Facility Lease,
providing for an increase in the Base Rental Payments to be made hereunder subject to the
limitations set forth in Section 5.01(c)(ii) hereof.
ARTICLE VI
MAINTENANCE; TAXES;
INSURANCE AND OTHER CHARGES
Section 6.01 Maintenance of the Leased Property by the City. The City agrees
that, at all times during the term hereof, it will, at its own cost and expense, maintain, preserve and
Lynwood Public Financing Authority - Page 144 of 244 Agenda Item # 2
4828-6835-3991.1
13
keep the Leased Property and every portion thereof in good repair, working order and condition
and that it will from time to time make or cause to be made all necessary and proper repairs,
replacements and renewals. The Authority shall have no responsibility in any of these matters or
for the making of additions or improvements to the Leased Property.
Section 6.02 Taxes, Other Governmental Charges and Utility Charges. The
parties hereto contemplate that the Leased Property will be used for public purposes by the City
and, therefore, that the Leased Property will be exempt from all taxes presently assessed and levied
with respect to real and personal property, respectively. In the event that the use, possession or
acquisition by the City or the Authority of the Leased Property is found to be subject to taxation
in any form, the City will pay during the term hereof, as the same respectively become due, all
taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed
or levied against or with respect to the Leased Property and any other property acquired by the
City in substitution for, as a renewal or replacement of, or a modification, improvement or addition
to, the Leased Property, as well as all gas, water, steam, electricity, heat, power, air conditioning,
telephone, utility and other charges incurred in the operation, maintenance, use, occupancy and
upkeep of the Leased Property; provided, that with respect to any governmental charges or taxes
that may lawfully be paid in installments over a period of years, the City shall be obligated to pay
only such installments as are accrued during such time as this Facility Lease is in effect.
Section 6.03 Insurance. The City shall secure and maintain or cause to be
secured and maintained at all time with insurers of recognized responsibility all coverage on the
Leased Property required by this Section 6.03. Such insurance shall consist of:
(1) standard commercial general liability insurance policy or policies or
other comparable coverage form in protection of the City and its respective members,
officers, agents, employees and assigns. Said policy or policies will provide for
indemnification of said parties against direct or contingent loss or liability for damages for
bodily and personal injury, death or property damage occasioned by reason of the operation
of the Leased Property should the City be legally liable. Such policy or policies must
provide coverage with limits and subject to such deductibles as the City will deem adequate
and prudent, and in all events in form and amount (including any deductibles). Such
insurance may be maintained as part of or in conjunction with any other insurance coverage
carried by the City (including, a self-insurance program), and may be maintained in whole
or in part in the form of the participation by the City in a joint powers authority or other
program providing pooled insurance. The City will apply the proceeds of such liability
insurance toward extinguishment or satisfaction of the liability with respect to which such
proceeds have been paid.
(2) property insurance against loss or damage to all of the buildings
situated on the Leased Property and owned by the City, in an amount at least equal to the
lesser of the replacement value of the insured buildings and the aggregate principal amount
of the Base Rental Payments outstanding. Such insurance must, as nearly as practicable,
cover loss or damage by all “special form” perils. Earthquake insurance will only be
carried if available from reputable insurers at a reasonable cost as determined by the
Finance Director of the City. Such insurance may be maintained as part of or in
conjunction with any other insurance coverage carried by the City (including, a self-
Lynwood Public Financing Authority - Page 145 of 244 Agenda Item # 2
4828-6835-3991.1
14
insurance program), and may be maintained in whole or in part in the form of the
participation by the City in a joint powers authority or other program providing pooled
insurance. The City will apply the Net Proceeds of such insurance as provided in Section
7.01.
(3) So long as any Bonds are Outstanding, rental interruption or use and
occupancy insurance to cover loss, total or partial, of the use of the Leased Property and
the improvements situated thereon as a result of any of the hazards covered in the insurance
required by Section 6.03(2), in an amount at least equal to the maximum Base Rental
Payments coming due and payable during any immediately succeeding 24 month period.
Such insurance may be maintained as part of or in conjunction with any other insurance
coverage carried by the City, and may be maintained in whole or in part in the form of the
participation by the City in a joint powers authority or other program providing pooled
insurance; provided that such rental interruption insurance shall not be self-insured by the
City. The City will apply the Net Proceeds of such insurance towards the payment of the
Base Rental Payments allocable to the insured improvements as the same become due and
payable.
(4) If required by applicable California law, the City shall carry
worker’s compensation insurance covering all employees on, in, near or about the Leased
Property and, upon request, shall furnish to the Authority certificates evidencing such
coverage throughout the Term of this Facility Lease. Such insurance may be maintained
as part of or in conjunction with any other insurance coverage carried by the City (including
a self-insurance program), and may be maintained in whole or in part in the form of the
participation by the City in a joint powers authority or other program providing pooled
insurance
All insurance policies (or riders) required by this Section 6.03 and provided by third
party insurance carriers shall be taken out and maintained with responsible insurance companies
organized under the laws of one of the states of the United States and qualified to do business in
the State, and shall contain a provision that the insurer shall not cancel or revise coverage
thereunder without giving written notice to the insured parties at least ten (10) days before the
cancellation or revision becomes effective. Each insurance policy or rider required by Sections
6.03 (1), 6.03(2) and 6.03(3) and provided by third party insurance carriers shall name the City as
an insured party. Prior to the Closing Date, the City will provide policies (and riders and
endorsements, if applicable) evidencing any such insurance procured by it, or a certificate or
certificates of the respective insurers stating that such insurance is in full force and effect. Before
the expiration of any such policy (or rider), the City will furnish to the Trustee and the Insurer
evidence that the policy has been renewed or replaced by another policy conforming to the
provisions of this Article VI unless such insurance is no longer obtainable, in which event the City
shall notify the Trustee of such fact.
Section 6.04 Advances. In the event the City shall fail to maintain the full
insurance coverage required hereby or shall fail to keep the Leased Property in good repair and
operating condition, the Authority may (but shall be under no obligation to) purchase the required
policies of insurance and pay the premiums on the same or may make such repairs or replacements
as are necessary and provide for payment thereof; and all amounts so advanced therefor by the
Lynwood Public Financing Authority - Page 146 of 244 Agenda Item # 2
4828-6835-3991.1
15
Authority shall become Additional Payments, which amounts the City agrees to pay within 30
days of a written request therefor, together with interest thereon at the maximum rate allowed by
law.
Section 6.05 Title Insurance. The City covenants and agrees to deliver or cause
to be delivered to the Trustee on the Closing Date a CLTA or ALTA leasehold owner’s policy or
policies, or a commitment for such policy or policies, with respect to the Leased Property with
liability in the aggregate amount of the principal component of all Base Rental Payments payable
hereunder. Such policy or policies, when issued, shall name the Trustee as the insured and shall
insure the leasehold estate of the City in the Leased Property subject only to such exceptions as do
not materially affect the City’s right to the use and occupancy of the Leased Property.
ARTICLE VII
DAMAGE, DESTRUCTION, TITLE DEFECT AND CONDEMNATION
Section 7.01 Damage, Destruction, Title Defect and Condemnation; Use of
Net Proceeds. If prior to the termination of the term hereof (a) the Leased Property or any portion
thereof is destroyed (in whole or in part) or is damaged by fire or other casualty; or (b) title to, or
the temporary use of, the Leased Property or any portion thereof or the estate of the City or the
Authority in the Leased Property or any portion thereof is defective or shall be taken under the
exercise of the power of eminent domain by any governmental body or by any person or firm or
Authority acting under governmental authority, then the City and the Authority will cause the net
proceeds of any insurance claim or condemnation award to be applied to the prompt repair,
restoration, modification, improvement or replacement of the damaged, destroyed, defective or
condemned portion of the Leased Property, and any balance of the net proceeds remaining after
such work has been completed shall be paid to the City; provided, that the City, at its option and
provided the proceeds of such insurance or condemnation award together with any other moneys
then available for the purpose are at least sufficient to prepay the aggregate annual amounts of
principal and interest components of the Base Rental Payments due hereunder attributable to the
portion of the Leased Property so destroyed, damaged, defective or condemned (determined by
reference to the proportion which the annual fair rental value of the destroyed, damaged, defective
or condemned portion thereof bears to the annual fair rental value of the Leased Property), may
elect not to repair, reconstruct or replace the damaged, destroyed, defective or condemned portion
of the Leased Property and thereupon shall cause said proceeds to be used for the redemption of
Outstanding Bonds pursuant to the provisions of Section 4.01(a) of the Indenture. Notwithstanding
any other provision herein, the City shall only prepay less than all of the principal component of
the then-remaining Base Rental Payments if the annual fair rental value of the Leased Property
after such damage, destruction, title defect or condemnation is at least equal to the aggregate annual
amount of the principal and interest components of the Base Rental Payments not being prepaid.
In the event that the proceeds, if any, of said insurance or condemnation award are
insufficient either to (i) repair, rebuild or replace the Leased Property so that the fair rental value
of the Leased Property would be at least equal to the Base Rental Payments or (ii) to redeem all
the Outstanding Bonds, both as provided in the preceding paragraph, then the City may, in its sole
discretion, budget and appropriate an amount necessary to effect such repair, rebuilding or
Lynwood Public Financing Authority - Page 147 of 244 Agenda Item # 2
4828-6835-3991.1
16
replacement or prepayment; provided that the failure of the City to so budget and/or appropriate
shall not be a breach of or default under this Facility Lease.
ARTICLE VIII
DISCLAIMER OF WARRANTIES;
VENDOR’S WARRANTIES; USE OF THE LEASED PROPERTY
Section 8.01 Disclaimer of Warranties. NEITHER THE TRUSTEE NOR THE
AUTHORITY MAKES ANY AGREEMENT, WARRANTY OR REPRESENTATION, EITHER
EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION,
MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE OR FITNESS FOR USE
OF THE LEASED PROPERTY, OR WARRANTY WITH RESPECT THERETO. THE CITY
ACKNOWLEDGES THAT NEITHER THE TRUSTEE NOR THE AUTHORITY IS A
MANUFACTURER OF ANY PORTION OF THE LEASED PROPERTY OR A DEALER
THEREIN, THAT THE CITY LEASES THE LEASED PROPERTY AS-IS, IT BEING AGREED
THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. In no
event shall the Authority or the Trustee be liable for any incidental, indirect, special or
consequential damage in connection with or arising out of this Facility Lease or the existence,
furnishing, functioning or the City’s use of the Leased Property as provided hereby.
Section 8.02 Use of the Leased Property; Improvements. The City will not
use, operate or maintain the Leased Property improperly, carelessly, in violation of any applicable
law or in a manner contrary to that contemplated hereby. The City shall provide all permits and
licenses, if any, necessary for the use of the Leased Property. In addition, the City agrees to comply
in all respects (including, without limitation, with respect to the use, maintenance and operation of
each portion of the Leased Property) with all laws of the jurisdictions in which its operations
involving any portion of the Leased Property may extend and any legislative, executive,
administrative or judicial body exercising any power or jurisdiction over the Leased Property;
provided, that the City may contest in good faith the validity or application of any such law or rule
in any reasonable manner which does not, in the opinion of the City adversely affect the estate of
the Authority in and to the Leased Property or its interest or rights hereunder.
ARTICLE IX
ASSIGNMENT AND INDEMNIFICATION
Section 9.01 Assignment by Authority. The parties understand that certain of
the rights of the Authority hereunder and under the Site Lease will be assigned to the Trustee
pursuant to the Assignment Agreement, and accordingly the City agrees to make all payments due
hereunder to the Trustee, notwithstanding any claim, defense, setoff or counterclaim whatsoever
(whether arising from a breach hereof or otherwise) that the City may from time to time have
against the Authority. The City agrees to execute all documents, including notices of assignment
and chattel mortgages or financing statements, which may be reasonably requested by the
Authority or the Trustee to protect their interests in the Leased Property during the term hereof.
Lynwood Public Financing Authority - Page 148 of 244 Agenda Item # 2
4828-6835-3991.1
17
Section 9.02 Assignment by City. This Facility Lease and the interest of the City
in the Leased Property may not be assigned or encumbered by the City except as permitted by
Section 2.04 hereof.
Section 9.03 Indemnification. The City shall, to the full extent then permitted
by law, indemnify, protect, hold harmless, save and keep harmless the Authority and its directors,
officers and employees from and against any and all liability, obligations, losses, claims and
damages whatsoever, regardless of the cause thereof, and expenses in connection therewith,
including, without limitation, counsel fees and expenses, penalties and interest arising out of or as
the result of the issuance of the Bonds, the entering into of this Facility Lease, the acquisition,
construction, installation and use of the Leased Property and each portion thereof or any accident
in connection with the operation, use, condition or possession of the Leased Property or any portion
thereof resulting in damage to property or injury to or death to any person including, without
limitation, any claim alleging latent and other defects, whether or not discoverable by the City or
the Authority; any claim arising out of the use, presence, storage, disposal or release of any
Hazardous Substances on or about the Leased Property; any claim for patent, trademark or
copyright infringement; and any claim arising out of strict liability in tort. The indemnification
arising under this Section 9.03 shall continue in full force and effect notwithstanding the full
payment of all obligations hereunder or the termination hereof for any reason. The City and the
Authority mutually agree to promptly give notice to each other of any claim or liability hereby
indemnified against following the learning thereof by such party.
ARTICLE X
DEFAULT
Section 10.01 Default.
(a) The following events shall be “Events of Default” under this Facility Lease
and the terms “Event of Default” and “Default” shall mean, whenever they are used in this Facility
Lease, any one or more of the following events:
(1) The City shall fail to deposit with the Trustee any Base Rental
Payment required to be so deposited by the close of business on the day such deposit is
required pursuant to Section 5.01(a) hereof, provided, that the failure to deposit any Base
Rental Payments abated pursuant to Section 5.04 hereof shall not constitute an Event of
Default;
(2) The City shall fail to pay any item of Additional Payments when the
same shall become due and payable pursuant to Section 5.01(b) hereof; or
(3) The City shall breach any other terms, covenants or conditions
contained herein or in the Indenture, and shall fail to remedy any such breach with all
reasonable dispatch within a period of 30 days after written notice thereof from the
Authority or Insurer to the City; provided, however, that if the failure stated in the notice
cannot be corrected within such period, then the Authority shall not unreasonably withhold
Lynwood Public Financing Authority - Page 149 of 244 Agenda Item # 2
4828-6835-3991.1
18
its consent to an extension of such time if corrective action is instituted by the City within
such period and is diligently pursued until the default is corrected.
(b) Upon the happening of any of the Events of Default specified in
Section 10.01(a) or (d) hereof, it shall be lawful for the Authority or its assignee, subject to the
terms of this Facility Lease, to exercise any and all remedies available or granted to it pursuant to
law or hereunder; provided, however, that notwithstanding anything herein or in the Indenture to
the contrary, there shall be no right under any circumstances to accelerate the Base Rental
Payments or otherwise declare any Base Rental Payments not then in default to be immediately
due and payable. After the occurrence of an event of default hereunder, the City will surrender
possession of the Leased Property to the Authority, if requested to do so by the Authority, or by
the Trustee or the Owners in accordance with the provisions of the Indenture.
(1) No Termination: Repossession and Re-Letting on Behalf of City.
In the event the Authority does not elect to terminate this Facility Lease in the manner
hereinafter provided for in subparagraph (2) hereof, the Authority with the consent of the
City, which consent is irrevocably given, may repossess the Leased Property and re-let
them for the account of the City, in which event the City’s obligation will continue to
accrue from year to year in accordance with the Lease and the City will continue to receive
the value of the use of the Leased Property from year to year in the form of credits against
its obligation to pay Base Rental Payments. The obligations of the City shall remain the
same as prior to such default to pay Base Rental Payments whether the Authority re-enters
or not. The City agrees to and shall remain liable for the payment of all Base Rental
Payments and the performance of all conditions contained herein and shall reimburse the
Authority for any deficiency arising out of the re-letting of the Leased Property, or, in the
event the Authority is unable to re-let the Leased Property, then for the full amount of all
Base Rental Payments to the end of the term of this Facility Lease, but said Base Rental
Payments and/or deficiency shall be payable only at the same time and in the same manner
as provided above for the payment of Base Rental Payments hereunder, notwithstanding
such repossession by the Authority or any suit, brought by the Authority for the purpose of
effecting such repossession of the Leased Property or the exercise of any other remedy by
the Authority. The City hereby irrevocably appoints the Authority as the agent and
attorney-in-fact of the City to repossess and re-let the Leased Property in the event of
default by the City in the performance of any covenants contained herein to be performed
by the City and to remove (any removal to be done with reasonable prudence) all personal
property connected to or made a part of the Leased Property, to place such property in
storage or other suitable place in the City of Lynwood, for the account of and at the expense
of the City, and the City hereby exempts and agrees to save harmless the Authority from
any costs, loss or damage whatsoever arising or occasioned by any such repossession and
re-letting of the Leased Property. The City hereby waives any and all claims for damages
caused or which may be caused by the Authority in repossessing the Leased Property as
provided herein and all claims for damages that may result from the destruction of or the
injury to the Leased Property and all claims for damage to or loss of any property belonging
to the City that may be in or upon the Leased Property.
The City agrees that the terms of this Facility Lease constitute full and sufficient
notice of the right of the Authority to re-let the Leased Property in the event of such
Lynwood Public Financing Authority - Page 150 of 244 Agenda Item # 2
4828-6835-3991.1
19
repossession without effecting a surrender of this Facility Lease, and further agrees that no
acts of the Authority in effecting such re-letting shall constitute a surrender or termination
of this Facility Lease irrespective of the term for which such re-letting is made or the terms
and conditions of such re-letting or otherwise, but that, on the contrary, in the event of such
default by the City the right to terminate this Facility Lease shall vest in the Authority to
be effected in the sole and exclusive manner provided for in subparagraph (2) below. The
City further waives the right to any rental obtained by the Authority in excess of the Base
Rental Payments and hereby conveys and releases such excess to the Authority as
compensation to the Authority for its services in re-letting the Leased Property. In the
event that the liability of the City under this subsection is held to constitute indebtedness
or liability in any year exceeding the income and revenue provided for such year, the
Authority, or the Trustee or the Owners as assignees of the Authority, shall not exercise
the remedies provided in this subsection.
(2) Termination: Repossession and Re-Letting. In the event of the
termination of this Facility Lease by the Authority at its option and in the manner
hereinafter provided on account of default by the City (and notwithstanding any
repossession of the Leased Property by the Authority in any manner whatsoever or the sale
or re-letting of the Leased Property), the City nevertheless agrees to pay to the Authority
all costs, losses or damages, but not Base Rental Payments, howsoever arising or occurring
payable at the same time and in the same manner as is provided herein in the case of
payment of Base Rental Payments. Any proceeds of the re-letting or other disposition of
the Leased Property or the sale of the improvements located on the Leased Property by the
Authority shall, after payment of the fees and expenses of the Trustee and other Additional
Payments, be deposited into the Revenue Fund and be applied in accordance with the
provisions of the Indenture. Any surplus received by the Authority from such sale or re-
letting shall be the absolute property of the Authority and the City shall have no right
thereto, nor shall the City be entitled to any credit in the event of a surplus in the rentals
received by the Authority for the Leased Property. Neither notice to pay rent or to deliver
up possession of the Leased Property given pursuant to law nor any proceeding taken by
the Authority to recover possession of the Leased Property shall by itself operate to
terminate this Facility Lease, and no termination of this Facility Lease on account of default
by the City shall be or become effective by operation of law, or otherwise, unless and until
the Authority shall have given written notice to the City of the election on the part of the
Authority to terminate this Facility Lease. The City covenants and agrees that no surrender
of the Leased Property or of the remainder of the term hereof or any termination of this
Facility Lease shall be valid in any manner or for any purpose whatsoever unless stated or
accepted by the Authority by such written notice. No such termination shall be effected
whether by operation of law or acts of the parties hereto, except only in the manner herein
expressly provided.
(c) The Authority expressly waives the right to receive any amount from the
City pursuant to Section 1951.2(a)(3) of the California Civil Code.
(d) In addition to any Event of Default resulting from breach by the City of any
agreement, condition, covenant or term hereof, if the City’s interest herein or any part thereof
assigned, sublet or transferred without the written consent of the Authority (except as otherwise
Lynwood Public Financing Authority - Page 151 of 244 Agenda Item # 2
4828-6835-3991.1
20
permitted by Section 2.04 hereof), either voluntarily or by operation of law; or the City or any
assignee shall file any petition or institute any proceedings under any act or acts, state or federal,
dealing with or relating to the subject of bankruptcy or insolvency or under any amendment of
such act or acts, either as a bankrupt or as an insolvent or as a debtor or in any similar capacity,
wherein or whereby the City asks or seeks or prays to be adjudicated a bankrupt, or is to be
discharged from any or all of its debts or obligations, or offers to its creditors to effect a
composition or extension of time to pay its debts, or asks, seeks or prays for a reorganization or to
effect a plan of reorganization or for a readjustment of its debts or for any other similar relief, or
if the City shall make a general or any assignment for the benefit of its creditors; or the City shall
abandon or vacate the Leased Property or any portion thereof (except as permitted by Section 2.04
hereof); then in each and every such case the City shall be deemed to be in default hereunder.
(e) Neither the City nor the Authority shall be in default in the performance of
any of its obligations hereunder (except for the obligation to make Base Rental Payments pursuant
to Section 5.01 hereof) unless and until it shall have failed to perform such obligation within 30
days after notice by the City of the Authority, as the case may be, to the other party properly
specifying wherein it has failed to perform such obligation.
(f) The City and Authority and its successors and assigns shall honor the
exclusive rights of the City to use the Leased Property.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Notices. All written notices to be given hereunder shall be given by
first class mail to the party entitled thereto at its address set forth below, or at such other address
as such party may provide to the other parties in writing from time to time, namely:
If to the Authority:
Lynwood Public Financing Authority
11330 Bullis Road
Lynwood, California 90262
Attention: Chief Administrative Officer
If to the City:
City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
Lynwood Public Financing Authority - Page 152 of 244 Agenda Item # 2
4828-6835-3991.1
21
If to the Trustee:
U.S. Bank National Association
633 West Fifth Street, 24th Floor
Los Angeles, California 90071
Attention: Global Corporate Trust
If to the Insurer:
_________________
_________________
Attention: ______________
Telephone: _________; Telecopier: __________
Section 11.02 Binding Effect. This Facility Lease shall inure to the benefit of and
shall be binding upon the Authority and the City and their respective successors and assigns.
Section 11.03 Trustee and Insurer as Third Party Beneficiary. So long as the
Policy is in effect and Insurer is not in default in respect of its payment obligations thereunder, the
Insurer shall be a third-party beneficiary under this Facility Lease and may enforce any right,
remedy or claim conferred upon, given or granted hereunder. To the extent that this Facility Lease
confers upon or gives or grants the Trustee any right, remedy or claim under or by reason of this
Facility Lease, the Trustee is hereby explicitly recognized as being a third-party beneficiary
hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder.
Section 11.04 Net Lease. It is the purpose and intent of the Authority and the City
that Base Rental Payments hereunder shall be absolutely net to the Authority so that this Facility
Lease shall yield to the Authority the Base Rental Payments, free of any charges, assessments or
impositions of any kind charged, assessed or imposed on or against the Leased Property, and
without counterclaim, deduction, defense, deferment or set-off by the City except as herein
specifically otherwise provided. The Authority shall not be expected or required to pay any such
charge, assessment or imposition, or be under any obligation or liability hereunder except as herein
expressly set forth, and all costs, expenses and obligations of any kind relating to the maintenance
and operation of the Leased Property which may arise or become due during the term of this
Facility Lease shall be paid by the City. This Facility Lease shall be deemed and construed to be a
“Triple-Net Lease.”
Section 11.05 Amendments. This Facility Lease may be amended in writing as
may be mutually agreed by the Authority and the City, subject to the written consent of the Trustee
and the Insurer; provided, that no such amendment which materially adversely affects the rights
of the Owners shall be effective unless it shall have been consented to by the Owners of more than
50% in principal amount of the Bonds Outstanding, and provided further, that no such amendment
shall (a) extend the payment date of any Base Rental Payment, or reduce the interest, principal or
prepayment premium component of any Base Rental Payment, without the prior written consent
of the Owner of each Bond so affected, or (b) reduce the percentage of the principal amount of the
Bonds Outstanding the consent of the Owners of which is required for the execution of any
amendment hereof.
Lynwood Public Financing Authority - Page 153 of 244 Agenda Item # 2
4828-6835-3991.1
22
This Facility Lease and the rights and obligations of the Authority and the City
hereunder may also be amended or supplemented at any time by an amendment hereof or
supplement hereto which shall become binding upon execution without the written consents of any
Owners, but with the consents of the Insurer and only to the extent permitted by law and only for
any one or more of the following purposes:
(a) to add to the agreements, conditions, covenants and terms required
by the Authority or the City to be observed or performed herein and other agreements,
conditions, covenants and terms thereafter to be observed or performed by the Authority
or the City, or to surrender any right or power reserved herein to or conferred herein on the
Authority or the City, and which in either case shall not materially adversely affect the
interests of the Owners;
(b) to make such provisions for the purpose of curing any ambiguity or
of correcting, curing or supplementing any defective provision contained herein or in
regard to questions arising hereunder which the Authority or the City may deem desirable
or necessary and not inconsistent herewith, and which shall not materially adversely affect
the interests of the Owners;
(c) to effect a Substitution or Removal in accordance with Section 2.06
hereof;
(d) to facilitate the issuance of Additional Bonds as provided in Section
5.07 hereof; or
(e) to make any other addition, amendment or deletion which does not
materially adversely affect the interests of the Owners.
Section 11.06 Discharge of City. Upon the payment of all Base Rental Payments
and Additional Payments payable hereunder, all of the obligations of the City hereunder shall
thereupon cease, terminate and become void and shall be discharged and satisfied; provided,
however, if any Outstanding Bonds shall be deemed to have been paid by virtue of a deposit of
Base Rental Payments hereunder pursuant to Section 10.01(b) of the Indenture, then the obligation
of the City hereunder to make Base Rental Payments hereunder shall continue in full force and
effect until the Outstanding Bonds so deemed paid have in fact been paid, but such payments shall
be made solely and exclusively from moneys and securities deposited with the Trustee as
contemplated by Section 10.01(b) of the Indenture, and that shall be the sole source of satisfaction
of the City’s obligation to make Base Rental Payments. The time period for giving notice by the
City to the Authority and the Trustee specified in the third paragraph of Section 5.05 hereof shall
not apply incident to the payment to the Owners of all Outstanding Bonds in accordance with
Section 10.01, including Section 10.01(b), of the Indenture.
Section 11.07 Partial Invalidity. If any one or more of the agreements,
conditions, covenants or terms hereof shall to any extent be declared invalid, unenforceable, void
or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or
decree of which becomes final, none of the remaining agreements, conditions, covenants or terms
Lynwood Public Financing Authority - Page 154 of 244 Agenda Item # 2
4828-6835-3991.1
23
hereof shall be affected thereby, and each provision of this Facility Lease shall be valid and
enforceable to the fullest extent permitted by law.
Section 11.08 California Law. This Facility Lease shall be governed by and
construed and interpreted in accordance with the laws of the State of California.
Section 11.09 Headings. All section headings contained herein are for
convenience of reference only and are not intended to define or limit the scope of any provision
hereof.
Section 11.10 Execution. This Facility Lease may be executed and entered into
in several counterparts, each of which shall be deemed an original, and all of which shall constitute
but one and the same instrument.
Section 11.11 Bond Insurance Provisions. Notwithstanding anything to the
contrary set forth in this Facility Lease or the Indenture, the following provisions of this Section
shall govern with respect hereto:
(a) The City shall provide the Insurer (at the notice address provided in the
Indenture) with annual audited financial statements within 270 days of the end of the City's fiscal
year (together with a certification of the City that it is not aware of any default or Event of Default
under this Facility Lease), and, upon request, the City's annual budget, together with such other
information, data or reports as the Insurer shall reasonably request from time to time.
(b) The City will permit the Insurer to discuss the affairs, finances and accounts
of the City or any information the Insurer may reasonably request in writing regarding the security
for the Series 2020A Bonds with appropriate officers of the City and will use commercially
reasonable efforts to enable the Insurer to have access to the facilities, books and records of the
City on any Business Day upon reasonable prior written notice.
(c) The City shall pay or reimburse the Insurer, as Additional Payments, any
and all charges, fees, costs and expenses that the Insurer may reasonably pay or incur in connection
with (i) the administration, enforcement, defense or preservation of any rights or security in the
Indenture, this Facility Lease, the Site Lease and the Assignment Agreement (each, a "Related
Document"); (ii) the pursuit of any remedies under this Facility Lease or any other Related
Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action
with respect to, or related to, this Facility Lease or any other Related Document whether or not
executed or completed, or (iv) any litigation or other dispute in connection with this Facility Lease
or any other Related Document or the transactions contemplated thereby, other than costs resulting
from the failure of the Insurer to honor its obligations under the Insurance Policy. The Insurer
reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver
or consent proposed in respect of this Facility Lease or any other Related Document.
(d) Following an event of default by the City, the Trustee, acting at the direction
of the Insurer, shall have the right to re-enter and re-let the Leased Property and to terminate this
Facility Lease and any sublease of the Leased Property or any part thereof. The Insurer shall have
the exclusive right to deliver its vote or consent with respect to the Series 2020A Bonds in
connection with the exercise of any remedies or other matters for which voting or consent is
Lynwood Public Financing Authority - Page 155 of 244 Agenda Item # 2
4828-6835-3991.1
24
required for under both this Facility Lease and Indenture. The Insurer shall be entitled to waive
any requirement that an opinion of tax or other counsel be delivered prior to re-letting the Leased
Property.
(e) The City hereby covenants and agrees, to the extent it may lawfully do so,
that so long as any of the Series 2020A Bonds remain outstanding and unpaid, the City will not
exercise the power of condemnation with respect to the Leased Property. The City further
covenants and agrees, to the extent it may lawfully do so, that if for any reason the foregoing
covenant is determined to be unenforceable or if the City should fail or refuse to abide by such
covenant and condemns the real property subject to the Facility Lease, the appraised value of the
real property subject to the Facility Lease shall not be less that the greater of (i) if such Series
2020A Bonds are then subject to redemption, the principal and interest components of the Series
2020A Bonds outstanding through the date of their redemption, or (ii) if such Series 2020A Bonds
are not then subject to redemption, the amount necessary to defease such Series 2020A Bonds to
the first available redemption date in accordance with the Indenture.
(f) The City shall not have the right to terminate this Facility Lease for default
by the Authority.
(g) Any self-insurance for rental interruption or casualty insurance shall be
subject to the consent of the Insurer.
(h) Any additional debt secured by the Leased Property shall require the
consent of the Insurer.
(i) Any permitted encumbrance that would materially affect the security for the
Series 2020A Bonds or the use of the Leased Property shall be subject to the Insurer’s consent.
[This space intentionally left blank]
Lynwood Public Financing Authority - Page 156 of 244 Agenda Item # 2
4828-6835-3991.1
25
IN WITNESS WHEREOF, the parties hereto have executed and entered into this
Facility Lease by their officers thereunto duly authorized as of the day and year first written above.
LYNWOOD PUBLIC FINANCING AUTHORITY
By:
Chief Administrative Officer
CITY OF LYNWOOD
By:
City Manager
Lynwood Public Financing Authority - Page 157 of 244 Agenda Item # 2
4828-6835-3991.1
A-1
EXHIBIT A
DESCRIPTION OF LEASED PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LYNWOOD,
IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS
FOLLOWS:
Lynwood Public Financing Authority - Page 158 of 244 Agenda Item # 2
4828-6835-3991.1
B-1
EXHIBIT B
BASE RENTAL PAYMENTS SCHEDULE
Interest
Payment Date*
Principal Component of
Base Rental Payment
Interest Component of
Base Rental Payment Total
* Due on each Base Rental Payment Date or that date fifteen days preceding each Interest Payment Date.
Lynwood Public Financing Authority - Page 159 of 244 Agenda Item # 2
4828-6835-3991.1
B-2
Interest
Payment Date*
Principal Component of
Base Rental Payment
Interest Component of
Base Rental Payment Total
Total
Lynwood Public Financing Authority - Page 160 of 244 Agenda Item # 2
4828-6835-3991.1
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the Facility Lease, dated as
of _______ 1, 2020, by and between the Lynwood Public Financing Authority (the “Authority”)
and the City of Lynwood (the “City”), from the Authority to the City, is hereby accepted by the
undersigned on behalf of the City pursuant to authority conferred by resolution of the City Council
of the City adopted on ___________, 2020, and the City consents to recordation thereof by its duly
authorized officer.
Dated as of _________, 2020
CITY OF LYNWOOD
By: _______________________________
City Manager
Lynwood Public Financing Authority - Page 161 of 244 Agenda Item # 2
4828-6835-3991.1
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On _____________, 2020, before me, , Notary Public, personally
appeared ________________________, who proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature [SEAL]
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
Lynwood Public Financing Authority - Page 162 of 244 Agenda Item # 2
4828-6835-3991.1
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On _____________, 2020, before me, , Notary Public, personally
appeared ________________________, who proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature [SEAL]
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
Lynwood Public Financing Authority - Page 163 of 244 Agenda Item # 2
4828-6835-3991.1
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On _____________, 2020, before me, , Notary Public, personally
appeared ________________________, who proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature [SEAL]
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
Lynwood Public Financing Authority - Page 164 of 244 Agenda Item # 2
4833-1177-0567.1
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Nixon Peabody LLP
300 South Grand Avenue, Suite 4100
Los Angeles, California 90071
Attention: Danny Kim, Esq.
(Space above for Recorder’s use)
This document is recorded for the benefit of the City of Lynwood and the recording is fee-exempt
under Section 6103 of the California Government Code and the recording is exempt under Section
27383 of the California Government Code and Section 11928 of the California Revenue and
Taxation Code.
SITE LEASE
by and between the
CITY OF LYNWOOD,
as Lessor
and the
LYNWOOD PUBLIC FINANCING AUTHORITY,
as Lessee
relating to the
$___________
Lynwood Public Financing Authority
Lease Revenue Bonds, Series 2020A (Federally Taxable)
DATED AS OF __________ 1, 2020
Lynwood Public Financing Authority - Page 165 of 244 Agenda Item # 2
4833-1177-0567.1
SITE LEASE
This Site Lease (this “Site Lease”), dated as of __________ 1, 2020, by and
between the CITY OF LYNWOOD, a political subdivision of the State of California (the “City”),
as lessor, and the LYNWOOD PUBLIC FINANCING AUTHORITY, a joint powers authority
duly organized and existing under and by virtue of the laws of the State of California (the
“Authority”), as lessee;
W I T N E S S E T H:
WHEREAS, concurrently with the execution of this Site Lease, the Authority and
the City are entering into a Facility Lease (the “Facility Lease”), dated as of _______ 1, 2020
(which is recorded concurrently herewith), whereby the Authority will lease certain real property
to the City, more particularly described in Exhibit A attached hereto (the “Real Property,” and
such Real Property, together with the improvements thereon, being collectively referred to herein
as the “Leased Property”); and
WHEREAS, concurrently with the execution of this Site Lease, the Authority, the
City and U.S. Bank National Association, as trustee (the “Trustee”), are entering into an Indenture,
dated as of _______ 1, 2020 (the “Indenture”);
WHEREAS, in order to provide funds for the financing of working capital for the
City’s general fund, the Authority will issue its Lease Revenue Bonds, Series 2020A (Federally
Taxable) (the “Series 2020A Bonds”), in the aggregate principal amount of $__________;
WHEREAS, the Series 2020A Bonds will be secured by the payments to be made
by the City pursuant to the Facility Lease;
WHEREAS, the City is authorized by law to lease the Leased Property and the
Leased Property is necessary and proper for public purposes; and
WHEREAS, all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in connection with the execution and
entering into of this Site Lease do exist, have happened and have been performed in regular and
due time, form and manner as required by law, and the parties hereto are now duly authorized to
execute and enter into this Site Lease;
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE
MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER
VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS
FOLLOWS:
Section 1. Leased Property. The City hereby leases to the Authority and the
Authority hereby rents and hires from the City, on the terms and conditions hereinafter set forth,
those certain real property and improvements thereon or to be located thereon, more particularly
described in Exhibit A attached hereto and made a part hereof (the “Leased Property”). Capitalized
terms used herein and not otherwise defined shall have the meanings given such terms pursuant to
the Facility Lease.
Lynwood Public Financing Authority - Page 166 of 244 Agenda Item # 2
4833-1177-0567.1
2
Section 2. Term.
(a) The term hereof will commence on ___________, 2020 and shall end on
__________, the Expiry Date, unless such term is sooner terminated or is extended as hereinafter
provided herein and in the Facility Lease. If prior to the Expiry Date all Base Rental Payments
under the Facility Lease shall have been paid, or provision therefor has been made in accordance
with Article X of the Indenture, the term hereof shall end simultaneously therewith.
(b) If the Facility Lease is extended beyond the Expiry Date pursuant to the
terms thereof, this Site Lease shall also be extended to the day following the date of termination
of the Facility Lease.
Section 3. Rent. The Authority shall pay to the City an advance rent of $1,
which, together with the execution and delivery of the Facility Lease, shall constitute full
consideration for this Site Lease over its term. The Authority hereby waives any right that it may
have under the laws of the State of California to receive a rebate of such rent in full or in part in
the event there is a substantial interference with the use and right of possession by the Authority
of the Leased Property or portion thereof as a result of material damage, destruction or
condemnation.
Section 4. Purpose. The Authority shall use the Leased Property solely for the
purpose of subleasing the same to the City; provided, that in the event of default by the City under
the Facility Lease, the Authority may exercise the remedies provided in the Facility Lease.
Section 5. Owner in Fee. The City covenants that it is the owner of the Leased
Property free and clear of all liens, claims or encumbrances which affect marketability.
Section 6. Assignments and Leases. Unless the City shall be in default under
the Facility Lease, the Authority may not, without the prior written consent of the City, assign its
rights hereunder or sublet the Leased Property except that the City expressly approves and consents
to the assignment and transfer of the Authority’s right, title and interest in this Site Lease to the
Trustee pursuant to the Assignment Agreement (which is recorded concurrently herewith).
Section 7. Right of Entry. The City reserves the right for any of its duly
authorized representatives to enter upon the Leased Property at any reasonable time to inspect the
same or to make any repairs, improvements or changes necessary for the preservation thereof.
Section 8. Termination. The Authority agrees, upon the termination hereof,
to quit and surrender the Leased Property in the same good order and condition as the same was
in at the time of commencement of the terms hereunder, reasonable wear and tear excepted, and
agrees that any permanent improvements to the Leased Property at the time of the termination
hereof shall remain thereon and title thereto shall vest in the City.
Section 9. Default. In the event the Authority shall be in default in the
performance of any obligation on its part to be performed under the terms hereof, which default
continues for thirty (30) days following notice and demand for correction thereof to the Authority,
the City may exercise any and all remedies granted by law, except that no merger of this Site Lease
and of the Facility Lease shall be deemed to occur as a result thereof; provided, that so long as the
Lynwood Public Financing Authority - Page 167 of 244 Agenda Item # 2
4833-1177-0567.1
3
Bonds executed and delivered pursuant to the Indenture are Outstanding, the City shall have no
power to terminate this Site Lease by reason of any default on the part of the Authority, if such
termination would affect or impair any assignment of the Facility Lease then in effect between the
Authority and the Trustee that authenticates and delivers the Bonds.
Section 10. Quiet Enjoyment. The Authority at all times during the term hereof
shall peaceably and quietly have, hold and enjoy the Leased Property.
Section 11. Waiver of Personal Liability. All liabilities hereunder on the part
of the Authority shall be solely corporate liabilities of the Authority, and the City hereby releases
each and every director, officer and employee of the Authority of and from any personal or
individual liability hereunder. No director, officer or employee of the Authority shall at any time
or under any circumstances be individually or personally liable hereunder for anything done or
omitted to be done by the Authority hereunder.
Section 12. Eminent Domain. In the event the whole or any portion of the
Leased Property is taken by eminent domain proceedings, the interest of the Authority shall be
recognized and is hereby determined to be the amount of the then unpaid Base Rental Payments
payable under the Facility Lease, and the amount of the unpaid Additional Rental due under the
Facility Lease, and the balance of the award, if any, shall be paid to the City.
Section 13. Amendments. This Site Lease may be amended for the purpose of
affecting a Substitution or Removal, as further described in the Facility Lease.
Section 14. Partial Invalidity. If any one or more of the agreements,
conditions, covenants or terms hereof shall to any extent be declared invalid, unenforceable, void
or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or
decree of which becomes final, none of the remaining agreements, conditions, covenants or terms
hereof shall be affected thereby, and each provision of this Site Lease shall be valid and
enforceable to the fullest extent permitted by law.
Section 15. Notices. All written notices to be given shall be given by first class
mail to the party entitled thereto as its address set forth below, or at such other address as such
party may provide to the other parties in writing from time to time, namely:
If to the City:
City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
Lynwood Public Financing Authority - Page 168 of 244 Agenda Item # 2
4833-1177-0567.1
4
If to the Authority:
Lynwood Public Financing Authority
11330 Bullis Road
Lynwood, California 90262
Attention: Chief Administrative Officer
If to the Insurer:
_____________________
_____________________
Attention: ________________
Telephone: __________; Telecopier: ___________
Section 16. Insurer as Third Party Beneficiary. So long as the Policy is in
effect and Insurer is not in default in respect of its payment obligations thereunder, the Insurer
shall be a third-party beneficiary under this Site Lease and may enforce any right, remedy or claim
conferred upon, given or granted hereunder.
Section 17. Section Headings. All section headings contained herein are for
convenience of reference only and are not intended to define or limit scope of any provision hereof.
Section 18. Counterparts. This Site Lease may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be an original, but such
counterparts shall together constitute one and the same instrument.
Section 19. Governing Law. This Site Lease is made in the State of California
under the Constitution and laws of the State of California and is to be so construed.
[This space intentionally left blank]
Lynwood Public Financing Authority - Page 169 of 244 Agenda Item # 2
4833-1177-0567.1
5
IN WITNESS WHEREOF, the parties hereto have executed and entered into this
Site Lease by their officers thereunder duly authorized as of the day and year first above written.
CITY OF LYNWOOD
By:
City Manager
LYNWOOD PUBLIC FINANCING AUTHORITY
By:
Chief Administrative Officer
Lynwood Public Financing Authority - Page 170 of 244 Agenda Item # 2
4833-1177-0567.1
A-1
EXHIBIT A
DESCRIPTION OF THE LEASED PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LYNWOOD,
IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS
FOLLOWS:
Lynwood Public Financing Authority - Page 171 of 244 Agenda Item # 2
4833-1177-0567.1
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On _____________, 2020, before me, , Notary Public, personally
appeared ________________________, who proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature [SEAL]
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
Lynwood Public Financing Authority - Page 172 of 244 Agenda Item # 2
4833-1177-0567.1
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On _____________, 2020, before me, , Notary Public, personally
appeared ________________________, who proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature [SEAL]
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
Lynwood Public Financing Authority - Page 173 of 244 Agenda Item # 2
4847-6090-2599.1
INDENTURE
by and among
U.S. BANK NATIONAL ASSOCIATION
as Trustee,
THE CITY OF LYNWOOD
and
LYNWOOD PUBLIC FINANCING AUTHORITY
Dated as of ________ 1, 2020
relating to the
$__________
Lynwood Public Financing Authority
Lease Revenue Bonds, Series 2020A (Federally Taxable)
Lynwood Public Financing Authority - Page 174 of 244 Agenda Item # 2
4847-6090-2599.1
TABLE OF CONTENTS
Page
-i-
ARTICLE I DEFINITIONS; EQUAL SECURITY ....................................................................... 2
Section 1.01 Definitions ..................................................................................................... 2
Section 1.02 Interpretation ............................................................................................... 13
Section 1.03 Equal Security ............................................................................................. 14
ARTICLE II TERMS AND CONDITIONS OF SERIES 2020A BONDS .................................. 15
Section 2.01 Authorization of Series 2020A Bonds ........................................................ 15
Section 2.02 Terms of Series 2020A Bonds .................................................................... 15
Section 2.03 Payment Dates of Series 2020A Bonds; Interest ........................................ 15
Section 2.04 Form of Series 2020A Bonds ...................................................................... 16
Section 2.05 Execution of Bonds ..................................................................................... 16
Section 2.06 Transfer and Payment of Bonds; Exchange of Bonds ................................. 17
Section 2.07 Book-Entry Bonds ....................................................................................... 17
Section 2.08 Bond Registration Books ............................................................................ 19
Section 2.09 Temporary Bonds ........................................................................................ 19
Section 2.10 Bonds Mutilated, Lost, Destroyed or Stolen ............................................... 20
Section 2.11 Execution and Delivery of Additional Bonds ............................................. 20
Section 2.12 Proceedings for Authorization of Additional Bonds ................................... 21
ARTICLE III PROCEEDS OF BONDS ...................................................................................... 22
Section 3.01 Delivery of Series 2020A Bonds ................................................................. 22
Section 3.02 Deposit of Proceeds of Series 2020A Bonds and Other Moneys ................ 22
Section 3.03 Costs of Issuance Fund ................................................................................ 23
ARTICLE IV REDEMPTION OF SERIES 2020A BONDS ....................................................... 23
Section 4.01 Terms of Redemption .................................................................................. 23
Section 4.02 Notice of Redemption ................................................................................. 24
Section 4.03 Partial Redemption of Bonds ...................................................................... 25
Section 4.04 Effect of Redemption .................................................................................. 25
ARTICLE V REVENUES ............................................................................................................ 26
Section 5.01 Pledge of Revenues; Revenue Fund ............................................................ 26
Section 5.02 Deposit of Revenues .................................................................................... 27
Section 5.03 Application of Insurance Proceeds and Condemnation Awards ................. 28
Section 5.04 Title Insurance ............................................................................................. 29
ARTICLE VI COVENANTS ....................................................................................................... 30
Section 6.01 Compliance with Indenture ......................................................................... 30
Section 6.02 Compliance with Facility Lease and Site Lease .......................................... 30
Section 6.03 Observance of Laws and Regulations ......................................................... 30
Section 6.04 Other Liens .................................................................................................. 30
Section 6.05 Prosecution and Defense of Suits ................................................................ 31
Section 6.06 Accounting Records and Statements ........................................................... 31
Section 6.07 Recordation and Filing ................................................................................ 31
Section 6.08 Further Assurances ...................................................................................... 31
Section 6.09 Tax Covenants; Rebate Fund ...................................................................... 31
Section 6.10 Continuing Disclosure ................................................................................. 33
Lynwood Public Financing Authority - Page 175 of 244 Agenda Item # 2
4847-6090-2599.1
TABLE OF CONTENTS
(continued)
Page
-ii-
ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY ............................................. 33
Section 7.01 Events of Default ......................................................................................... 33
Section 7.02 Action on Default ........................................................................................ 34
Section 7.03 Other Remedies of the Trustee .................................................................... 34
Section 7.04 Non-Waiver ................................................................................................. 34
Section 7.05 Remedies Not Exclusive ............................................................................. 34
Section 7.06 No Liability by the Authority to the Owners .............................................. 35
Section 7.07 No Liability by the City to the Owners ....................................................... 35
Section 7.08 No Liability by the Trustee to the Owners .................................................. 35
Section 7.09 Application of Amounts After Default ........................................................ 35
Section 7.10 Trustee May Enforce Claims Without Possession of Bonds ....................... 35
Section 7.11 Limitation on Suits ...................................................................................... 36
ARTICLE VIII THE TRUSTEE .................................................................................................. 36
Section 8.01 Employment of the Trustee ......................................................................... 36
Section 8.02 Duties, Removal and Resignation of the Trustee ........................................ 36
Section 8.03 Compensation and Indemnification of the Trustee ..................................... 37
Section 8.04 Protection of the Trustee ............................................................................. 38
ARTICLE IX AMENDMENT OF OR SUPPLEMENT TO INDENTURE ................................ 40
Section 9.01 Amendment or Supplement ......................................................................... 40
Section 9.02 Disqualified Bonds ...................................................................................... 41
Section 9.03 Endorsement or Replacement of Bonds After Amendment or
Supplement .................................................................................................. 41
Section 9.04 Amendment by Mutual Consent ................................................................. 41
Section 9.05 Opinion of Counsel ..................................................................................... 41
ARTICLE X DEFEASANCE ....................................................................................................... 41
Section 10.01 Discharge of Bonds and Indenture .............................................................. 41
Section 10.02 Unclaimed Moneys ..................................................................................... 43
ARTICLE XI BOND INSURANCE AND RESERVE POLICY ................................................ 43
Section 11.01 Bond Insurance Provisions .......................................................................... 43
Section 11.02 Reserve Policy Provisions ........................................................................... 48
ARTICLE XII MISCELLANEOUS ............................................................................................. 50
Section 12.01 Benefits of Indenture Limited to Parties ..................................................... 50
Section 12.02 Successor Deemed Included in all References to Predecessor ................... 50
Section 12.03 Execution of Documents by Owners ........................................................... 50
Section 12.04 Waiver of Personal Liability ....................................................................... 51
Section 12.05 Acquisition of Bonds by City ...................................................................... 51
Section 12.06 Content of Certificates ................................................................................ 51
Section 12.07 Publication for Successive Weeks ............................................................... 51
Section 12.08 Funds ........................................................................................................... 51
Section 12.09 Investments .................................................................................................. 52
Section 12.10 Partial Invalidity .......................................................................................... 52
Section 12.11 California Law ............................................................................................. 52
Lynwood Public Financing Authority - Page 176 of 244 Agenda Item # 2
4847-6090-2599.1
TABLE OF CONTENTS
(continued)
Page
-iii-
Section 12.12 Notices ......................................................................................................... 53
Section 12.13 Effective Date .............................................................................................. 53
Section 12.14 Execution in Counterparts ........................................................................... 53
EXHIBIT A DESCRIPTION OF LEASED PROPERTY ..................................................... A-1
EXHIBIT B FORM OF SERIES 2020A BOND ................................................................... B-1
EXHIBIT C FORM OF REQUISITION FOR FUNDS FROM THE COSTS OF
ISSUANCE FUND ............................................................................................ C-1
Lynwood Public Financing Authority - Page 177 of 244 Agenda Item # 2
4847-6090-2599.1
1
INDENTURE
This INDENTURE, made and entered into as of ________ 1, 2020, by and among U.S.
BANK NATIONAL ASSOCIATION, a national banking association duly organized and existing
under and by virtue of the laws of the United States of America (the “Trustee”), the CITY OF
LYNWOOD, a political subdivision duly organized and existing under the laws of the State of
California (the “City”), and LYNWOOD PUBLIC FINANCING AUTHORITY, a joint powers
authority duly organized and existing under and by virtue of the laws of the State of California
(the “Authority”);
W I T N E S S E T H:
WHEREAS, in order to assist the City in financing working capital for its general fund,
the City desires that the Authority issue its Lease Revenue Bonds, Series 2020A (Federally
Taxable) (the “Series 2020A Bonds”); and
WHEREAS, the City and the Authority have executed and entered into a Site Lease (the
“Site Lease”) dated as of ________ 1, 2020, whereby the City has agreed to lease to the Authority
the real property more particularly described in Exhibit A attached hereto (the “Real Property”),
which together with the improvements thereon is referred to as the “Leased Property”;
WHEREAS, the City and the Authority have executed and entered into a Facility Lease
(the “Facility Lease”) dated as of ________ 1, 2020, whereby the City has agreed to sublease back
the Leased Property from the Authority;
WHEREAS, under and pursuant to the Facility Lease, the City is obligated to make rental
payments to the Authority;
WHEREAS, the Authority has assigned without recourse all its rights to receive the Base
Rental Payments scheduled to be paid by the City under and pursuant to the Facility Lease, and
certain other rights to the Trustee pursuant to the Assignment Agreement (the “Assignment
Agreement”) executed and entered into as of ________ 1, 2020;
WHEREAS, in consideration of the assignments pursuant to the Assignment Agreement
and the execution and delivery of this Indenture, the Authority has agreed to issue the Series 2020A
Bonds;
WHEREAS, all acts, conditions and things required by law to exist, to have happened and
to have been performed precedent to and in connection with the execution and entering into of this
Indenture do exist, have happened and have been performed in regular and due time, form and
manner as required by law, and the parties hereto are now duly authorized to execute and enter
into this Indenture;
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE
MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER
VALUABLE CONSIDERATION, THE PARTIES DO HEREBY AGREE AS FOLLOWS:
Lynwood Public Financing Authority - Page 178 of 244 Agenda Item # 2
4847-6090-2599.1
2
ARTICLE I
DEFINITIONS; EQUAL SECURITY
Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in
this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and
of the Bonds and of any certificate, opinion, request or other document mentioned herein or therein
have the meanings defined herein, the following definitions to be equally applicable to both the
singular and plural forms of any of the terms defined herein:
Additional Bonds
The term “Additional Bonds” means the additional bonds authorized by a
Supplemental Indenture that are authenticated and delivered by the Trustee under and pursuant to
Article II hereof.
Additional Payments
The term “Additional Payments” means the additional payments payable by the
City under and pursuant to Section 5.01(b) of the Facility Lease.
Annual Debt Service
The term “Annual Debt Service” means, for any Fiscal Year, the sum of (1) the
interest payable on all Outstanding Bonds in such Fiscal Year, assuming that all Outstanding Serial
Bonds are retired as scheduled and that all Outstanding Term Bonds are redeemed or paid from
sinking fund payments as scheduled (except to the extent that such interest is to be paid from the
proceeds of the sale of any Bonds), (2) the principal amount of all Outstanding Serial Bonds
maturing by their terms in such Fiscal Year, and (3) the principal amount of all Outstanding Term
Bonds required to be redeemed or paid in such Fiscal Year (together with the redemption
premiums, if any, thereon).
Assignment Agreement
The term “Assignment Agreement” means that certain Assignment Agreement,
dated as of ________ 1, 2020, by and between the Authority and the Trustee, as it may from time
to time be amended.
Authority
The term “Authority” means the Lynwood Public Financing Authority, a joint
powers authority duly organized and existing under and by virtue of the laws of the State of
California.
Authorized Denominations
The term “Authorized Denominations” means $5,000 or any integral multiple
thereof.
Lynwood Public Financing Authority - Page 179 of 244 Agenda Item # 2
4847-6090-2599.1
3
Average Annual Debt Service
The term “Average Annual Debt Service” means an amount equal to the average
of the Annual Debt Service for all Bond Years, including the Bond Year in which the calculation
is made.
Base Rental Payments
The term “Base Rental Payments” means the aggregate base rental payments with
interest components and principal components payable by the City under and pursuant
to Section 5.01(a) of the Facility Lease in the amounts and at the times set forth in Exhibit B
thereof.
Beneficial Owner
The term “Beneficial Owner” shall have the same meaning as the term “Holder”
set forth in the Continuing Disclosure Agreement.
Bond Purchase Agreement
The term “Bond Purchase Agreement” means that certain Bond Purchase
Agreement, dated __________, 2020, by and among the Underwriter, the Authority and the City
relating to the Series 2020A Bonds.
Bonds; Series 2020A Bonds; Serial Bonds; Term Bonds
The term “Bonds” means the Series 2020A Bonds and all Additional Bonds.
The term “Series 2020A Bonds” means the Lynwood Public Financing Authority
Lease Revenue Bonds, Series 2020A (Federally Taxable).
The term “Serial Bonds” means Bonds for which no sinking fund payments are
provided.
The term “Term Bonds” means Bonds which are payable on or before their
specified maturity dates from sinking fund payments established for that purpose and calculated
to retire such Bonds on or before their specified maturity dates.
Bond Year
The term “Bond Year” means the twelve-month period ending on ________ 1 of
each year to which reference is made.
Business Day
The term “Business Day” means a day other than (i) Saturday or Sunday or (ii) a
day on which banking institutions in Los Angeles, California, New York, New York, or the city
or cities in which the principal corporate trust office of the Trustee are closed or (iii) a day on
which the New York Stock Exchange is closed. If the date for making any payment or the last
Lynwood Public Financing Authority - Page 180 of 244 Agenda Item # 2
4847-6090-2599.1
4
date for performance of any act or the exercising of any right, as provided in this Indenture, shall
not be a Business Day, such payment may be made or act performed or right exercised on the next
succeeding Business Day, with the same force and effect as if done on the nominal date provided
in this Indenture, and, unless otherwise specifically provided in this Indenture, no interest shall
accrue for the period from and after such nominal date.
Certificate of Completion
“Certificate of Completion” means a Certificate of the City filed with the Trustee,
stating that construction of a Project has been substantially completed and that all Construction
Costs have been paid or provided for.
Certificate, Statement, Written Request or Requisition of the Authority or the City
“Certificate,” “Statement,” “Written Request” and “Requisition” of the Authority
or of the City means, respectively, a written certificate, statement, request or requisition signed in
the name of the Authority by its President, Chief Administrative Officer, and Finance Director or
any other person designated and authorized to sign for the Authority in writing to the Trustee, and
with respect to the City means its President, City Manager, and Finance Director or such other
person as may be designated and authorized to sign for the City in writing to the Trustee. Any
such instrument and supporting opinions or representations, if any, may, but need not, be combined
in a single instrument with any other instrument, opinion or representation, and the two or more
so combined shall be read and construed as a single instrument. If and to the extent required by
Section 12.06, each such instrument shall include the statements provided for in Section 12.06.
City
The term “City” means the City of Lynwood, a political subdivision duly organized
and existing under the Constitution and laws of the State of California.
Closing Date
The term “Closing Date” means ___________, 2020.
Code
The term “Code” means the Internal Revenue Code of 1986, as amended.
Continuing Disclosure Agreement
The term “Continuing Disclosure Agreement” means collectively, the Continuing
Disclosure Agreement executed by the City at the time of the initial issuance of the Series 2020A
Bonds, together with any Continuing Disclosure Agreement executed by the City at the time of
the execution and delivery of any Additional Bonds, as originally executed and as each such
Agreement may be amended from time to time in accordance with the terms thereof.
Lynwood Public Financing Authority - Page 181 of 244 Agenda Item # 2
4847-6090-2599.1
5
Costs of Issuance Fund
The term “Costs of Issuance Fund” means the fund by that name established in
accordance with Section 3.03 hereof.
Costs of Issuance
The term “Costs of Issuance” means all the costs of executing and delivering the
Bonds, including, but not limited to, all printing and document preparation expenses in connection
with this Indenture, the Facility Lease, the Site Lease, the Assignment Agreement, the Bonds and
the preliminary official statement and final official statement pertaining to the Bonds; rating
agency fees; financial advisor fees; verification agent fees; bidding agent fees; title insurance fees;
CUSIP Service Bureau charges; market study fees; legal fees and expenses of counsel with respect
to the Facility Lease of the Leased Property; any computer and other expenses incurred in
connection with the Bonds; the fees and expenses of the Trustee, including fees and expenses of
their respective counsel; and other fees and expenses incurred in connection with the execution of
the Bonds, to the extent such fees and expenses are approved by the City.
Defeasance Securities
The term “Defeasance Securities” means any of the following:
(1) Cash (insured at all times by the Federal Deposit Insurance Corporation);
(2) Obligations of, or obligations guaranteed as to principal and interest by,
the U.S. or any agency or instrumentality thereof, when such obligations
are backed by the full faith and credit of the U.S. including:
• U.S. Treasury obligations;
• All direct or fully guaranteed obligations
• Farmers Home Administration
• General Services Administration
• Guaranteed Title XI financing
• Government National Mortgage Association
(GNMA); and
• State and Local Government Series; and
(3) Obligations described in paragraph (7) of the definition of Permitted
Investments.
DTC
The term “DTC” means The Depository Trust Company, New York, New York, a
limited-purpose trust company organized under the laws of the State of New York, and its
successors as securities depository for the Bonds including any such successor appointed pursuant
to Section 2.07 hereof.
Lynwood Public Financing Authority - Page 182 of 244 Agenda Item # 2
4847-6090-2599.1
6
Event of Default
The term “Event of Default” means any occurrence or event specified in and
defined by Section 7.01 hereof.
Facility Lease
The term “Facility Lease” means that certain Facility Lease, dated as of ________
1, 2020, with respect to the Leased Property, by and between the City, as sublessee, and the
Authority, as sublessor, as originally executed and as it may be amended from time to time.
Fiscal Year
The term “Fiscal Year” means the fiscal year of the City which, as of the date
hereof, is the period from July 1 to and including the following June 30.
Hazardous Substances
The term “Hazardous Substances” means any substances, pollutants, wastes and
contaminants now or hereafter included in such (or similar term) term under any federal state or
local statute, ordinance, code or regulation now existing or hereafter enacted or amended.
Indenture
The term “Indenture” means this Indenture by and among the Trustee, the City and
the Authority, dated as of ________ 1, 2020, as originally executed and as it may from time to
time be amended or supplemented in accordance herewith.
Insurance Proceeds and Condemnation Awards Fund
The term “Insurance Proceeds and Condemnation Awards Fund” means the fund
by that name established in accordance with Section 5.03 hereof.
Insurer
The term “Insurer” means _____________, or any successor thereto or assignee
thereof.
Interest Fund
The term “Interest Fund” means the Series 2020A Interest Fund and each additional
fund established for the payment of interest of a Series of Additional Bonds within the Revenue
Fund established in accordance with Section 5.01(a) hereof.
Interest Payment Date
The term “Interest Payment Date” means ______ 1, 20___ and each _______ 1,
and ________ 1, thereafter.
Lynwood Public Financing Authority - Page 183 of 244 Agenda Item # 2
4847-6090-2599.1
7
Interest Period
The term “Interest Period” means each period from and including one Interest
Payment Date to but excluding the next following Interest Payment Date, except that the initial
Interest Period will be the period from and including the date of the initial delivery of the Series
2020A Bonds to but excluding _______ 1, 20___.
Joint Powers Agreement
“Joint Powers Agreement” means the Joint Exercise of Powers Agreement by and
between the City and the Lynwood Redevelopment Agency, dated December 1, 1992, as originally
executed and as it may from time to time be amended or supplemented pursuant to the provisions
hereof and thereof.
Leased Property
The term “Leased Property” means the real property and all the improvements
thereon or to be located thereon described in Exhibit A attached hereto, and Exhibit A in the Site
Lease and in the Facility Lease (as the same may be changed from time to time by Removal or
Substitution, as defined in the Facility Lease).
Mandatory Sinking Account Payment
The term “Mandatory Sinking Account Payment” means the principal amount of
any Bond required to be paid on each Mandatory Sinking Account Payment Date pursuant to the
terms of this Indenture or any Supplemental Indenture.
Mandatory Sinking Account Payment Date
The term “Mandatory Sinking Account Payment Date,” means ________ 1 of each
year pursuant to this Indenture or any Supplemental Indenture.
Maximum Annual Debt Service
The term “Maximum Annual Debt Service” means an amount equal to the largest
Annual Debt Service for all future Bond Years beginning in the Bond Year in which the calculation
is made.
MSRB
The term “MSRB” shall mean the Municipal Securities Rulemaking Board or any
other entity designated or authorized by the Securities and Exchange Commission to receive
reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and
Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal
Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.
Lynwood Public Financing Authority - Page 184 of 244 Agenda Item # 2
4847-6090-2599.1
8
Opinion of Counsel
The term “Opinion of Counsel” means a written opinion of counsel of recognized
national standing in the field of law relating to municipal bonds, appointed and paid by the City.
Outstanding
The term “Outstanding” when used as of any particular time with reference to
Bonds, means all Bonds, including, but not limited to, the Bonds as described in Section 10.01(b)
hereof, except:
(1) Bonds previously canceled by the Trustee or delivered to the Trustee for
cancellation;
(2) Bonds which pursuant to Section 9.02 hereof are not deemed outstanding;
(3) Bonds paid or deemed to have been paid within the meaning of
Section 10.01 hereof; and
(4) Bonds in lieu of or in substitution for which other Bonds shall have been
executed and delivered by the Trustee pursuant to Section 2.10 hereof.
Owner
The term “Owner” means any person who shall be the registered owner of any
Outstanding Bond as indicated in the registration books of the Trustee.
Permitted Investments
The term “Permitted Investments” means any of the following to the extent then
permitted by applicable laws and any investment policies of the City:
(1) Defeasance Securities;
(2) Obligations of any of the following federal agencies which obligations
represent the full faith and credit of the United States of America, including:
— Export-Import Bank;
— Rural Economic Community Development Administration;
— U.S. Maritime Administration;
— Small Business Administration;
— U.S. Department of Housing & Urban Development (PHAs);
— Federal Housing Administration; and
— Federal Financing Bank.
(3) Direct obligations of any of the following federal agencies which
obligations are not fully guaranteed by the full faith and credit of the United
States of America:
Lynwood Public Financing Authority - Page 185 of 244 Agenda Item # 2
4847-6090-2599.1
9
— Senior debt obligations issued by the Federal National Mortgage
Association (FNMA) or Federal Home Loan Mortgage Corporation
(FHLMC);
— Obligations of the Resolution Funding Corporation (REFCORP);
— Senior debt obligations of the Federal Home Loan Bank System; and
— Senior debt obligations of other Government Sponsored Agencies.
(4) U.S. dollar denominated deposit accounts, federal funds and bankers’
acceptances with domestic commercial banks which have a rating on their
short term certificates of deposit on the date of purchase of “A-1” or “A-
1+” by S&P and maturing not more than 360 calendar days after the date of
purchase. (Ratings on holding companies are not considered as the rating of
the bank).
(5) Commercial paper which is rated at the time of purchase in the single
highest classification, “A-1” or better by S&P and which matures not more
than 270 calendar days after the date of purchase.
(6) Investments in a money market fund rated “AAAm” or “AAAm-G” or
better by S&P.
(7) Pre-refunded Municipal Obligations defined as follows: any bonds or other
obligations of any state of the United States of America or of any agency,
instrumentality or local governmental unit of any such state which are not
callable at the option of the obligor prior to maturity or as to which
irrevocable instructions have been given by the obligor to call on the date
specified in the notice; and
(A) which are rated, based on an irrevocable escrow account or fund (the
“escrow”), in the highest rating category of S&P or any successors
thereto; or
(B) (i) which are fully secured as to principal and interest and
redemption premium, if any, by an escrow consisting only of cash
or obligations described in clause (2) of the definition of
“Defeasance Securities” contained in this Indenture, which escrow
may be applied only to the payment of such principal of and interest
and redemption premium, if any, on such bonds or other obligations
on the maturity date or dates thereof or the specified redemption date
or dates pursuant to such irrevocable instructions, as appropriate,
and (ii) which escrow is sufficient, as verified by a nationally
recognized independent certified public accountant, to pay principal
of and interest and redemption premium, if any, on the bonds or
other obligations described in this paragraph on the maturity date or
dates specified in the irrevocable instructions referred to above, as
appropriate;
Lynwood Public Financing Authority - Page 186 of 244 Agenda Item # 2
4847-6090-2599.1
10
(8) Municipal Obligations rated in the top two rating categories or higher by
S&P.
(9) Investment Agreements with entities rated at the time of entry into the
agreement in the top three rating categories or higher by S&P (supported,
as may be required, by appropriate opinions of counsel);
(10) Any investment authorized by California Government Code Section 53601;
(11) The Local Agency Investment Fund or similar pooled fund operated by or
on behalf of the State of California and which is authorized to accept
investments of moneys held in any of the funds or accounts established
pursuant to this Indenture; and
(12) Senior obligations of (a) International Bank for Reconstruction and
Development (“IBRD” or “World Bank”); (b) International Financing
Corporation (“IFC”) and (c) Inter-American Development Bank (“IADB”).
Any references to long-term rating categories in this definition of “Permitted
Investments” shall not take into account any plus or minus sign or numerical modifiers.
Policy
The term “Policy” means Municipal Bond Insurance Policy issued by the Insurer
that guarantees the scheduled payment of principal of and interest on the Series 2020A Bonds
when due.
Principal Corporate Trust Office
The term “Principal Corporate Trust Office” means the corporate trust office of the
Trustee at the address set forth in Section 12.12 hereof, except for purposes of payment,
registration, transfer, exchange and surrender of Bonds, means the corporate trust office of the
Trustee in St. Paul, Minnesota, or such other office specified by the Trustee.
Principal Fund
The term “Principal Fund” means the Series 2020A Principal Fund and each
additional fund established for the payment of principal of a Series of Additional Bonds within the
Revenue Fund established in accordance with Section 5.01(a) hereof.
Principal Payment
The term “Principal Payment” means the principal amount of Bonds required to be
paid on each Principal Payment Date.
Lynwood Public Financing Authority - Page 187 of 244 Agenda Item # 2
4847-6090-2599.1
11
Principal Payment Date
The term “Principal Payment Date” means __________ 1 of each year,
commencing on the Principal Payment Date or Dates set forth in Section 2.03 hereof.
Qualified Reserve Fund Credit Instrument
The term “Qualified Reserve Fund Credit Instrument” means an irrevocable
standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance
company and deposited with the Trustee pursuant to Section 5.02(c), provided that all of the
following requirements are met: (i) at the time of issuance of such letter of credit or surety bond,
the long-term credit rating of such commercial bank or insurance company is “AA” or “Aa2” by
S&P or Moody’s, respectively, or higher, and, if rated by A.M. Best & Company, a minimum
rating of “A;” (ii) such letter of credit or surety bond has a term which ends no earlier than the last
Interest Payment Date of the Series of Bonds to which the Reserve Requirement applies; (iii) such
letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve
Requirement with respect to which funds are proposed to be released pursuant to Section 5.02(c);
and (iv) the Trustee is authorized pursuant to the terms of such letter of credit or surety bond to
draw thereunder amounts necessary to carry out the purposes specified in Section 5.02(c),
including the replenishment of the Interest Fund or the Principal Fund.
Rebate Requirement
The term “Rebate Requirement” means the Rebate Requirement as defined in the
Tax Certificate.
Record Date
The term “Record Date” means the close of business on the 15th day of the month
preceding any Interest Payment Date, whether or not such day is a Business Day.
Redemption Fund
The term “Redemption Fund” means the fund by that name established in
accordance with Section 5.02(d) hereof.
Rental Payments
The term “Rental Payments” means, collectively, the Base Rental Payments and
the Additional Payments.
Representation Letter
The term “Representation Letter” means the Letter of Representations from the City
and the Trustee to DTC, or any successor securities depository for the Bonds, in which the City
and the Trustee make certain representations with respect to the Bonds, the payment with respect
thereto and delivery of notices with respect thereto.
Lynwood Public Financing Authority - Page 188 of 244 Agenda Item # 2
4847-6090-2599.1
12
Reserve Fund
The term “Reserve Fund” shall have the meaning given to such term in Section
5.02(c) hereof.
Reserve Policy
“Reserve Policy” means the Municipal Bond Debt Service Reserve Insurance
Policy issued by the Insurer and deposited into the Reserve Fund. The Reserve Policy constitutes
a Qualified Reserve Fund Credit Instrument for purposes of this Indenture.
Reserve Requirement
The term “Reserve Requirement” means as of any calculation date in a Bond Year,
an amount equal to the least of (i) ten percent (10%) of the sale proceeds (within the meaning of
section 148 of the Code) of the Bonds, (ii) 125% of average annual debt service on the Bonds for
that and every succeeding Bond Year, or (iii) Maximum Annual Debt Service; except with respect
to the issuance of Additional Bonds, in which case the meaning of Reserve Requirement for such
Additional Bonds shall be as set forth in any related Supplemental Indenture. Provided, however,
the Reserve Requirement on any calculation date shall not be greater than the Reserve Requirement
amount on the Closing Date or on the date of delivery of the Additional Bonds, as applicable.
Revenue Fund
The term “Revenue Fund” shall have the meaning given to such term in
Section 5.01(a).
Revenues
The term “Revenues” means all Base Rental Payments pursuant to the Facility
Lease, and all other benefits, charges, income, proceeds, profits, receipts, rents and revenues
derived by the Authority from the operation or use of the Leased Property, including interest or
profits from the investment of money in any account or fund (other than the Rebate Fund) pursuant
to Section 12.09.
S&P
“S&P” means S&P Global Ratings, its successors and their assigns, or, if such
corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities
rating agency, any other nationally recognized securities rating agency designated by the City by
notice in writing to the Authority and the Trustee.
Series
The term “Series”, when used with reference to the Bonds, means all of the Bonds
authenticated and delivered on original issuance and identified pursuant to the Indenture or a
Supplemental Indenture authorizing such Bonds as a separate Series of Bonds, and any Bonds
Lynwood Public Financing Authority - Page 189 of 244 Agenda Item # 2
4847-6090-2599.1
13
thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to the
Indenture.
Site Lease
The term “Site Lease” means that certain Site Lease, dated as of ________ 1, 2020,
with respect to the Leased Property, by and between the City, as lessor, and the Authority, as
lessee, as originally executed and as it may be amended from time to time.
Supplemental Indenture
The term “Supplemental Indenture” means an agreement amending or
supplementing the terms hereof entered into pursuant to the terms hereof.
Tax Certificate
The term “Tax Certificate” means that Tax Certificate and Agreement, by and
between the City and the Authority, executed at the time of execution and delivery of a Series of
Bonds relating to the requirements of Section 148 of the Code, as such Tax Certificate and
Agreement may be amended or supplemented.
Tax-Exempt
The term “Tax-Exempt” means, with respect to any obligation of a state or local
government, that such interest is excluded from the gross income of the owners thereof for federal
income tax purposes, whether or not such interest is includable as an item of tax preference or
otherwise includable directly or indirectly for purposes of calculating other tax liabilities, including
any alternative minimum tax or environmental tax under the Code.
Trustee
The term “Trustee” means U.S. Bank National Association, a national banking
association duly organized and existing under and by virtue of the laws of the United States of
America and having a corporate trust office located at Los Angeles, California, or any other bank
or trust company which may at any time be substituted in its place as provided in Section 8.02
hereof.
Underwriter
The term “Underwriter” means Raymond James and Associates, Inc.
Section 1.02 Interpretation. (a) In this Indenture, unless the context otherwise
requires:
(i) The terms “hereby,” “hereof,” “hereto,” “herein,” “hereunder” and
any similar terms, as used in this Indenture, refer to this Indenture, and the term “hereafter”
shall mean after, and the term “heretofore” shall mean before, the date of this Indenture;
Lynwood Public Financing Authority - Page 190 of 244 Agenda Item # 2
4847-6090-2599.1
14
(ii) Words of the masculine gender shall mean and include correlative
words of the feminine and neuter genders and words importing the singular number shall
mean and include the plural number and vice versa;
(iii) Words importing persons shall include firms, associations,
partnerships (including limited partnerships), trusts, corporations and other legal entities,
including public bodies, as well as natural persons; and
(iv) Any headings preceding the text of the several Articles and Sections
of this Indenture, and any table of contents or marginal notes appended to copies hereof,
shall be solely for convenience of reference and shall not constitute a part of this Indenture,
nor shall they affect its meaning, construction or effect.
(b) Whenever in this Indenture the City, the Authority or the Trustee is named
or referred to, it shall include, and shall be deemed to include, its respective successors and assigns
whether so expressed or not. All of the covenants, stipulations, obligations and agreements by or
on behalf of, and other provisions for the benefit of, the City, the Authority or the Trustee contained
in this Indenture shall bind and inure to the benefit of such respective successors and assigns and
shall bind and inure to the benefit of any officer, board, commission, authority, agency or
instrumentality to whom or to which there shall be transferred by or in accordance with law any
right, power or duty of the City or of its successors or assigns, the possession of which is necessary
or appropriate in order to comply with any such covenants, stipulations, obligations, agreements
or other provisions of this Indenture.
(c) Nothing in this Indenture expressed or implied is intended or shall be
construed to confer upon, or to give to, any person other than the City, the Authority, the Trustee
and the Owners of the Bonds, any right, remedy or claim under or by reason of this Indenture or
any covenant, condition or stipulation hereof. All of the covenants, stipulations, promises and
agreements in this Indenture contained by or on behalf of the City shall be for the sole benefit of
the City, the Authority, the Trustee (including its agents) and the Owners.
Section 1.03 Equal Security. In consideration of the acceptance of the Bonds by the
Owners, this Indenture shall be deemed to be and shall constitute a contract between the Trustee
and the Owners to secure the full and final payment of the principal of, premium, if any, and
interest on the Bonds which may be executed and delivered hereunder, subject to each of the
agreements, conditions, covenants and terms contained herein; and all agreements, conditions,
covenants and terms contained herein required to be observed or performed by or on behalf of the
Trustee shall be for the equal and proportionate benefit, protection and security of all Owners
without distinction, preference or priority as to security or otherwise of any Bonds over any other
Bonds by reason of the number or date thereof or the time of execution or delivery thereof or for
any cause whatsoever, except as expressly provided herein or therein.
Lynwood Public Financing Authority - Page 191 of 244 Agenda Item # 2
4847-6090-2599.1
15
ARTICLE II
TERMS AND CONDITIONS OF SERIES 2020A BONDS
Section 2.01 Authorization of Series 2020A Bonds. The Authority has reviewed all
proceedings heretofore taken relative to the authorization of the Series 2020A Bonds and has
found, as a result of such review, and hereby finds and determines that all acts, conditions and
things required by law to exist, to have happened and to have been performed precedent to and in
the issuance of the Series 2020A Bonds do exist, have happened and have been performed in due
time, form and manner as required by law, and that the Authority is now duly authorized to issue
the Series 2020A Bonds in the form and manner provided herein, and that the Series 2020A Bonds
shall be entitled to the benefit, protection and security of the provisions hereof.
Section 2.02 Terms of Series 2020A Bonds. The Series 2020A Bonds authorized to be
issued by the Authority under and subject to the terms of this Indenture shall be issued in two
series designated “Lynwood Public Financing Authority Lease Revenue Bonds, Series 2020A
(Federally Taxable),” in the aggregate principal amount of $_________; and shall be executed and
delivered in the form of fully registered Series 2020A Bonds, without coupons, in Authorized
Denominations and shall be payable in lawful money of the United States of America.
The Series 2020A Bonds shall be dated their date of delivery. Each Series 2020A
Bond shall bear interest from the Interest Payment Date to which interest has been paid or duly
provided for next preceding its date of authentication, unless such date of authentication shall be
(i) prior to the close of business on ________, 20___, in which case such Series 2020A Bond shall
bear interest from its date of delivery, (ii) subsequent to a Record Date but before the related
Interest Payment Date, in which case such Series 2020A Bond shall bear interest from such Interest
Payment Date, or (iii) an Interest Payment Date to which interest has been paid in full or duly
provided for, in which case such Series 2020A Bond shall bear interest from such date of
authentication; provided, however, that if, as shown by the records of the Trustee, interest shall be
in default, each Series 2020A Bond shall bear interest from the last Interest Payment Date to which
such interest has been paid in full or duly provided for.
Section 2.03 Payment Dates of Series 2020A Bonds; Interest.
(a) Method and Place of Payment. The principal of the Series 2020A Bonds
shall be payable, subject to prior redemption, on each Principal Payment Date, as the case may be,
in each of the years and in the amounts and with the rate of interest components set forth in the
following table:
Lynwood Public Financing Authority - Page 192 of 244 Agenda Item # 2
4847-6090-2599.1
16
Payment Date
( 1) Principal Amount
Rate of
Interest
__________________
* Final Maturity.
The interest on the Series 2020A Bonds shall be payable on each Interest Payment
Date by check sent by first class mail by the Trustee to the respective Owners of the Series 2020A
Bonds as of the Record Date for such Interest Payment Date at their addresses shown on the books
required to be kept by the Trustee pursuant to the provisions of Section 2.08 hereof. Payments of
defaulted interest on any Series 2020A Bond shall be paid by check to the Owner as of a special
record date to be fixed by the Trustee, notice of which special record date shall be given to the
Owner of the Series 2020A Bond not less than ten days prior thereto. The principal and premium,
if any, of the Series 2020A Bonds shall be payable upon presentation and surrender thereof on
maturity or on redemption prior thereto at the Principal Corporate Trust Office of the Trustee.
The Owner of $1,000,000 or more in aggregate principal amount of the Series
2020A Bonds may request in writing that the Trustee pay the interest on the Series 2020A Bonds
by wire transfer to an account in the United States of America and the Trustee shall comply with
such request for all Interest Payment Dates following the 15th day after receipt of such request.
(b) Principal and Interest Payments. The principal of the Series 2020A
Bonds shall be payable on the Principal Payment Dates indicated in subsection (a) above and the
interest on the Series 2020A Bonds shall be payable on each Interest Payment Date. Interest shall
be computed on the basis of a 360-day year of twelve 30-day months.
Section 2.04 Form of Series 2020A Bonds. The Series 2020A Bonds and the
assignment to appear thereon shall be in substantially the forms, respectively, of Exhibit B hereto,
with necessary or appropriate insertions, omissions and variations as permitted or required hereby.
Section 2.05 Execution of Bonds. The President of the Authority is hereby authorized
and directed to execute each of the Bonds on behalf of the Authority and the Secretary of the
Authority is hereby authorized and directed to countersign each of the Bonds on behalf of the
Authority. The signatures of such President and Secretary may be by printed, lithographed or
engraved by facsimile reproduction. In case any officer whose signature appears on the Bonds
Lynwood Public Financing Authority - Page 193 of 244 Agenda Item # 2
4847-6090-2599.1
17
shall cease to be such officer before the delivery of the Bonds to the purchaser thereof, such
signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained
in office until such delivery of the Bonds.
Only those Bonds bearing thereon a certificate of authentication and registration in
substantially the form set forth in Exhibit B hereto, executed manually and dated by the Trustee,
shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any
purpose, and such certificate of the Trustee shall be conclusive evidence that the Bonds so
authenticated and registered have been duly authorized, executed, issued and delivered hereunder
and are entitled to the benefit, protection and security hereof.
Section 2.06 Transfer and Payment of Bonds; Exchange of Bonds. All Bonds may
be presented for transfer by the Owner thereof, in person or by his attorney duly authorized in
writing, at the Principal Corporate Trust Office of the Trustee, on the books required to be kept by
the Trustee pursuant to the provisions of Section 2.08 hereof, upon surrender of such Bonds for
cancellation accompanied by delivery of a duly executed written instrument of transfer in a form
acceptable to the Trustee. The Trustee may treat the Owner of any Bond as the absolute owner of
such Bond for all purposes, whether or not such Bond shall be overdue, and the Trustee shall not
be affected by any knowledge or notice to the contrary; and payment of the principal of, premium,
if any, and interest on such Bond shall be made only to such Owner, which payments shall be valid
and effectual to satisfy and discharge the liability of by such Bond to the extent of the sum or sums
so paid.
Whenever any Bond or Bonds shall be surrendered for transfer, the Trustee shall
execute and deliver a new Bond or Bonds in the same principal amount in Authorized
Denominations. The Trustee shall require the payment by any Owner requesting such transfer of
any tax or other governmental charge required to be paid with respect to such transfer.
Bonds may be presented for exchange at the Principal Corporate Trust Office of the
Trustee, for a like aggregate principal amount of Bonds of other Authorized Denominations. The
Trustee shall require the payment by the Owner requesting such exchange of any tax or other
governmental charge required to be paid with respect to such exchange.
The Trustee shall not be required to transfer or exchange any Bond during the
period in which the Trustee is selecting Bonds for redemption, nor shall the Trustee be required to
transfer or exchange any Bond or portion thereof selected for redemption from and after the date
of mailing the notice of redemption thereof.
Section 2.07 Book-Entry Bonds. Notwithstanding any provision of this Indenture to
the contrary, the transfer provisions of Section 2.06 hereof do not apply if the ownership of the
Bonds is in book-entry form.
(a) Except as provided in subparagraph (d) of this Section 2.07, the registered
Owner of all of the Bonds shall be DTC, and the Bonds shall be registered in the name of Cede &
Co., as nominee for DTC. Notwithstanding anything to the contrary contained in this Indenture,
payment of interest with respect to any Bond registered as of each Record Date in the name of
Cede & Co. shall be made by wire transfer of same-day funds to the account of Cede & Co. on
Lynwood Public Financing Authority - Page 194 of 244 Agenda Item # 2
4847-6090-2599.1
18
the Interest Payment Date for the Bonds at the address indicated on the Record Date or special
record date for Cede & Co. in the Bond registration books required to be kept by the Trustee
pursuant to the provisions of Section 2.08 hereof or as otherwise provided in the Representation
Letter.
(b) The Bonds shall be initially executed and delivered in the form of separate
single fully registered Bonds in the amount of each separate stated maturity of the Bonds. Upon
initial execution and delivery, the ownership of such Bonds shall be registered in the Bond
registration books required to be kept by the Trustee pursuant to the provisions of Section 2.08
hereof in the name of Cede & Co., as nominee of DTC. The Trustee and the City shall treat DTC
(or its nominee) as the sole and exclusive Owner of the Bonds registered in its name for the
purposes of payment of the principal, premium, if any, or interest with respect to the Bonds,
selecting the Bonds or portions thereof to be redeemed, giving any notice permitted or required to
be given to Owners under this Indenture, registering the transfer of Bonds, obtaining any consent
or other action to be taken by Owners and for all other purposes whatsoever, and neither the Trustee
nor the City shall be affected by any notice to the contrary. Neither the Trustee nor the City shall
have any responsibility or obligation to any person claiming a beneficial ownership interest in the
Bonds under or through DTC, or any other person which is not shown on the Bond registration
books required to be kept by the Trustee pursuant to the provisions of Section 2.08 hereof as being
an Owner, with respect to (i) the accuracy of any records maintained by DTC; (ii) the payment by
DTC of any amount of the principal, premium, if any, or interest on the Bonds; (iii) any notice
which is permitted or required to be given to Owners under this Indenture or the selection by DTC
of any person to receive payment in the event of a partial redemption of the Bonds; or (iv) any
consent given or other action taken by DTC as Owner. The Trustee shall pay all principal,
premium, if any, and interest on the Bonds only to DTC, and all such payments shall be valid and
effective to fully satisfy and discharge the City’s obligations with respect to the principal,
premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. Except under
the conditions of (d) below, no person other than DTC shall receive an executed Bond representing
the right to receive principal, premium, if any and interest pursuant to this Indenture. Upon
delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute
a new nominee in place of Cede & Co., and subject to the provisions herein with respect to Record
Dates, the term “Cede & Co.” in this Indenture shall refer to such new nominee of DTC.
(c) In order to qualify the Bonds for DTC’s book-entry system, the City and the
Trustee, if required by DTC, will execute, countersign and deliver to DTC the Representation
Letter. The execution and delivery of the Representation Letter shall not in any way limit the
provisions of this Section 2.07 or in any other way impose upon the Trustee, the City or the
Authority any obligation whatsoever with respect to persons having interests in the Bonds other
than the Owners, as shown on the Bond registration books required to be kept by the Trustee
pursuant to the provisions of Section 2.08 hereof.
(d) In the event (i) DTC, including any successor as securities depository for
the Bonds, determines not to continue to act as securities depository for the Bonds, or (ii) the City
determines that the incumbent securities depository shall no longer so act and delivers a written
certificate to the Trustee to that effect, then the City will discontinue the book-entry system with
the incumbent securities depository for the Bonds. If the City determines to replace the incumbent
securities depository for the Bonds with another qualified securities depository, the City shall
Lynwood Public Financing Authority - Page 195 of 244 Agenda Item # 2
4847-6090-2599.1
19
prepare or direct the preparation of a new single, separate fully registered Bond for the aggregate
outstanding principal amount of Bonds of each maturity, registered in the name of such successor
or substitute qualified securities depository, or its nominee, or make such other arrangement
acceptable to the City, the Trustee and the successor securities depository for the Bonds as are not
inconsistent with the terms of this Indenture. If the City fails to identify another qualified successor
securities depository for the Bonds to replace the incumbent securities depository, then the Bonds
shall no longer be restricted to being registered in the Bond registration books required to be kept
by the Trustee pursuant to the provisions of Section 2.08 hereof in the name of the incumbent
securities depository or its nominee, but shall be registered in whatever name or names the
incumbent securities depository for the Bonds, or its nominee, shall designate. In such event the
Trustee shall execute and deliver a sufficient quantity of Bonds as to carry out the transfers and
exchanges provided in this Section and Sections 2.06 and 2.10 hereof. All such Bonds shall be in
fully registered form in denominations authorized by this Indenture.
(e) Notwithstanding any other provision of this Indenture to the contrary, so
long as any Bond is registered in the name of DTC, or its nominee, all payments with respect to
the principal, premium, if any, and interest on such Bond and all notices with respect to such Bonds
shall be made and given, respectively, as provided in the Representation Letter.
(f) In connection with any notice or other communication to be provided to
Owners pursuant to this Indenture by the City or the Trustee with respect to any consent or other
action to be taken by Owner, the City or the Trustee, as the case may be, shall establish a record
date for such consent or other action and give DTC notice of such record date not less than 15
calendar days in advance of such record date to the extent possible.
Section 2.08 Bond Registration Books. The Trustee will keep sufficient books for the
registration and transfer of the Bonds, which books shall be available for inspection by the
Authority and the City at reasonable hours and under reasonable conditions, upon reasonable
notice; and upon presentation for such purpose the Trustee shall, under such reasonable regulations
as it may prescribe, register or transfer the Bonds on such books as hereinabove provided. The
Trustee will, upon written request, make copies of the foregoing available to any Owner of at least
five percent in aggregate principal amount of Outstanding Bonds or his agent duly authorized in
writing.
Section 2.09 Temporary Bonds. The Bonds may be initially delivered in temporary
form exchangeable for definitive Bonds when ready for delivery, which temporary Bonds shall be
printed, lithographed or typewritten, shall be of such denominations as may be determined by the
Trustee, shall be in fully registered form and shall contain such reference to any of the provisions
hereof as may be appropriate. Every temporary Bond shall be authenticated and delivered by the
Trustee upon the same conditions and terms and in substantially the same manner as definitive
Bonds. If the Trustee authenticates and delivers temporary Bonds, it will authenticate definitive
Bonds without delay, and thereupon the temporary Bonds may be surrendered at the Principal
Corporate Trust Office of the Trustee, in exchange for such definitive Bonds, and until so
exchanged such temporary Bonds shall be entitled to the same benefits hereunder as definitive
Bonds executed and delivered hereunder.
Lynwood Public Financing Authority - Page 196 of 244 Agenda Item # 2
4847-6090-2599.1
20
Section 2.10 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the Trustee, at the expense of the Owner thereof, shall authenticate and deliver a new
Bond of like tenor, payment date in exchange and substitution for the Bond so mutilated, but only
upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to
the Trustee shall be canceled by it. If any Bond shall be lost, destroyed or stolen, evidence of such
loss, destruction or theft may be submitted to the Trustee, and if such evidence is satisfactory to
the Trustee and indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of
the Owner thereof, shall authenticate and deliver a new Bond of like tenor, numbered as the Trustee
shall determine, in lieu of and in substitution for the Bond so lost, destroyed or stolen. The Trustee
shall require payment of a sum not exceeding the actual cost of preparing each new Bond
authenticated and delivered by it under this Section and of the expenses which may be incurred by
it under this Section. Any Bond authenticated and delivered under the provisions of this Section in
lieu of any Bond alleged to be lost, destroyed or stolen shall be equally and proportionately entitled
to the benefits hereof with all other Bonds secured hereby, and the Trustee shall not be required to
treat both the original Bond and any replacement Bond as being Outstanding for the purpose of
determining the amount of Bonds which may be executed and delivered hereunder or for the
purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and
replacement Bond shall be treated as one and the same. Notwithstanding any other provision of
this Section, in lieu of authenticating and delivering a new Bond for a Bond which has been lost,
destroyed or stolen and which has matured or will mature within 30 days after the Trustee has
received all required indemnity and payments on account of a lost, destroyed or stolen Bond, the
Trustee may make payment of such Bond to the Owner thereof on or after the maturity date.
Section 2.11 Execution and Delivery of Additional Bonds. The City, the Authority
and the Trustee may, by execution of a Supplemental Indenture without the consent of the Owners,
provide for the execution and delivery of Additional Bonds payable from additional Revenues.
The Trustee may authenticate and deliver to or upon the request of the City such Additional Bonds,
and the proceeds of such Additional Bonds may be applied to any lawful purposes of the City or
the Authority, but such Additional Bonds may only be authenticated and delivered upon
compliance by the City with the provisions of Section 2.12 hereof and subject to the following
specific conditions, which are hereby made conditions precedent to the execution and delivery of
any such Additional Bonds:
(a) Neither of the City nor the Authority shall be in default under the Indenture
or any Supplemental Indenture or under the Facility Lease or the Site Lease;
(b) The dated date and the maturity dates of, and the Mandatory Sinking
Account Payment dates, if any, for such Additional Bonds; provided that (i) each maturity date
shall fall upon a Principal Payment Date, (ii) the final maturity date shall not exceed the remaining
useful life of the Leased Property, (iii) all such Additional Bonds of like maturity shall be identical
in all respects, except as to number and denomination and (iv) serial maturities for Serial Bonds
or sinking fund payments for Term Bonds, or any combination thereof, shall be established to
provide for the retirement of such Additional Bonds on or before their respective maturity dates;
(c) The interest payment dates for such Additional Bonds shall be Interest
Payment Dates;
Lynwood Public Financing Authority - Page 197 of 244 Agenda Item # 2
4847-6090-2599.1
21
(d) The aggregate principal amount of Bonds authenticated and delivered and
at any time Outstanding hereunder or under any Supplemental Indenture shall not exceed any limit
imposed by law, by this Indenture or by any Supplemental Indenture;
(e) The Site Lease and the Facility Lease shall have been amended, to the extent
necessary, so as to increase the Base Rental Payments payable by the City thereunder by an
aggregate amount at least sufficient to pay the principal of and interest on such Additional Bonds
as the same become due provided, however, that no such amendment shall be made such that Base
Rental Payments, including any such amendment, in any year shall be in excess of the annual fair
rental value of the Leased Property, and evidence of the satisfaction of this condition shall be made
by a Certificate of the City, as required by Section 2.12(b) hereof; and
(f) The Insurer has delivered its prior written consent to the Additional Bonds.
Any Additional Bonds shall be on a parity with the Bonds and each Owner thereof
shall have the same rights upon an Event of Default as the Owner of any other Bonds executed
and delivered under this Indenture, except as otherwise provided in the Supplemental Indenture
under which Additional Bonds are executed and delivered.
Section 2.12 Proceedings for Authorization of Additional Bonds. Whenever the City
and the Authority shall determine to authorize the execution and delivery of any Additional Bonds
pursuant to Section 2.11 hereof, the City, the Authority and the Trustee shall enter into a
Supplemental Indenture without the consent of the Owners of any Bonds, providing for the
execution and delivery of such Additional Bonds, specifying the maximum principal amount of
such Additional Bonds and prescribing the terms and conditions of such Additional Bonds.
Such Supplemental Indenture shall prescribe the form or forms of such Additional
Bonds and, subject to the provisions of Section 2.11 hereof, shall provide for the distinctive
designation, denominations, method of numbering, dates, Principal Payment Dates, interest rates,
Interest Payment Dates, provisions for redemption (if desired) and places of payment of principal
and interest.
Before such Additional Bonds shall be executed and delivered, the City and the
Authority shall file or cause to be filed the following documents with the Trustee:
(a) An Opinion of Counsel (which may rely upon the Certificate of the City
required by Section 2.12(b) and such other opinions and certificates as may be appropriate) setting
forth (1) that such Counsel has examined the Supplemental Indenture and the amendment, if any,
to the Site Lease and the Facility Lease required by Section 2.11(f) hereof; (2) that the execution
and delivery of the Additional Bonds have been sufficiently and duly authorized by the City and
the Authority; (3) that said amendments to the Site Lease and the Facility Lease and the
Supplemental Indenture, when duly executed by the City and the Authority, will be valid and
binding obligations of the City and the Authority; (4) that said amendments to the Site Lease and
the Facility Lease have been duly authorized, executed and delivered; and (5) that the amendments
to the Site Lease and the Facility Lease do not adversely affect the Tax-Exempt status of interest
on any Outstanding Bonds the interest on which is intended to be Tax-Exempt;
Lynwood Public Financing Authority - Page 198 of 244 Agenda Item # 2
4847-6090-2599.1
22
(b) A Certificate of the City that the requirements of Section 2.11 hereof have
been met, including a Certificate of the City as to the annual fair rental value of the Leased
Property; which Certificate may assume the timely construction and completion of any Project to
be financed with the proceeds of Additional Bonds so long as the proceeds of Additional Bonds
or other funds of the City have been deposited with the Trustee (i) in the Construction Fund, in an
amount reasonably expected to be sufficient to provide for the Construction Costs of such Project,
and (ii) in a capitalized interest account, in an amount sufficient to pay interest on the Additional
Bonds for the period of time from their date of issuance until 6 months following the expected
delivery date of the Certificate of Completion with respect to such Project;
(c) Certified copies of the resolutions of the City and the Authority, authorizing
the execution of the amendments to the Site Lease and Facility Lease required by Section 2.11
hereof;
(d) An executed counterpart or duly authenticated copy of the amendments to
the Site Lease and Facility Lease required by Section 2.11(f) hereof;
(e) Certified copies of the policies of insurance required by Article VI of the
Facility Lease or certificates thereof, which shall evidence that the amounts of the insurance
required under Section 6.03(1) and (2) of the Facility Lease have been increased, if necessary, to
cover the amount of such Additional Bonds; and
(f) A CLTA title insurance policy or other appropriate form of policy in the
amount of the Additional Bonds of the type and with the endorsements described in Section 6.05
of the Facility Lease.
Upon the delivery to the Trustee of the foregoing instruments so as to permit the
execution and delivery of the Additional Bonds in accordance with the Supplemental Indenture
then delivered to the Trustee, the Trustee shall authenticate and deliver said Additional Bonds, in
the aggregate principal amount specified in such Supplemental Indenture, to, or upon the request
of, the City.
ARTICLE III
PROCEEDS OF BONDS
Section 3.01 Delivery of Series 2020A Bonds. The Trustee is hereby authorized to
execute and deliver the Series 2020A Bonds to the Underwriter pursuant to the Bond Purchase
Agreement upon receipt of a Written Request of the Authority and upon receipt of the proceeds of
sale thereof.
Section 3.02 Deposit of Proceeds of Series 2020A Bonds and Other Moneys. The
proceeds received from the sale of the Series 2020A Bonds in the amount of $____________
(consisting of the par amount of the Series 2020A Bonds of $___________, less $____________
for the Policy premium relating to the Series 2020A Bonds and less $___________ for the Reserve
Policy premium relating to the Series 2020A Bonds which shall be wired directly to
________________ by the Underwriter on the Closing Date, and less an Underwriter’s discount
of $___________), shall be transferred for deposit by the Trustee to the following respective funds:
Lynwood Public Financing Authority - Page 199 of 244 Agenda Item # 2
4847-6090-2599.1
23
(a) The Trustee shall deposit the amount of $_________ in the Costs of
Issuance Fund; and
(b) The Trustee shall transfer to the City the amount of $_____________.
To facilitate any transfers to or for the benefit of the City required in this
Section 3.02, the Trustee may, in its discretion open a temporary fund or account on its records
which shall be closed upon completion of such transfers.
Section 3.03 Costs of Issuance Fund. There is hereby established in trust a special
fund designated as the “Costs of Issuance Fund” which shall be held by the Trustee and which
shall be kept separate and apart from all other funds held by the Trustee. The moneys in the Costs
of Issuance Fund shall be applied to the payment of Costs of Issuance of the Bonds, upon a Written
Request of the City on behalf of the Authority (in the form as set forth in Exhibit D hereto). All
payments from the Costs of Issuance Fund shall be reflected in the Trustee’s regular accounting
statements. On or before 6 months after the issuance of any Series of Bonds, the Trustee shall
transfer any amounts then remaining in the Costs of Issuance Fund to the Revenue Fund and the
Costs of Issuance Fund shall be closed.
ARTICLE IV
REDEMPTION OF SERIES 2020A BONDS
Section 4.01 Terms of Redemption. The Series 2020A Bonds shall be subject to
redemption prior to their respective maturity dates as set forth in subsections (a) and (b) hereof.
(a) Extraordinary Redemption. To the extent permitted or required by
Section 5.03 or 5.04 hereof, the Series 2020A Bonds are subject to redemption on any date prior
to their respective maturity dates, as a whole, or in part, at the written direction of the City, from
the net proceeds of any insurance or condemnation award with respect to the Leased Property or
portions thereof, at a redemption price equal to the principal amount of the Series 2020A Bonds
plus accrued interest thereon to the date fixed for redemption, without premium.
(b) Optional Redemption. The Series 2020A Bonds maturing on or after
___________ are subject to optional redemption prior to maturity on or after ___________ at the
option of the City, in whole, or in part, on any date, at a redemption price equal to the principal
amount of the Series 2020A Bonds to be redeemed, plus accrued but unpaid interest to the
redemption date, without premium.
(c) Mandatory Sinking Fund Redemption. The Series 2020A Bonds maturing
on ___________ and ___________ (the “Series 2020A Term Bonds”) are subject to mandatory
redemption, in part by lot, on ________ 1 in each year shown below until maturity, from
Mandatory Sinking Account Payments made by the Authority, at a redemption price equal to the
principal amount thereof to be redeemed together with accrued interest thereon to the redemption
date, without premium, in the aggregate respective principal amounts and on the respective dates
as set forth in the following table; provided, however, that in lieu of redemption thereof, such
Series 2020A Term Bonds may be purchased by the Authority and tendered to the Trustee.
Lynwood Public Financing Authority - Page 200 of 244 Agenda Item # 2
4847-6090-2599.1
24
Series 2020A Term Bonds maturing on ___________
Sinking Fund
Redemption Date
( 1)
Principal Amount to be
Redeemed or
Purchased
____________________
* Maturity.
Series 2020A Term Bonds maturing on ________
Sinking Fund
Redemption Date
( 1)
Principal Amount to be
Redeemed or
Purchased
____________________
* Maturity.
Series 2020A Term Bonds maturing on _________
Sinking Fund
Redemption Date
( 1)
Principal Amount to be
Redeemed or
Purchased
____________________
* Final Maturity.
If some but not all of the Series 2020A Term Bonds have been redeemed pursuant to
extraordinary or optional redemptions, the total amount of Mandatory Sinking Account Payments
to be made subsequent to such redemption shall be reduced in an amount equal to the principal
amount of the Series 2020A Term Bonds so redeemed by reducing each such future Mandatory
Sinking Account Payments on a pro rata basis (as nearly as practicable) in integral multiples of
$5,000, as shall be designated pursuant to written notice filed by Authority with the Trustee.
Section 4.02 Notice of Redemption. Notice of redemption shall be mailed by first class
mail by the Trustee, on behalf and at the expense of the City, not less than 30 nor more than 60
days prior to the redemption date to the respective Owners of Bonds designated for redemption at
Lynwood Public Financing Authority - Page 201 of 244 Agenda Item # 2
4847-6090-2599.1
25
their addresses appearing on the bond registration books of the Trustee and, unless otherwise
instructed by the Authority, provided by the Trustee to the MSRB. Each notice of redemption
shall state the date of such notice, the Bonds to be redeemed, the Series and date of issue of such
Bonds, the redemption date, the redemption price, the place or places of redemption (including the
name and appropriate address or addresses), the CUSIP number (if any) of the maturity or
maturities, and, if less than all of any such maturity are to be redeemed, the distinctive certificate
numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed
in part only, the respective portions of the principal amount thereof to be redeemed. Each such
notice of optional redemption shall also state that such redemption may be rescinded by the City
and that, unless such redemption is so rescinded, and provided that on said date funds are available
for payment in full of the Bonds then called for redemption, on said date there will become due
and payable on each of such Bonds the redemption price thereof or of said specified portion of the
principal amount thereof in the case of a Bond to be redeemed in part only, together with interest
accrued thereon to the redemption date, and that from and after such redemption date interest
thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the address
or addresses of the Trustee specified in the redemption notice.
Failure by the Trustee to give notice pursuant to this Section to any one or more of
the information services or securities depositories, or the insufficiency of any such notice shall not
affect the sufficiency of the proceedings for redemption. The failure of any Owner to receive any
redemption notice mailed to such Owner and any defect in the notice so mailed shall not affect the
sufficiency of the proceedings for redemption.
The City shall have the right to rescind any optional redemption by written notice
to the Trustee on or prior to the date fixed for redemption. Any notice of redemption shall be
canceled and annulled if for any reason funds are not available on the date fixed for redemption
for the payment in full of the Bonds then called for redemption, and such cancellation shall not
constitute an Event of Default hereunder. The Trustee shall mail notice of such rescission of
redemption in the same manner as the original notice of redemption was sent.
Section 4.03 Partial Redemption of Bonds. Upon surrender of any Bond redeemed in
part only, the Trustee shall execute and deliver to the Owner thereof a new Bond or Bonds
representing the unpaid principal amount of the Bond surrendered.
Whenever less than all the Outstanding Bonds maturing on any one date are called
for redemption at any one time, the Trustee shall select the Bonds to be redeemed, from the
Outstanding Bonds maturing on such date not previously selected for redemption, by lot in any
manner which the Trustee deems appropriate.
Section 4.04 Effect of Redemption. If notice of redemption has been duly given as
aforesaid and moneys for the payment of the redemption price of the Bonds to be redeemed are
held by the Trustee, then on the redemption date designated in such notice the Bonds so called for
redemption shall become payable at the redemption price specified in such notice; and from and
after the date so designated interest on the Bonds so called for redemption shall cease to accrue,
such Bonds shall cease to be entitled to any benefit or security hereunder and the Owners of such
Bonds shall have no rights in respect thereof except to receive payment of the redemption price
Lynwood Public Financing Authority - Page 202 of 244 Agenda Item # 2
4847-6090-2599.1
26
represented thereby. The Trustee shall, upon surrender for payment of any of the Bonds to be
redeemed, pay such Bonds at the redemption price thereof.
All Bonds redeemed pursuant to the provisions of this Article shall be canceled by
the Trustee and shall not be redelivered.
ARTICLE V
REVENUES
Section 5.01 Pledge of Revenues; Revenue Fund.
(a) There is hereby established a special fund designated as the “Revenue
Fund” which shall be held by the Trustee and which shall be kept separate and apart from all other
funds and moneys held by the Trustee. Within the Revenue Fund, the Trustee shall establish and
maintain a separate fund designated the “Series 2020A Interest Fund” and a separate fund
designated the “Series 2020A Principal Fund.” Upon the issuance of Additional Bonds, the Trustee
shall also establish and maintain, within the Revenue Fund, a separate Interest Fund and a separate
Principal Fund for each Series of Additional Bonds. The Authority and the City hereby irrevocably
pledge and transfer to the Trustee, for the benefit of the Owners, all of its right, title and interest
in and to all amounts on deposit from time to time in the funds and accounts established hereunder
(other than the Rebate Fund), subject to the provisions hereof permitting the disbursement thereof
for or to the purposes and on the conditions and terms set forth herein, and in and to the Revenues,
which shall be used for the punctual payment of the interest and principal of the Bonds and the
Revenues shall not be used for any other purpose while any of the Bonds remain Outstanding. It
is the intent of the parties hereto that the Authority shall not have any right, title, in or to the
Revenues. In the event, however, that it should be determined that the Authority has any right,
title or interest in or to the Revenues, then the Authority hereby irrevocably pledges and transfers
to the Trustee, for the benefit of the Owners, all of such right, title and interest, which shall be used
for the punctual payment of the interest and principal of the Bonds. These pledges shall constitute
a first and exclusive lien on the funds established hereunder and the Revenues in accordance with
the terms hereof subject in all events to the power of the City and the Authority to cause the
execution and delivery of Additional Bonds pursuant to Section 2.11 hereof which shall be on a
parity with the Bonds Outstanding.
(b) All Revenues shall be paid directly by the City to the Trustee, and if
received by the Authority at any time shall be deposited by the Authority, as the case may be, with
the Trustee within one Business Day after the receipt thereof. All Revenues, the proceeds of rental
interruption insurance and liquidated damages, if any, shall be deposited by the Trustee in the
Revenue Fund and all amounts on deposit therein shall be held in trust by the Trustee, which fund
the Trustee hereby agrees to establish and maintain for the benefit of the Owners until all required
Revenues are paid in full pursuant to the Facility Lease or until such date as the Bonds are no
longer Outstanding; provided, however, and notwithstanding the foregoing, if the Trustee receives
Revenues in an amount in excess of the amount necessary to pay the amount due and owing on the
next Interest Payment Date, Principal Payment Date or Mandatory Sinking Account Payment Date,
as the case may be, after giving effect to the funds then on deposit in the Revenue Fund not needed
Lynwood Public Financing Authority - Page 203 of 244 Agenda Item # 2
4847-6090-2599.1
27
for any other purpose hereunder, then amounts in the Revenue Fund not needed to make such
payments may be utilized by the Trustee, as directed in writing by the City, for any other purpose.
Section 5.02 Deposit of Revenues. Except as otherwise provided in this Section, the
Trustee shall deposit the amounts in the Revenue Fund at the time and in the priority and manner
hereinafter provided in the following respective funds, each of which the Trustee hereby agrees to
establish and maintain until all required Revenues are paid in full pursuant to the Facility Lease or
until such date as the Bonds are no longer Outstanding, and the moneys in each of such funds shall
be disbursed only for the purposes and uses hereinafter authorized.
(a) Interest Fund. The Trustee, on each Interest Payment Date, shall transfer
from the Revenue Fund to each Interest Fund an amount equal to the interest on the related Series
of Bonds coming due on such Interest Payment Date; provided, however, that if and to the extent
that such amount is available for such Series of Bonds in any capitalized interest subaccount
established pursuant to a Supplemental Indenture on such Interest Payment Date, the Trustee shall,
instead, transfer such amount from such capitalized interest subaccount to the related Interest Fund
on such Interest Payment Date. Moneys in each Interest Fund shall be withdrawn and used by the
Trustee for the purpose of paying interest on the related Series of Bonds as and when due and
payable.
(b) Principal Fund. The Trustee, on each Principal Payment Date and
Mandatory Sinking Account Payment Date, shall transfer from the Revenue Fund to each Principal
Fund an amount equal to the principal of the related Series of Bonds, including principal due and
payable by reason of a Mandatory Sinking Account Payment coming due on such date. Moneys in
each Principal Fund shall be withdrawn and used by the Trustee for the purpose of paying principal
of the related Series of Bonds, including principal due and payable by reason of a Mandatory
Sinking Account Payment, as and when due and payable.
(c) Reserve Fund. The Trustee shall establish and maintain a separate account
to be known as the “Reserve Fund.” On or before each Interest Payment Date, the Trustee shall
deposit in the Reserve Fund such amount as may be necessary to maintain a balance therein equal
to the Reserve Requirement. No deposit shall be made in the Reserve Fund so long as there shall
be on deposit an amount equal to the Reserve Requirement. All money in the Reserve Fund (or
available to be drawn from a Qualified Reserve Fund Credit Instrument) shall be used and
withdrawn by the Trustee solely for the purpose of replenishing the Interest Fund or the Principal
Fund in such order, in the event of any deficiency at any time in either of such accounts, or for the
purpose of paying the interest on or principal of or redemption premiums, if any, on the Bonds in
the event that no other money of the Authority is lawfully available therefor. All moneys in the
Reserve Fund (or available to be drawn from a Qualified Reserve Fund Credit Instrument held in
the Reserve Fund) in excess of the Reserve Requirement may be applied to the retirement of all
Bonds then Outstanding or as a credit against the next following Base Rental Payment as directed
in a Request by the City. The Reserve Requirement may be satisfied by crediting to the Reserve
Fund moneys or a Qualified Reserve Fund Credit Instrument or any combination thereof, which
in the aggregate make funds available in the Reserve Fund in an amount equal to the Reserve
Requirement.
Lynwood Public Financing Authority - Page 204 of 244 Agenda Item # 2
4847-6090-2599.1
28
Upon the deposit with the Trustee of such Qualified Reserve Fund Credit
Instrument to satisfy the Reserve Requirement, the Trustee shall transfer any excess amounts then
on deposit in the Reserve Fund into a segregated account of the Revenue Fund to be established
by the Trustee, which monies shall be applied pursuant to the written direction of the Authority
either (i) to the payment within one year of the date of transfer of capital expenditures of the
Authority permitted by law, or (ii) to the redemption of Bonds on the earliest succeeding date on
which such redemption is permitted hereby, and pending such application shall in accordance with
written direction of the Authority be held either not invested in investment property (as defined in
section 148(b) of the Code), or invested in such property to produce a yield that is not in excess of
the yield on the Bonds; provided, however, that the Authority may by written direction to the
Trustee cause an alternative use of such amounts if the Authority shall first have obtained a written
opinion of nationally recognized bond counsel substantially to the effect that such alternative use
will not adversely affect the exclusion pursuant to section 103 of the Code of interest on the Bonds
from the gross income of the owners thereof for federal income tax purposes.
In any case where a Reserve Fund is funded with a combination of cash and a
Qualified Reserve Fund Credit Instrument, the Trustee shall deplete all cash balances before
drawing on the Qualified Reserve Fund Credit Instrument. With regard to replenishment, any
available moneys provided by the Authority or the City shall be used first to reinstate the Qualified
Reserve Fund Credit Instrument and second, to replenish the cash in the Reserve Fund. In the
event the Qualified Reserve Fund Credit Instrument is drawn upon, the Authority shall make
payment of interest on amounts advanced under the Qualified Reserve Fund Credit Instrument
after making any payments pursuant to this subsection.
With respect to the issuance of any Additional Bonds, the Supplemental Indenture
providing for the issuance of such Additional Bonds shall establish whether such Additional Bonds
shall be secured by a Reserve Fund and, if so, shall establish a separate subaccount for such
Additional Bonds within the Reserve Fund and the terms to which such subaccount will be subject.
With respect to the Series 2020A Bonds, the Reserve Requirement is satisfied by
the deposit of the Reserve Policy in the Reserve Fund and the provisions in Section 11.02 hereof
shall govern with respect to the Reserve Policy.
(d) Redemption Fund. The Trustee, on the redemption date specified in the
Written Request of the City filed with the Trustee at the time that any prepaid Base Rental Payment
is paid to the Trustee pursuant to the Facility Lease, shall deposit in the Redemption Fund that
amount of moneys representing the portion of the Base Rental Payments designated as prepaid
Base Rental Payments. Monies in the Redemption Fund shall be used and withdrawn by the
Trustee for the purpose of paying the principal, premium, if any, and interest of the Bonds to be
redeemed.
Section 5.03 Application of Insurance Proceeds and Condemnation Awards. The
Trustee shall not be responsible for the sufficiency of any insurance required by the Facility Lease
and shall be fully protected in accepting payment on account of such insurance or any adjustment,
compromise or settlement of any loss agreed to by the City or the Authority. Delivery to the
Trustee of the schedule of insurance policies under the Facility Lease shall not confer
responsibility upon the Trustee as to the sufficiency of coverage or amounts of such policies.
Lynwood Public Financing Authority - Page 205 of 244 Agenda Item # 2
4847-6090-2599.1
29
Except as hereinafter provided, in the event of any damage to or destruction of any
part of the Leased Property, caused by the perils covered by the policies of insurance required to
be maintained by the City pursuant to Section 6.03 of the Facility Lease, the City and the Authority
shall cause the proceeds of such insurance (other than rental interruption insurance which is to be
placed in the Revenue Fund) to be used in accordance with Section 7.01 of the Facility Lease. The
Trustee shall hold said proceeds in a separate fund to be established and maintained by the Trustee
when deposit is required and designated the “Insurance Proceeds and Condemnation Awards
Fund.” The Trustee shall only make disbursements from the Insurance Proceeds and
Condemnation Awards Fund upon receipt of a Written Request of the City on behalf of the
Authority, which (i) states with respect to each disbursement to be made: (A) the requisition
number, (B) the name and address of the person, firm or authority to whom payment is due, (C) the
amount to be disbursed, and (D) that each obligation therein has been properly incurred for the
purpose of repair, reconstruction or replacement of the Leased Property to at least the same good
order, repair and condition as it was in prior to the damage or destruction, insofar as the same may
be accomplished by the use of said proceeds and is a proper charge against the Insurance Proceeds
and Condemnation Awards Fund and has not been the basis of any previous disbursement;
(ii) specifies in reasonable detail the nature of the obligation; and (iii) is accompanied by a bill or
statement of account for each obligation. Any balance of said proceeds not required for such
repair, reconstruction or replacement as evidenced by a Certificate of the City to the effect that
such repair, reconstruction or replacement has been completed and all amounts owing therefor
have been paid or provision for the payment therefor has been made shall be transferred by the
Trustee to Redemption Fund and applied in the manner provided by Section 4.01(a) hereof.
Alternatively, the City, at its option, and if the proceeds of such insurance together with any other
moneys then available for the purpose are at least sufficient to redeem all Outstanding Bonds, may
elect not to repair, reconstruct or replace the damaged or destroyed portion of the Leased Property
and thereupon shall cause said proceeds to be transferred to the Redemption Fund and used for the
redemption of Outstanding Bonds pursuant to Section 4.01(a) hereof; provided, that if the City
elects to so redeem the Outstanding Bonds, then the City shall make said election within 45 days
after the damage to or destruction of the Leased Property. Notwithstanding any other provision
herein, the City shall only redeem less than all of the Outstanding Bonds if the annual fair rental
value of the Leased Property after such damage, destruction or condemnation is at least equal to
the aggregate annual amount of principal and interest of the Outstanding Bonds not being
redeemed.
The proceeds of any award in eminent domain shall be transferred by the City to
the Trustee for deposit in the Redemption Fund and applied to the redemption of Outstanding
Bonds pursuant to Section 4.01(a) hereof.
Section 5.04 Title Insurance. Proceeds of any policy of title insurance received by the
City, the Authority or the Trustee in respect of the Leased Property shall be applied and disbursed
by the City, the Authority or the Trustee as follows:
(a) If the City determines that the title defect giving rise to such proceeds has
not materially affected the operation of the Leased Property and will not result in an abatement of
Rental Payments payable by the City under the Facility Lease, such proceeds shall be remitted to
the City and used for any lawful purpose thereof; or
Lynwood Public Financing Authority - Page 206 of 244 Agenda Item # 2
4847-6090-2599.1
30
(b) If any portion of the Leased Property has been affected by such title defect,
and if the City determines that such title defect will result in an abatement of Rental Payments
payable by the City under the Facility Lease, then the City, the Authority or the Trustee, upon
written direction of the City, shall immediately deposit such proceeds in the Redemption Fund and
such proceeds shall be applied to the redemption of Bonds in the manner provided in
Section 4.01(a) hereof.
ARTICLE VI
COVENANTS
Section 6.01 Compliance with Indenture. The Trustee will not execute or deliver any
Bonds in any manner other than in accordance with the provisions hereof, and neither of the City
or the Authority will suffer or permit any default by them to occur hereunder, but will faithfully
comply with, keep, observe and perform all the agreements, conditions, covenants and terms
hereof required to be complied with, kept, observed and performed by them.
Section 6.02 Compliance with Facility Lease and Site Lease. The City and the
Authority will faithfully comply with, keep, observe and perform all the agreements, conditions,
covenants and terms contained in the Facility Lease and Site Lease required to be complied with,
kept, observed and performed by them and, together with the Trustee, will enforce the Facility
Lease and Site Lease against the other party thereto in accordance with their respective terms.
Section 6.03 Observance of Laws and Regulations. The Trustee, the City and the
Authority will faithfully comply with, keep, observe and perform all valid and lawful obligations
or regulations now or hereafter imposed on them by contract, or prescribed by any law of the
United States of America or of the State of California, or by any officer, board or commission
having jurisdiction or control, as a condition of the continued enjoyment of each and every
franchise, right or privilege now owned or hereafter acquired by them, including their right to exist
and carry on their respective businesses, to the end that such franchises, rights and privileges shall
be maintained and preserved and shall not become abandoned, forfeited or in any manner impaired.
Section 6.04 Other Liens. The City will keep the Leased Property and all parts thereof
free from judgments and materialmen’s and mechanics’ liens and free from all claims, demands,
encumbrances and other liens of whatever nature or character, other than Permitted Encumbrances
(with respect to the Leased Property, as such term is defined in the Facility Lease, and free from
any claim or liability which materially impairs the City in conducting its business or utilizing the
Leased Property, and the Trustee at its option (after first giving the City ten days’ written notice
to comply therewith and failure of the City to take any necessary steps to defend against or to so
comply within such ten-day period) may defend against any and all actions or proceedings in which
the validity hereof is or might be questioned, or may pay or compromise any claim or demand
asserted in any such actions or proceedings; provided, however, that, in defending against any such
actions or proceedings or in paying or compromising any such claims or demands, the Trustee
shall not in any event be deemed to have waived or released the City from liability for or on account
of any of its agreements and covenants contained herein, or from its liability hereunder to defend
the validity hereof and to perform such agreements and covenants. The Trustee shall have no
Lynwood Public Financing Authority - Page 207 of 244 Agenda Item # 2
4847-6090-2599.1
31
liability with respect to any determination made in good faith to proceed or decline to defend, pay
or compromise any such claim or demand.
So long as any Bonds are Outstanding, neither the City nor the Authority will create
or suffer to be created any pledge of or lien on the Revenues other than as provided or permitted
under Section 5.01 hereof.
Section 6.05 Prosecution and Defense of Suits. The City will promptly take such
action from time to time as may be necessary or proper, in its reasonable discretion, to remedy or
cure any known cloud upon or defect in the title to the Leased Property or any portion thereof,
whether now existing or hereafter developing, and will prosecute all actions, suits or other
proceedings as may be appropriate for such purpose.
Section 6.06 Accounting Records and Statements. The Trustee will keep proper
accounting records in which complete and correct entries shall be made of all transactions made
by it relating to the receipt, deposit and disbursement of the Revenues, and such accounting records
shall be available for inspection by the City or the Authority at reasonable hours, under reasonable
conditions and with reasonable notice. The Trustee shall deliver a monthly accounting to the City;
provided that the Trustee shall not be obligated to report as to any fund or account that (a) has a
balance of zero and (b) has not had any activity since the last reporting date.
Section 6.07 Recordation and Filing. The Authority will file, record, register, renew,
refile and rerecord all such documents, including financing statements (or continuation statements
in connection therewith), as may be required by law in order to maintain the Facility Lease, Site
Lease, Assignment Agreement and this Indenture at all times as a security interest in the Revenues,
all in such manner, at such times and in such places as may be required and to the extent permitted
by law in order to perfect, preserve and protect fully the security of the Owners and the rights and
security interests of the Trustee, and the Authority will do whatever else may be necessary or be
reasonably required in order to perfect and continue the liens of the Facility Lease, Site Lease,
Assignment Agreement and this Indenture.
Section 6.08 Further Assurances. Whenever and so often as requested to do so by the
Trustee or any Owner, the City and the Authority will promptly execute and deliver or cause to be
executed and delivered all such other and further assurances, documents or instruments and
promptly do or cause to be done all such other and further things as may be necessary or reasonably
required in order to further and more fully vest in the Trustee and the Owners all advantages,
benefits, interests, powers, privileges and rights conferred or intended to be conferred upon them
hereby or by the Assignment Agreement, Facility Lease or Site Lease.
Section 6.09 Tax Covenants; Rebate Fund.
(a) In addition to the accounts created pursuant to Section 5.02, the Trustee
shall establish and maintain a fund separate from any other fund or account established and
maintained hereunder designated as the Rebate Fund. There shall be deposited in the Rebate Fund
such amounts as are required to be deposited therein pursuant to the Tax Certificate. The Trustee
may rely conclusively upon the City’s determinations, calculations and certifications required by
this Section. The Trustee shall have no responsibility to independently make any calculation or
Lynwood Public Financing Authority - Page 208 of 244 Agenda Item # 2
4847-6090-2599.1
32
determination or to review the City’s calculations hereunder. All money at any time deposited in
the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate
Requirement (as defined in the Tax Certificate), for payment to the United States of America.
Notwithstanding the provisions of this Indenture relating to the pledge of Revenues, the allocation
of money in the Revenue Fund, the investments of money in any fund or account, the application
of funds upon an Event of Default and the defeasance of Outstanding Bonds, all amounts required
to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this Section
6.09 and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be
deemed conclusively to have complied with such provisions if it follows the written directions of
the Authority, and shall have no liability or responsibility to enforce compliance by the Authority
with the terms of the Tax Certificate.
(b) Any funds remaining in the Rebate Fund with respect to a Series of Bonds
after redemption and payment of all such Series of Bonds and all other amounts due hereunder or
under the Facility Lease relating to such Series of Bonds, or provision made therefor satisfactory
to the Trustee, including accrued interest and payment of any applicable fees and expenses of the
Trustee and satisfaction of the Rebate Requirement (as defined in the Tax Certificate), shall be
withdrawn by the Trustee and remitted to or upon the direction of the Authority.
(c) The Authority shall not use or permit the use of any proceeds of the Bonds
or any funds of the Authority, directly or indirectly, to acquire any securities or obligations, and
shall not take or permit to be taken any other action or actions, which would cause any of the
Bonds to be an “arbitrage bond” within the meaning of Section 148 of the Code, “private activity
bond” within the meaning of Section 141(a) of the Code, or “federally guaranteed” within the
meaning of Section 149(b) of the Code and any such applicable requirements promulgated from
time to time thereunder and under Section 103(c) of the Internal Revenue Code of 1954, as
amended. The Authority shall observe and not violate the requirements of Section 148 of the Code
and any such applicable regulations. The Authority shall comply with all requirements of Sections
148 and 149(b) of the Code to the extent applicable to the Bonds. In the event that at any time the
Authority is of the opinion that for purposes of this Section 6.09(c) it is necessary to restrict or to
limit the yield on the investment of any moneys held by the Trustee under this Indenture, the
Authority shall so instruct the Trustee under this Indenture in writing, and the Trustee shall take
such action as may be necessary in accordance with such instructions.
(d) The Authority and the Trustee (as directed by the Authority) specifically
covenant to comply with the provisions and procedures of the Tax Certificate; provided that the
Trustee shall not be bound by this covenant if an Event of Default has occurred and is continuing.
(e) The Authority shall not use or permit the use of any proceeds of Tax-
Exempt Bonds or any funds of the Authority, directly or indirectly, in any manner, and shall not
take or omit to take any action that would cause any of the Tax-Exempt Bonds to be treated as an
obligation not described in Section 103(a) of the Code.
(f) Notwithstanding any provisions of this Section 6.09, if the Authority shall
provide to the Trustee an Opinion of Counsel that any specified action required under this Section
6.09 or the Tax Certificate is no longer required or that some further or different action is required
to maintain the exclusion from federal income tax of interest on Tax-Exempt Bonds, the Trustee
Lynwood Public Financing Authority - Page 209 of 244 Agenda Item # 2
4847-6090-2599.1
33
and the Authority may conclusively rely on such opinion in complying with the requirements of
this Section, and, notwithstanding Article IX hereof, the covenants hereunder shall be deemed to
be modified to that extent.
The foregoing provisions of this Section 6.09 shall not be applicable to the Series
2020A Bonds, nor to any Series of Bonds or the proceeds thereof that the Authority determines
upon the issuance thereof are to be taxable bonds, the interest on which is not Tax-Exempt.
Section 6.10 Continuing Disclosure. The City hereby covenants and agrees that it will
comply with and carry out all of the provisions of the Continuing Disclosure Agreement.
Notwithstanding any other provision of the Indenture, failure of the City to comply with the
Continuing Disclosure Agreement shall not be considered an Event of Default; however, the
Trustee may (and, at the request of the Underwriter or the Owners of at least 25% aggregate
principal amount of Outstanding Bonds, shall) or any Owner or Beneficial Owner of Bonds may
take such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the City to comply with its obligations under this
Section 6.10; provided, that the Trustee shall only be required to take an action under this
Section 6.10 to the extent funds have been provided to it or it has been otherwise indemnified to
its reasonable satisfaction from any cost, liability, expense or additional charges of the Trustee
whatsoever, including, without limitation, fees and expenses of its attorneys.
ARTICLE VII
DEFAULT AND LIMITATIONS OF LIABILITY
Section 7.01 Events of Default. The following events shall be Events of Default:
(a) default in the due and punctual payment of the principal of or premium, if
any, on any Bond when and as the same shall become due and payable, whether at maturity as
therein expressed, by proceedings for redemption, by declaration or otherwise;
(b) default in the due and punctual payment of any installment of interest on
any Bond when and as such interest installment shall become due and payable;
(c) default by the City in the observance of any of the covenants, agreements
or conditions on its part in this Indenture contained, if such default shall have continued for a
period of 30 days after written notice thereof, specifying such default and requiring the same to be
remedied, shall have been given to the City and the Authority by the Trustee, or to the City, the
Authority and the Trustee by the Owners of not less than 25% in aggregate principal amount of
the Bonds at the time Outstanding; provided, however, that if such default can be remedied but not
within such 30-day period and if the City has taken all action reasonably possible to remedy such
default within such 30-day period, such default shall not become an Event of Default for so long
as the City shall diligently proceed to remedy the same in accordance with and subject to any
directions or limitations of time reasonably established by the Trustee; or
(d) an event of default shall have occurred and be continuing under the Facility
Lease.
Lynwood Public Financing Authority - Page 210 of 244 Agenda Item # 2
4847-6090-2599.1
34
Section 7.02 Action on Default. In each and every case during the continuance of an
Event of Default, the Trustee or the Owners of not less than a majority in aggregate principal
amount of the Bonds at the time Outstanding (subject to the provisions of Section 7.11 hereof)
shall be entitled, upon notice in writing to the City and the Authority to exercise any of the
remedies granted to the City under the Facility Lease, to the Authority under the Facility Lease,
and in addition, to take whatever action at law or in equity may appear necessary or desirable to
enforce its rights as assignee pursuant to the Assignment Agreement or to protect and enforce any
of the rights vested in the Trustee or the Owners by this Indenture or by the Bonds, either at law
or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant
or agreement or for the enforcement of any other legal or equitable right, including any one or
more of the remedies set forth in Section 7.03(a), (b) or (c) hereof.
Section 7.03 Other Remedies of the Trustee. The Trustee shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to
enforce its rights against the City, the Authority or any director, officer or employee thereof, and
to compel the City or the Authority or any such director, officer or employee to perform or carry
out its or his or her duties under law and the agreements and covenants required to be performed
by it or him or her contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate
the rights of the Trustee; or
(c) by suit in equity upon the happening of any default hereunder to require the
City and the Authority to account as the trustee of an express trust.
Section 7.04 Non-Waiver. A waiver of any default or breach of duty or contract by the
Trustee shall not affect any subsequent default or breach of duty or contract or impair any rights
or remedies on any such subsequent default or breach of duty or contract. No delay or omission
by the Trustee to exercise any right or remedy accruing upon any default or breach of duty or
contract shall impair any such right or remedy or shall be construed to be a waiver of any such
default or breach of duty or contract or an acquiescence therein, and every right or remedy
conferred upon the Trustee by law or by this Article may be enforced and exercised from time to
time and as often the Trustee shall deem expedient.
If any action, proceeding or suit to enforce any right or to exercise any remedy is
abandoned or determined adversely to the Trustee or any Owner or Owners, then subject to any
adverse determination, the Trustee or such Owner or Owners and the City and the Authority shall
be restored to their former positions, rights and remedies as if such action, proceeding or suit had
not been brought or taken.
Section 7.05 Remedies Not Exclusive. No remedy herein conferred upon or reserved
to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise and may be exercised without exhausting and
without regard to any other remedy conferred by any law. The assertion or employment of any
Lynwood Public Financing Authority - Page 211 of 244 Agenda Item # 2
4847-6090-2599.1
35
right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment
of any other appropriate right or remedy.
Section 7.06 No Liability by the Authority to the Owners. Except as expressly
provided herein, the Authority shall have no obligation or liability to the Owners with respect to
the payment when due of the Base Rental Payments by the City, or with respect to the performance
by the City of the other agreements and covenants required to be performed by it contained in the
Facility Lease or herein, or with respect to the performance by the Trustee of any right or obligation
required to be performed by it contained herein.
Section 7.07 No Liability by the City to the Owners. Except for the payment when
due of the Base Rental Payments and the performance of the other agreements and covenants
required to be performed by it contained in the Facility Lease or herein, the City shall not have any
obligation or liability to the Owners with respect to the Indenture or the preparation, execution,
delivery or transfer of the Bonds or the disbursement of the Revenues by the Trustee to the Owners,
or with respect to the performance by the Trustee of any right or obligation required to be
performed by it contained herein.
Section 7.08 No Liability by the Trustee to the Owners. Except as expressly provided
herein, the Trustee shall not have any obligation or liability to the Owners with respect to the
payment when due of the Base Rental Payments by the City, or with respect to the performance
by the City or the Authority of the other agreements and covenants required to be performed by
them, respectively contained in the Facility Lease or Site Lease or in this Indenture.
Section 7.09 Application of Amounts After Default. Notwithstanding anything to the
contrary contained herein, after a default by the City, all funds and accounts held by the Trustee
and all payments received by the Trustee with respect to the rental of the Leased Property after a
default by the City pursuant to Section 10.01 of the Facility Lease, and all damages or other
payments received by the Trustee for the enforcement of any rights and powers of the Trustee
under Section 10.01 of the Facility Lease, shall be deposited into the Revenue Fund and as soon
as practicable thereafter applied:
(a) to the payment of all amounts due the Trustee under Section 8.03 hereof;
and
(b) to the payment of all amounts then due as interest with respect to the Bonds,
and thereafter to the payment of all amounts due as principal with respect to the Bonds, in respect
of which or for the benefit of which, money has been collected (other than Bonds which have
matured or otherwise become payable prior to such Event of Default and money for the payment
of which is held by the Trustee), ratably without preference or priority of any kind, according to
the amounts due and payable with respect to such Bonds.
Section 7.10 Trustee May Enforce Claims Without Possession of Bonds. All rights
of action and claims under this Indenture or the Bonds may be prosecuted and enforced by the
Trustee without the possession of any of the Bonds or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after provision for the payment
Lynwood Public Financing Authority - Page 212 of 244 Agenda Item # 2
4847-6090-2599.1
36
of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Owners of the Bonds in respect of which such
judgment has been recovered.
Section 7.11 Limitation on Suits. No Owner of any Bond shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless such Owner has
previously given written notice to the Trustee of a continuing Event of Default; the Owners of not
less than 25% in principal amount of the Outstanding Bonds shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee
hereunder; such Owner or Owners have afforded to the Trustee indemnity reasonably satisfactory
to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such
request; the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has
failed to institute any such proceedings; and no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Owners of a majority in principal
amount of the Outstanding Bonds; it being understood and intended that no one or more Owners
of Bonds shall have any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other Owner of Bonds, or to obtain
or seek to obtain priority or preference over any other Owner or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable benefit of all the
Owners of Bonds. Nothing in this Indenture contained shall, however, affect or impair the right
of any Owner to enforce the payment of the principal of or the redemption price of and the interest
of any Bond at and after the maturity or earlier redemption.
ARTICLE VIII
THE TRUSTEE
Section 8.01 Employment of the Trustee. The City and the Authority hereby appoint
and employ the Trustee to receive, deposit and disburse the Rental Payments, to authenticate,
deliver and transfer the Bonds and to perform the other functions contained herein; all in the
manner provided herein and subject to the conditions and terms hereof. By executing and
delivering the Indenture, the Trustee accepts the appointment and employment hereinabove
referred to and accepts the rights and obligations of the Trustee provided herein, subject to the
conditions and terms hereof. The Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee. In case an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the
same degree of care and skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
Section 8.02 Duties, Removal and Resignation of the Trustee. The City and the
Authority may, by an instrument in writing and upon 30 days written notice remove the Trustee
initially a party hereto and any successor thereto unless an Event of Default shall have occurred
and then be continuing, and shall remove the Trustee initially a party hereto and any successor
thereto if at any time requested to do so by an instrument or concurrent instruments in writing
signed by the Owners of a majority in aggregate principal amount of the Bonds at the time
Lynwood Public Financing Authority - Page 213 of 244 Agenda Item # 2
4847-6090-2599.1
37
Outstanding (or their attorneys duly authorized in writing), but any such successor Trustee shall
be a bank with trust powers or trust company doing business and having a corporate trust office in
California or New York, having (or if such bank or trust company is a member of a bank holding
company system, its bank holding company has) a combined capital (exclusive of borrowed
capital) and surplus of at least seventy-five million dollars ($75,000,000) and subject to
supervision or examination by federal or state authorities. If such bank or trust company publishes
a report of condition at least annually, pursuant to law or to the requirements of any supervising
or examining authority above referred to, then for the purposes of this Section the combined capital
and surplus of such bank or trust company shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published.
The Trustee may at any time resign by giving written notice of such resignation to
the City and the Authority and by mailing notice, first class, postage prepaid, of such resignation
to the Owners at their addresses appearing on the books required to be kept by the Trustee pursuant
to the provisions of Section 2.08 hereof. Upon receiving such notice of resignation, the City and
the Authority shall promptly appoint a successor Trustee by an instrument in writing; provided,
however, that in the event the City and the Authority do not appoint a successor Trustee within 30
days following receipt of such notice of resignation, the resigning Trustee may, at the expense of
the City, petition the appropriate court having jurisdiction to appoint a successor Trustee.
Section 8.03 Compensation and Indemnification of the Trustee. The City shall from
time to time, subject to any written agreement then in effect with the Trustee, pay the Trustee
reasonable compensation for all its services rendered hereunder and reimburse the Trustee for all
its advances and expenditures hereunder, including but not limited to payments, advances to and
fees and expenses of accountants, agents, appraisers, consultants or other experts, and counsel not
directly employed by the Trustee but an attorney or firm of attorneys retained by the Trustee,
employed by it in the exercise and performance of its rights and obligations hereunder; provided,
however, that the Trustee shall not have any lien for such compensation or reimbursement against
any moneys held by it in any of the funds or accounts established hereunder or under Facility Lease
(except that such compensation or reimbursement may be made from the Costs of Issuance Fund
held by the City to the extent provided in Section 3.03 hereof or as provided in Section 7.09
hereof). The Trustee may take whatever legal actions are lawfully available to it directly against
the City or the Authority.
Except as otherwise expressly provided herein, no provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its rights or powers
hereunder.
The City covenants and agrees to indemnify and save the Trustee and its officers,
directors, agents and employees, harmless against any loss, expense and liabilities which it may
incur arising out of or in the exercise and performance of its powers and duties hereunder,
including the costs of expenses of defending against any claim of liability including, without
limitation, any claim arising out of the use, presence, storage, disposal or lease of any Hazardous
Substances on or about the Leased Property, but excluding any and all losses, expenses and
liabilities which are due to the negligence or intentional misconduct of the Trustee, its officers,
Lynwood Public Financing Authority - Page 214 of 244 Agenda Item # 2
4847-6090-2599.1
38
directors, agents or employees. Such indemnity shall survive the discharge of this Indenture or
the resignation or removal of the Trustee.
Section 8.04 Protection of the Trustee. The Trustee shall be protected and shall incur
no liability in acting or proceeding in good faith upon any affidavit, bond, certificate, consent,
opinion, notice, request, requisition, resolution, direction, instruction, statement, telegram,
voucher, waiver or other paper or document which it shall in good faith believe to be genuine and
to have been adopted, executed or delivered by the proper party or pursuant to any of the provisions
hereof, and the Trustee shall be under no duty to make any investigation or inquiry as to any
statements contained or matters referred to in any such instrument, but may accept and rely upon
the same as conclusive evidence of the truth and accuracy of such statements. The Trustee shall
not be bound to recognize any person as an Owner of any Bond or to take any action at the request
of any such person unless such Bond shall be deposited with the Trustee or satisfactory evidence
of the ownership of such Bond shall be furnished to the Trustee. The Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Owners of the Bonds pursuant to this Indenture, unless such Owners shall
have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee, against
the costs, expenses and liabilities which might be incurred by it in compliance with such request
or direction. The Trustee may consult with counsel, who may be counsel to the City or the
Authority, with regard to legal questions, and the opinion of such counsel shall be full and complete
authorization and protection in respect to any action taken or suffered by it hereunder in good faith
in accordance therewith. If requested by the City, counsel to the Trustee shall be of recognized
national standing in the field of law relating to municipal bonds.
The Trustee shall not be responsible for the sufficiency or adequacy of the Bonds,
the Facility Lease, the Site Lease, or of the assignment made to it by the Assignment Agreement,
or for statements made in the preliminary or final official statement relating to the Bonds or of the
title to or value of the Leased Property.
The Trustee shall not be required to take notice or be deemed to have notice of any
default or event of default hereunder or an Event of Default under Section 7.01 hereof, except
failure of any of the payments to be made to the Trustee required to be made hereunder unless the
Trustee shall be specifically notified in writing of such default or Event of Default by the City, the
Authority or by the Owners of not less than 25% in aggregate principal amount of the Bonds then
Outstanding.
Whenever in the administration of its rights and obligations hereunder the Trustee
shall deem it necessary or desirable that a matter be proved or established prior to taking or
suffering any action hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established by a Certificate
of the City, and such certificate shall be full warrant to the Trustee for any action taken or suffered
under the provisions hereof upon the faith thereof, but in its discretion the Trustee may, in lieu
thereof, accept other evidence of such matter or may require such additional evidence as to it may
seem reasonable.
The Trustee may buy, sell, own, hold and deal in any of the Bonds and may join in
any action which any Owner may be entitled to take with like effect as if the Trustee were not a
Lynwood Public Financing Authority - Page 215 of 244 Agenda Item # 2
4847-6090-2599.1
39
party hereto. The Trustee, either as principal or agent, may also engage in or be interested in any
financial or other transaction with the City or the Authority, and may act as agent, depository or
trustee for any committee or body of Owners or of owners of obligations of the Authority or the
City as freely as if it were not the Trustee hereunder.
The Trustee may, to the extent reasonably necessary, execute any of the trusts or
powers hereof and perform any rights and obligations required of it hereunder by or through agents,
attorneys or receivers, and shall be entitled to advice of counsel concerning all matters of trust and
its rights and obligations hereunder, and the Trustee shall not be answerable for the default or
misconduct of any such agent, attorney or receiver selected by it with reasonable care. The Trustee
shall not be liable for any error of judgment made by it in good faith unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts.
The Trustee shall not be answerable for the exercise of any trusts or powers
hereunder or for anything whatsoever in connection with the funds established hereunder, except
only for its own willful misconduct or negligence.
The Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in accordance with the direction of the Owners of not less than a majority (or other
percentage provided for herein) in aggregate principal amount of the Bonds at the time Outstanding
relating to the exercise of any right or remedy available to the Trustee hereunder.
The Trustee makes no representation or warranty, express or implied as to the title,
value, design, compliance with specifications or legal requirements, quality, durability, operation,
condition, merchantability or fitness for any particular purpose or fitness for the use contemplated
by the City of the Leased Property. In no event shall the Trustee be liable for incidental, indirect,
special or consequential damages in connection with or arising from the Facility Lease, the Site
Lease or this Indenture for the existence, furnishing or use of the Property.
Every provision of this Indenture, the Facility Lease, the Site Lease and the
Assignment Agreement relating to the conduct or liability of the Trustee shall be subject to the
provisions of this Indenture, including without limitation, this Article VIII.
In acting as Trustee hereunder, the Trustee acts solely in its capacity as Trustee for
the Owners and not in its individual or personal capacity, and all persons, including without
limitation, the Owners, the City and the Authority, having any claim against the Trustee shall look
only to the funds and accounts held by the Trustee hereunder for payment, except as otherwise
specifically provided herein. Under no circumstances shall the Trustee be liable in its individual
capacity for the obligations evidenced by the Bonds.
The recitals of facts, covenants and agreements herein and in the Bonds shall be
taken as statements, covenants and agreements of the City or the Authority, as the case may be,
and the Trustee assumes no responsibility for the correctness of the same.
ARTICLE IX
Lynwood Public Financing Authority - Page 216 of 244 Agenda Item # 2
4847-6090-2599.1
40
AMENDMENT OF OR SUPPLEMENT TO
INDENTURE
Section 9.01 Amendment or Supplement. The Indenture and the rights and
obligations of the City, the Authority, the Owners and the Trustee hereunder may be amended or
supplemented at any time by an amendment hereof or supplement hereto which shall become
binding when the written consents of the Owners of a majority in aggregate principal amount of
the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 9.02 hereof,
are filed with the Trustee. No such amendment or supplement shall (1) extend the Principal
Payment Date of any Bond or reduce the rate of interest represented thereby or extend the time of
payment of such interest or reduce the amount of principal represented thereby or reduce the
amount of any Mandatory Sinking Account Payment without the prior written consent of the
Owner of each Bond so affected, or (2) reduce the percentage of Owners whose consent is required
for the execution of any amendment hereof or supplement hereto without the prior written consent
of the Owners of all Bonds then Outstanding, or (3) modify any of the rights or obligations of the
Trustee without its prior written consent thereto, or (4) amend this Section 9.01 without the prior
written consent of the Owners of all Bonds then Outstanding.
The Indenture and the rights and obligations of the City, the Authority, the Owners
and the Trustee hereunder may also be amended or supplemented at any time by an amendment
hereof or supplement hereto which shall become binding upon execution, but without the written
consents of any Owners, but only to the extent permitted by law and after receipt of an unqualified
approving Opinion of Counsel and only for any one or more of the following purposes:
(a) to add to the agreements, conditions, covenants and terms required to be
observed or performed herein by the City or the Authority, or to surrender any right or power
reserved herein to or conferred herein on the City or the Authority, and which in either case shall
not materially adversely affect the interests of the Owners; or
(b) to provide for removal of a portion of the Leased property or substitute
Leased Property as may be requested from time to time by the City in accordance with the Facility
Lease; or
(c) to make such provisions for the purpose of curing any ambiguity or of
correcting, curing or supplementing any defective provision contained herein or in regard to
questions arising hereunder which the City or the Authority may deem desirable or necessary and
not inconsistent herewith, and which shall not materially adversely affect the interests of the
Owners; or
(d) to provide for the execution and delivery of Additional Bonds in accordance
with Sections 2.11 and 2.12 hereof; or
(e) for any other reason, provided such amendment or supplement does not
materially adversely affect the interests of the Owners, provided further that the City, the Authority
and the Trustee may rely in entering into any such amendment or supplement upon an Opinion of
Counsel stating that the requirements of this subsection (e) have been met with respect to such
amendment or supplement.
Lynwood Public Financing Authority - Page 217 of 244 Agenda Item # 2
4847-6090-2599.1
41
Section 9.02 Disqualified Bonds. Bonds actually known by the Trustee to be owned or
held by or for the account of the City (but excluding Bonds held in any pension or retirement fund
of the City) shall not be deemed Outstanding for the purpose of any consent or other action or any
calculation of Outstanding Bonds provided in this Article, and shall not be entitled to consent to
or take any other action provided in this Article, and the Trustee may adopt appropriate regulations
to require each Owner, before his consent provided for herein shall be deemed effective, to reveal
if the Bonds as to which such consent is given are disqualified as provided in this Section.
Section 9.03 Endorsement or Replacement of Bonds After Amendment or
Supplement. After the effective date of any action taken as hereinabove provided in this Article
IX, the Trustee may determine that the Bonds may bear a notation by endorsement in form
approved by the Trustee as to such action, and in that case upon demand of the Owner of any
Outstanding Bond and presentation of such Bond for such purpose at the Principal Corporate Trust
Office of the Trustee a suitable notation as to such action shall be made on such Bond. If the
Trustee shall receive an Opinion of Counsel advising that new Bonds modified to conform to such
action are necessary, modified Bonds shall be prepared, and in that case upon demand of the Owner
of any Outstanding Bonds such new Bonds shall be exchanged at the Principal Corporate Trust
Office of the Trustee, without cost to each Owner for Bonds then Outstanding upon surrender of
such Outstanding Bonds.
Section 9.04 Amendment by Mutual Consent. The provisions of this Article shall not
prevent any Owner from accepting any amendment as to the particular Bonds owned by such
person, provided that due notation thereof is made on such Bonds.
Section 9.05 Opinion of Counsel. In executing any amendment or supplement hereto,
the Trustee may conclusively rely upon an Opinion of Counsel to the effect that all conditions
precedent for the execution of an amendment or supplement to this Indenture have been satisfied.
ARTICLE X
DEFEASANCE
Section 10.01 Discharge of Bonds and Indenture. (a) If the Trustee shall pay or cause
to be paid or there shall otherwise be paid to the Owners of all Outstanding Bonds the interest and
principal represented thereby at the times and in the manner stipulated herein and therein, then
such Owners shall cease to be entitled to the pledge of and lien on the Revenues as provided herein,
and all agreements and covenants of the City, the Authority and the Trustee to such Owners
hereunder shall thereupon cease, terminate and become void and shall be discharged and satisfied.
(b) Any Outstanding Bonds shall, prior to the maturity or redemption date
thereof, be deemed to have been paid within the meaning and with the effect expressed in this
Section 10.01 if (i) in case said Bonds are to be redeemed on any date prior to their maturity, the
City shall have given to the Trustee in form satisfactory to the Trustee irrevocable instructions to
mail, in accordance with the provisions of Article IV of this Indenture, notice of redemption of
such Bonds on said redemption date, (ii) there shall have been deposited with the Trustee either
moneys in an amount which shall be sufficient, or Defeasance Securities which are not callable or
subject to redemption prior to their respective maturity dates, the principal of and the interest on
Lynwood Public Financing Authority - Page 218 of 244 Agenda Item # 2
4847-6090-2599.1
42
which when due, and without any reinvestment thereof, will provide moneys which, together with
the moneys, if any, deposited with or held by the Trustee at the same time, shall be sufficient (as
verified by a report of an independent certified public accountant or other independent financial
consultant), to pay when due the principal or redemption price (if applicable) of, and interest due
and to become due on, said Bonds on and prior to the redemption date or maturity date thereof, as
the case may be, and (iii) in the event any of said Bonds are not to be redeemed within the next
succeeding 60 days, the City shall have given the Trustee in form satisfactory to the Trustee
irrevocable instructions to mail, as soon as practicable in the same manner as a notice of
redemption is mailed pursuant to Article IV of this Indenture, a notice to the Owners of such Bonds
and to the securities depositories and information services specified in clauses (b) and (c) of
Section 4.02 hereof that the deposit required by (ii) above has been made with the Trustee and that
said Bonds are deemed to have been paid in accordance with this Section 10.01(b) and stating such
maturity or redemption dates upon which moneys are to be available for the payment of the
principal or redemption price (if applicable) of said Bonds. Neither the securities nor moneys
deposited with the Trustee pursuant to this Section 10.01(b) nor principal or interest payments on
any such securities shall be withdrawn or used for any purpose other than, and shall be held in trust
for, the payment of the principal or redemption price (if applicable) of, and interest on said Bonds;
provided that Defeasance Securities deposited with the Trustee pursuant to this Section 10.01(b)
may be sold upon the written request of the City and the proceeds concurrently reinvested in other
Defeasance Securities which satisfy the conditions of (ii) above provided that the Trustee receives
an Opinion of Counsel to the effect that such sale and reinvestment does not adversely affect the
exclusion of interest on the Bonds from federal income taxes, and provided further that any cash
received from such principal or interest payments on such obligations deposited with the Trustee,
if not then needed for such purpose, shall, to the extent practicable, and at the direction of the City,
be reinvested in Defeasance Securities maturing at times and in amounts, together with the other
moneys and payments with respect to securities then held by the Trustee pursuant to this Section,
sufficient to pay when due the principal or redemption price (if applicable) of, and interest to
become due with respect to said Bonds on and prior to such redemption date or maturity date
thereof, as the case may be, and interest earned from such reinvestments shall, upon receipt by the
Trustee of a Written Request of the City, be paid over to the City, as received by the Trustee, free
and clear of any trust, lien or pledge. Nothing in this Section 10.01(b) shall preclude redemptions
pursuant to Section 4.01 hereof.
Any release under this Section 10.01(b) shall be without prejudice to the right of
the Trustee to be paid reasonable compensation for all services rendered by it under this Indenture
and all its reasonable expenses, charges and other disbursements and those of its attorneys, agents
and employees, incurred on and about the administration of trusts by this Indenture created and
the performance of its powers and duties under this Indenture; provided however, that the Trustee
shall have no right, title or interest in, or lien on, any moneys or securities deposited pursuant to
this Article X.
(c) After the payment or deemed payment of all the interest and principal of all
Outstanding Bonds as provided in this Section, the Trustee shall execute and deliver to the
Authority and the City all such instruments as may be necessary or desirable to evidence the
discharge and satisfaction of the Indenture, and the Trustee shall pay over or deliver to the City all
moneys or securities held by it pursuant hereto which are not required for the payment of the
principal of, premium, if any, and interest on, such Bonds. Notwithstanding the discharge and
Lynwood Public Financing Authority - Page 219 of 244 Agenda Item # 2
4847-6090-2599.1
43
satisfaction of this Indenture, Owners of Bonds shall thereafter be entitled to payments due under
the Bonds pursuant to the Facility Lease, but only from amounts deposited pursuant to
Section 10.01(a) hereof and from no other source.
Section 10.02 Unclaimed Moneys. Anything contained herein to the contrary
notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of the
principal of, premium, if any, and interest on, any of the Bonds which remain unclaimed for two
years after the date when the payments on such Bonds have become payable, if such moneys were
held by the Trustee at such date, or for two years after the date of deposit of such moneys if
deposited with the Trustee after the date when the principal of, premium, if any, and interest on,
such Bonds have become payable, shall be repaid by the Trustee to the City as its absolute property
free from trust, and the Trustee shall thereupon be released and discharged with respect thereto
and the Owners shall look only to the City for the payment of the principal of, premium, if any,
and interest on, such Bonds; provided, however, that before being required to make any such
payment to the City, the Trustee shall mail a notice to the Owner that such unclaimed funds shall
be returned to the City within 30 days.
ARTICLE XI
BOND INSURANCE AND RESERVE POLICY
Section 11.01 Bond Insurance Provisions. Notwithstanding anything to the contrary set
forth in this Indenture or in the Series 2020A Bonds, the following provisions of this Section shall
govern with respect to the Policy:
(a) The prior written consent of the Insurer shall be a condition precedent to the
deposit of any Qualified Reserve Fund Credit Instrument (other than the Reserve Policy) provided
in lieu of a cash deposit into the Reserve Fund. Notwithstanding anything to the contrary set forth
in this Indenture, amounts on deposit in the Reserve Fund shall be applied solely to the payment
of debt service due on the Series 2020A Bonds.
(b) The Insurer shall be deemed to be the sole Owner of the Series 2020A
Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction
or taking any other action that the Owners of the Series 2020A Bonds are entitled to take pursuant
to this Indenture pertaining to (i) defaults and remedies and (ii) the duties and obligations of the
Trustee. In furtherance thereof and as a term of this Indenture and each Series 2020A Bond, each
Owner of the Series 2020A Bonds appoints the Insurer as its agent and attorney-in-fact with respect
to the Series 2020A Bonds and agrees that the Insurer may at any time during the continuation of
any proceeding by or against the Authority or the City under the United States Bankruptcy Code
or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an
“Insolvency Proceeding”) direct all matters relating to such Insolvency Proceeding, including
without limitation, (A) all matters relating to any claim or enforcement proceeding in connection
with an Insolvency Proceeding (a “Claim”), (B) the direction of any appeal of any order relating
to any Claim, (C) the posting of any surety, supersedeas or performance bond pending any such
appeal, and (D) the right to vote to accept or reject any plan of adjustment. In addition, each Owner
of the Series 2020A Bonds delegates and assigns to the Insurer, to the fullest extent permitted by
law, the rights of each Owner of the Series 2020A Bonds with respect to the Series 2020A Bonds
Lynwood Public Financing Authority - Page 220 of 244 Agenda Item # 2
4847-6090-2599.1
44
in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party
to an adversary proceeding or action with respect to any court order issued in connection with any
such Insolvency Proceeding. The Trustee acknowledges such appointment, delegation and
assignment by each Owner of the Series 2020A Bonds for the Insurer’s benefit, and agrees to
cooperate with the Insurer in taking any action reasonably necessary or appropriate in connection
with such appointment, delegation and assignment. Remedies granted to the Owners shall
expressly include mandamus.
(c) No grace period for a covenant default shall exceed 30 days or be extended
for more than 60 days, without the prior written consent of the Insurer. No grace period shall be
permitted for payment defaults.
(d) The Insurer is a third-party beneficiary of this Indenture.
(e) The maturity of Series 2020A Bonds shall not be accelerated without the
consent of the Insurer and in the event the maturity of the Series 2020A Bonds is accelerated, the
Insurer may elect, in its sole discretion, to pay accelerated principal, and interest accrued on such
principal, to the date of acceleration (to the extent unpaid by the Issuer) and the Trustee shall be
required to accept such amounts. Upon payment of such accelerated principal and interest accrued
to the acceleration date as provided above, the Insurer’s obligations under the Policy with respect
to such Series 2020A Bonds shall be fully discharged.
(f) Upon the occurrence of an extraordinary redemption in part, the selection
of Series 2020A Bonds to be redeemed shall be subject to the approval of the Insurer. The exercise
of any provision of this Indenture which permits the purchase of Series 2020A Bonds in lieu of
redemption shall require the prior written approval of the Insurer if any Series 2020A Bond so
purchased is not cancelled upon purchase.
(g) Any amendment, supplement, modification to, or waiver of, this Indenture
that requires the consent of Owners of the Series 2020A Bonds or adversely affects the rights and
interests of the Insurer shall be subject to the prior written consent of the Insurer.
(h) The rights granted to the Insurer under this Indenture or any other
transaction document, including any underlying security agreement (each a “Related Document”)
to request, consent to or direct any action are rights granted to the Insurer in consideration of its
issuance of the Policy. Any exercise by the Insurer of such rights is merely an exercise of the
Insurer’s contractual rights and shall not be construed or deemed to be taken for the benefit, or on
behalf, of the Owner of the Series 2020A Bonds and such action does not evidence any position
of the Insurer, affirmative or negative, as to whether the consent of the Owners of the Series 2020A
Bonds or any other person is required in addition to the consent of the Insurer.
(i) Only (1) cash, (2) non callable direct obligations of the United States of
America (“Treasuries”), (3) evidences of ownership of proportionate interests in future interest
and principal payments on Treasuries held by a bank or trust company as custodian, under which
the owner of the investment is the real party in interest and has the right to proceed directly and
individually against the obligor and the underlying Treasuries are not available to any person
claiming through the custodian or to whom the custodian may be obligated, (4) subject to the prior
Lynwood Public Financing Authority - Page 221 of 244 Agenda Item # 2
4847-6090-2599.1
45
written consent of the Insurer, pre-refunded municipal obligations rated “AAA” and “Aaa” by
S&P and Moody’s, respectively, or (5) subject to the prior written consent of the Insurer, securities
eligible for “AAA” defeasance under then existing criteria of S&P or any combination thereof,
shall be used to effect defeasance of the Series 2020A Bonds unless the Insurer otherwise approves.
To accomplish defeasance of the Series 2020A Bonds, the Authority shall cause to
be delivered (i) a report of an independent firm of nationally recognized certified public
accountants or such other accountant as shall be acceptable to the Insurer (“Accountant”) verifying
the sufficiency of the escrow established to pay the Series 2020A Bonds in full on the maturity or
redemption date (“Verification”), (ii) an escrow deposit agreement (which shall be acceptable in
form and substance to the Insurer), (iii) an opinion of nationally recognized bond counsel to the
effect that the Series 2020A Bonds are no longer “Outstanding” under this Indenture and (iv) a
certificate of discharge of the Trustee with respect to the Series 2020A Bonds; each Verification
and defeasance opinion shall be acceptable in form and substance, and addressed, to the Authority,
the Trustee and the Insurer. The Insurer shall be provided with final drafts of the above referenced
documentation not less than five Business Days prior to the funding of the escrow.
Series 2020A Bonds shall be deemed “Outstanding” under this Indenture unless
and until they are in fact paid and retired or the above criteria are met.
(j) Amounts paid by the Insurer under the Policy shall not be deemed paid for
purposes of this Indenture and the Series 2020A Bonds relating to such payments shall remain
Outstanding and continue to be due and owing until paid by the Authority in accordance with this
Indenture. This Indenture shall not be discharged unless all amounts due or to become due to the
Insurer have been paid in full or duly provided for.
(k) Claims Upon the Policy and Payments by and to the Insurer. If, on the third
Business Day prior to the related scheduled interest payment date or principal payment date
(“Payment Date”) there is not on deposit with the Trustee, after making all transfers and deposits
required under this Indenture, moneys sufficient to pay the principal of and interest on the Series
2020A Bonds due on such Payment Date, the Trustee shall give notice to the Insurer and to its
designated agent (if any) (the “Insurer’s Fiscal Agent”) by telephone or telecopy of the amount of
such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second
Business Day prior to the related Payment Date, there continues to be a deficiency in the amount
available to pay the principal of and interest on the Series 2020A Bonds due on such Payment
Date, the Trustee shall make a claim under the Policy and give notice to the Insurer and the
Insurer’s Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation
of such deficiency between the amount required to pay interest on the Series 2020A Bonds and the
amount required to pay principal of the Series 2020A Bonds, confirmed in writing to the Insurer
and the Insurer’s Fiscal Agent by 12:00 noon, New York City time, on such second Business Day
by filling in the form of Notice of Claim and Series 2020A Bond delivered with the Policy.
The Trustee shall designate any portion of payment of principal on Series 2020A
Bonds paid by the Insurer, whether by virtue of mandatory sinking fund redemption, maturity or
other advancement of maturity, on its books as a reduction in the principal amount of Series 2020A
Bonds registered to the then current Owner of the Series 2020A Bonds, whether DTC or its
nominee or otherwise, and shall issue a replacement Series 2020A Bond to the Insurer, registered
Lynwood Public Financing Authority - Page 222 of 244 Agenda Item # 2
4847-6090-2599.1
46
in the name of _____________, in a principal amount equal to the amount of principal so paid
(without regard to authorized denominations); provided that the Trustee’s failure to so designate
any payment or issue any replacement Series 2020A Bond shall have no effect on the amount of
principal or interest payable by the Authority on any Series 2020A Bond or the subrogation rights
of the Insurer.
The Trustee shall keep a complete and accurate record of all funds deposited by the
Insurer into the Policy Payments Account (defined below) and the allocation of such funds to
payment of interest on and principal of any Series 2020A Bond. The Insurer shall have the right
to inspect such records at reasonable times upon reasonable notice to the Trustee.
Upon payment of a claim under the Policy, the Trustee shall establish a separate
special purpose trust account for the benefit of Owners of the Series 2020A Bonds referred to
herein as the “Policy Payments Account” and over which the Trustee shall have exclusive control
and sole right of withdrawal. The Trustee shall receive any amount paid under the Policy in trust
on behalf of Owners of the Series 2020A Bonds and shall deposit any such amount in the Policy
Payments Account and distribute such amount only for purposes of making the payments for which
a claim was made. Such amounts shall be disbursed by the Trustee to Owners of the Series 2020A
Bonds in the same manner as principal and interest payments are to be made with respect to the
Series 2020A Bonds under the sections of the Trust Agreement regarding payment of Series 2020A
Bonds. It shall not be necessary for such payments to be made by checks or wire transfers separate
from the check or wire transfer used to pay debt service with other funds available to make such
payments. Notwithstanding anything in the Trust Agreement to the contrary, the Authority agrees
to pay, or cause the City to pay pursuant to the Facility Lease, as applicable, to the Insurer (i) a
sum equal to the total of all amounts paid by the Insurer under the Policy (the “Insurer Advances”);
and (ii) interest on such Insurer Advances from the date paid by the Insurer until payment thereof
in full, payable to the Insurer at the Late Payment Rate per annum (collectively, the “Insurer
Reimbursement Amounts”). “Late Payment Rate” means the lesser of (a) the greater of (i) the per
annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its
principal office in The City of New York, as its prime or base lending rate (any change in such
rate of interest to be effective on the date such change is announced by JPMorgan Chase Bank)
plus 3%, and (ii) the then applicable highest rate of interest on the Series 2020A Bonds and (b) the
maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late
Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of
360 days. The Authority hereby covenants and agrees that the Insurer Reimbursement Amounts
are secured by a lien on and pledge of the Revenues and payable from such Revenues on a parity
with debt service due on the Series 2020A Bonds.
Funds held in the Policy Payments Account shall not be invested by the Trustee
and may not be applied to satisfy any costs, expenses or liabilities of the Trustee. Any funds
remaining in the Policy Payments Account following a Payment Date shall promptly be remitted
to the Insurer.
(l) The Insurer shall, to the extent it makes any payment of principal of or
interest on the Series 2020A Bonds, become subrogated to the rights of the recipients of such
payments in accordance with the terms of the Policy (which subrogation rights shall also include
the rights of any such recipients in connection with any Insolvency Proceeding). Each obligation
Lynwood Public Financing Authority - Page 223 of 244 Agenda Item # 2
4847-6090-2599.1
47
of the Authority to the Insurer under the Related Documents shall survive discharge or termination
of such Related Documents.
(m) After payment of reasonable fees and expenses of the Trustee, the
application of funds realized upon default shall be applied to the payment of expenses of the
Authority or rebate only after the payment of past due and current debt service on the Series 2020A
Bonds and amounts required to restore the Reserve Fund to the Reserve Requirement.
(n) The Insurer shall be entitled to pay principal or interest on the Series 2020A
Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the
Issuer (as such terms are defined in the Policy), and any amounts due on the Series 2020A Bonds
as a result of acceleration of the maturity thereof, whether or not the Insurer has received a Notice
of Nonpayment (as such terms are defined in the Policy) or a claim upon the Policy.
(o) The notice address of the Insurer is: _____________ _____________, New
York, New York 10019, Attention: _____________, Telephone: _________; Telecopier:
__________. In each case in which notice or other communication refers to an Event of Default,
then a copy of such notice or other communication shall also be sent to the attention of the General
Counsel and shall be marked to indicate “URGENT MATERIAL ENCLOSED.”
(p) The Insurer shall be provided with the following information by the
Authority or the Trustee, as the case may be:
(i) Notice of any draw upon the Reserve Fund within two Business
Days after knowledge thereof other than (a) withdrawals of amounts in excess of the
Reserve Requirement and (b) withdrawals in connection with a refunding of Series 2020A
Bonds;
(ii) Notice of any default known to the Trustee or the Authority within
five Business Days after knowledge thereof;
(iii) Prior notice of the advance refunding or redemption of any of the
Series 2020A Bonds, including the principal amount, maturities and CUSIP numbers
thereof;
(iv) Notice of the resignation or removal of the Trustee and Bond
Registrar and the appointment of, and acceptance of duties by, any successor thereto;
(v) Notice of the commencement of any Insolvency Proceeding;
(vi) Notice of the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of
principal of, or interest on, the Series 2020A Bonds;
(vii) A full original transcript of all proceedings relating to the execution
of any amendment, supplement, or waiver to the Related Documents; and
Lynwood Public Financing Authority - Page 224 of 244 Agenda Item # 2
4847-6090-2599.1
48
(viii) All reports, notices and correspondence to be delivered to Owners
of the Series 2020A Bonds under the terms of the Related Documents.
(q) The Insurer will have the right to receive such additional information as it
may reasonably request.
(r) The Authority will permit the Insurer to discuss the affairs, finances and
accounts of the Authority or any information the Insurer may reasonably request regarding the
security for the Series 2020A Bonds with appropriate officers of the Authority and will use
commercially reasonable efforts to enable the Insurer to have access to the facilities, books and
records of the Authority on any Business Day upon reasonable prior notice.
(s) The Trustee shall notify the Insurer of any known failure of the Authority
or the City to provide notices, certificates and other information under the Related Documents.
(t) Notwithstanding satisfaction of the other conditions to the issuance of
Additional Bonds set forth in this Indenture, no such issuance may occur (1) if an Event of Default
(or any event which, once all notice or grace periods have passed, would constitute an Event of
Default) exists unless such default shall be cured upon such issuance and (2) unless the Reserve
Fund is fully funded at the Reserve Requirement (including the proposed issue) upon the issuance
of such Additional Bonds, in either case unless otherwise permitted by the Insurer.
(u) In determining whether any amendment, consent, waiver or other action to
be taken, or any failure to take action, under this Indenture would adversely affect the security for
the Series 2020A Bonds or the rights of the Owners of the Series 2020A Bonds, the effect of any
such amendment, consent, waiver, action or inaction shall be considered as if there were no Policy.
(v) No contract shall be entered into or any action taken by which the rights of
the Insurer or security for or sources of payment of the Series 2020A Bonds may be impaired or
prejudiced in any material respect except upon obtaining the prior written consent of the Insurer.
(w) Neither the Authority nor the City shall enter into an interest rate exchange
agreement or any other interest rate maintenance agreement secured by and payable from the
Revenues without the prior written consent of the Insurer.
Section 11.02 Reserve Policy Provisions. The provisions of this Section shall govern
notwithstanding anything to the contrary in this Indenture.
(a) The Authority shall repay, or cause the City to repay pursuant to the Lease
Agreement, as applicable, any draws under the Reserve Policy and pay all related reasonable
expenses incurred by the Insurer and shall pay interest thereon from the date of payment by the
Insurer at the Late Payment Rate. "Late Payment Rate" means the lesser of (x) the greater of (i)
the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at
its principal office in the City of New York, as its prime or base lending rate ("Prime Rate") (any
change in such Prime Rate to be effective on the date such change is announced by JPMorgan
Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the Series 2020A
Bonds and (y) the maximum rate permissible under applicable usury or similar laws limiting
interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days
Lynwood Public Financing Authority - Page 225 of 244 Agenda Item # 2
4847-6090-2599.1
49
elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime
Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such
national bank as the Insurer shall specify. If the interest provisions of this subparagraph (a) shall
result in an effective rate of interest which, for any period, exceeds the limit of the usury or any
other laws applicable to the indebtedness created herein, then all sums in excess of those lawfully
collectible as interest for the period in question shall, without further agreement or notice between
or by any party hereto, be applied as additional interest for any later periods of time when amounts
are outstanding hereunder to the extent that interest otherwise due hereunder for such periods plus
such additional interest would not exceed the limit of the usury or such other laws, and any excess
shall be applied upon principal immediately upon receipt of such moneys by the Insurer, with the
same force and effect as if the Authority or the City had specifically designated such extra sums
to be so applied and the Insurer had agreed to accept such extra payment(s) as additional interest
for such later periods. In no event shall any agreed-to or actual exaction as consideration for the
indebtedness created herein exceed the limits imposed or provided by the law applicable to this
transaction for the use or detention of money or for forbearance in seeking its collection.
Repayment of draws and payment of expenses and accrued interest thereon at the
Late Payment Rate (collectively, "Policy Costs") shall commence in the first month following each
draw, and each such monthly payment shall be in an amount at least equal to 1/12 of the aggregate
of Policy Costs related to such draw.
Amounts in respect of Policy Costs paid to the Insurer shall be credited first to
interest due, then to the expenses due and then to principal due. As and to the extent that payments
are made to the Insurer on account of principal due, the coverage under the Reserve Policy will be
increased by a like amount, subject to the terms of the Reserve Policy. The obligation to pay Policy
Costs shall be secured by a valid lien on and pledge of all Revenues (subject only to the priority
of payment provisions set forth under this Indenture).
All cash and investments in the Reserve Fund, if any, shall be transferred to the
Interest Fund and the Principal Fund, as applicable, for payment of debt service on Series 2020A
Bonds before any drawing may be made on the Reserve Policy or any other credit facility credited
to the Reserve Fund in lieu of cash (herein, a "Credit Facility"). Payment of any Policy Costs shall
be made prior to replenishment of any such cash amounts. Draws on all Credit Facilities (including
the Reserve Policy) on which there is available coverage shall be made on a pro-rata basis
(calculated by reference to the coverage then available thereunder) after applying all available cash
and investments in the Reserve Fund. Payment of Policy Costs and reimbursement of amounts
with respect to other Credit Facilities shall be made on a pro-rata basis prior to replenishment of
any cash drawn from the Reserve Fund. For the avoidance of doubt, “available coverage” means
the coverage then available for disbursement pursuant to the terms of the applicable alternative
credit instrument without regard to the legal or financial ability or willingness of the provider of
such instrument to honor a claim or draw thereon or the failure of such provider to honor any such
claim or draws.
(b) If the Authority and the City shall fail to pay any Policy Costs in accordance
with the requirements of subparagraph (a) hereof, the Insurer shall be entitled to exercise any and
all legal and equitable remedies available to it, including those provided under this Indenture, and
Lynwood Public Financing Authority - Page 226 of 244 Agenda Item # 2
4847-6090-2599.1
50
the Facility Agreement, as applicable, other than (i) acceleration of the maturity of the Series
2020A Bonds or (ii) remedies which would adversely affect Owners of the Series 2020A Bonds.
(c) This Indenture shall not be discharged until all Policy Costs owing to the
Insurer shall have been paid in full. The Authority's obligation to pay such amounts shall expressly
survive payment in full of the Series 2020A Bonds.
(d) The Trustee shall ascertain the necessity for a claim upon the Reserve Policy
in accordance with the provisions of subparagraph (a) hereof and provide notice to the Insurer in
accordance with the terms of the Reserve Policy at least five business days prior to each date upon
which interest or principal is due on the Series 2020A Bonds. Where deposits are required to be
made by the Authority with the Trustee to the Interest Fund and the Principal Fund more often
than semi-annually, the Trustee shall give notice to the Insurer of any failure of the Authority to
make timely payment in full of such deposits within two business days of the date due.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Benefits of Indenture Limited to Parties. Nothing contained herein,
expressed or implied, is intended or shall be construed to confer upon, or to give or grant to, any
person or entity other than the City, the Authority, the Trustee, the Owners and the Insurer, any
right, remedy or claim under or by reason of this Indenture or any covenant, condition or stipulation
hereof, and all covenants, stipulations, promises and agreements in this Indenture contained by
and on behalf of the City or the Authority shall be for the sole and exclusive benefit of the City,
the Authority, the Trustee, the Insurer and the Owners.
Section 12.02 Successor Deemed Included in all References to Predecessor.
Whenever any of the City, the Authority, or the Trustee or any officer thereof is named or referred
to herein, such reference shall be deemed to include the successor to the powers, duties and
functions that are presently vested in the City, the Authority, or the Trustee or such officer, and all
agreements, conditions, covenants and terms required hereby to be observed or performed by or
on behalf of the City, the Authority, or the Trustee or any officer thereof shall bind and inure to
the benefit of the respective successors thereof whether so expressed or not.
Section 12.03 Execution of Documents by Owners. Any declaration, request or other
instrument which is permitted or required herein to be executed by Owners may be in one or more
instruments of similar tenor and may be executed by Owners in person or by their attorneys
appointed in writing. The fact and date of the execution by any Owner or his attorney of any
declaration, request or other instrument or of any writing appointing such attorney may be proved
by the certificate of any notary public or other officer authorized to take acknowledgments of deeds
to be recorded in the state or territory in which he purports to act that the person signing such
declaration, request or other instrument or writing acknowledged to him the execution thereof, or
by an affidavit of a witness of such execution duly sworn to before such notary public or other
officer, or by such other proof as the Trustee may accept which it may deem sufficient.
Lynwood Public Financing Authority - Page 227 of 244 Agenda Item # 2
4847-6090-2599.1
51
The ownership of any Bond and the amount, payment date, number and date of
owning the same may be proved by the books required to be kept by the Trustee pursuant to the
provisions of Section 2.08 hereof.
Any declaration, consent, request or other instrument in writing of the Owner of
any Bond shall bind all future Owners of such Bond with respect to anything done or suffered to
be done by the City, the Authority or the Trustee in good faith and in accordance therewith.
Section 12.04 Waiver of Personal Liability. Notwithstanding anything contained
herein to the contrary, no member, officer, employee or agent of the City, the Authority or the
Trustee shall be individually or personally liable for the payment of any moneys, including without
limitation, the principal of, premium, if any, and interest on, the Bonds, but nothing contained
herein shall relieve any member, officer, employee or agent of the City from the performance of
any official duty provided by any applicable provisions of law or by the Facility Lease, the Site
Lease or this Indenture.
Section 12.05 Acquisition of Bonds by City. All Bonds acquired by the City, whether
by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation.
Section 12.06 Content of Certificates. Every Certificate of the City or Authority with
respect to compliance with any agreement, condition, covenant or term contained herein shall
include (a) a statement that the person or persons making or giving such certificate have read such
agreement, condition, covenant or term and the definitions herein relating thereto; (b) a brief
statement as to the nature and scope of the examination or investigation upon which the statements
contained in such certificate are based; (c) a statement that, in the opinion of the signers, they have
made or caused to be made such examination or investigation as is necessary to enable them to
express an informed opinion as to whether or not such agreement, condition, covenant or term has
been complied with; and (d) a statement as to whether, in the opinion of the signers, such
agreement, condition, covenant or term has been complied with.
Any Certificate of the City or the Authority may be based, insofar as it relates to
legal matters, upon an Opinion of Counsel unless the person making or giving such certificate
knows that the Opinion of Counsel with respect to the matters upon which his certificate may be
based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the
same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters,
upon information with respect to which is in the possession of the City upon a representation by
an officer or officers of the City, unless the counsel executing such Opinion of Counsel knows that
the representation with respect to the matters upon which his opinion may be based, as aforesaid,
is erroneous, or in the exercise of reasonable care should have known that the same was erroneous.
Section 12.07 Reserved.
Section 12.08 Funds. Any fund required to be established and maintained herein by the
City or the Trustee may be established and maintained in the accounting records of the City or the
Trustee either as an account or a fund, and may, for the purposes of such accounting records, any
audits thereof and any reports or statements with respect thereto, be treated either as an account or
a fund; but all such records with respect to all such funds shall at all times be maintained in
Lynwood Public Financing Authority - Page 228 of 244 Agenda Item # 2
4847-6090-2599.1
52
accordance with sound accounting practice and with due regard for the protection of the security
of the Bonds and the rights of the Owners. The Trustee may establish such funds and accounts as
it deems necessary to perform its obligations hereunder.
The City and the Trustee may commingle any of the moneys held by it hereunder
for investment purposes only; provided, however, that the City and the Trustee shall account
separately for the moneys in each fund or account established pursuant to this Indenture.
Section 12.09 Investments. Any moneys held by the City in the funds and accounts
established hereunder shall be invested only in Permitted Investments. Any moneys held by the
Trustee in the funds and accounts established hereunder shall be invested by the Trustee upon the
written direction of the City Treasurer only in Permitted Investments. In the absence of such
direction, moneys shall be invested by the Trustee solely in Permitted Investments set forth in
clause (6) of the definition thereof. The Trustee shall not be liable or responsible for any loss
suffered in connection with any such investment made by it under the terms of and in accordance
with this Section. The Trustee may sell or present for redemption any obligations so purchased
whenever it shall be necessary in order to provide moneys to meet any payment of the funds so
invested, and the Trustee shall not be liable or responsible for any losses resulting from any such
investment sold or presented for redemption. Any interest or profits on such investments in any
funds and accounts (other than the Rebate Fund and the Construction Fund) established hereunder
shall be deposited in the Revenue Fund. All investment earnings on the Construction Fund shall
be retained therein. For purposes of determining the amount on deposit in any fund or account
hereunder, all investments shall be valued annually at the amortized cost thereof (exclusive of
accrued but unpaid interest, but inclusive of commissions). Any Permitted Investments that are
registrable securities shall be registered in the name of the Trustee, as trustee hereunder.
The City and the Authority acknowledge that to the extent regulations of the Comptroller
of the Currency or other applicable regulatory entity grant the City or the Authority the right to
receive brokerage confirmations of security transactions as they occur, the City and the Authority
specifically waive receipt of such confirmations to the extent permitted by law.
Section 12.10 Partial Invalidity. If any one or more of the agreements, conditions,
covenants or terms required herein to be observed or performed by or on the part of the City, the
Authority or the Trustee shall be contrary to law, then such agreement or agreements, such
condition or conditions, such covenant or covenants or such term or terms shall be null and void
to the extent contrary to law and shall be deemed separable from the remaining agreements,
conditions, covenants and terms hereof and shall in no way affect the validity hereof or of the
Bonds, and the Owners shall retain all the benefit, protection and security afforded to them under
any applicable provisions of law. The City, the Authority and the Trustee hereby declare that they
would have executed this Indenture, and each and every other Article, Section, paragraph,
subdivision, sentence, clause and phrase hereof and would have authorized the execution and
delivery of the Bonds pursuant hereto irrespective of the fact that any one or more Articles,
Sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof
to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.
Section 12.11 California Law. This Indenture shall be construed and governed in
accordance with the laws of the State of California.
Lynwood Public Financing Authority - Page 229 of 244 Agenda Item # 2
4847-6090-2599.1
53
Section 12.12 Notices. (a) All written notices to be given hereunder shall be given by
first-class mail to the party entitled thereto at its address set forth below, or at such other address
as such party may provide to the other parties in writing from time to time, namely:
If to the City: City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
If to the Authority: Lynwood Public Financing Authority
11330 Bullis Road
Lynwood, California 90262
Attention: Chief Administrative Officer
If to the Trustee: U.S. Bank National Association
633 West Fifth Street, 24th Floor
Los Angeles, California 90071
Attention: Global Corporate Trust
If to Insurer: See Section 11.01 herein.
Each such notice, statement, demand, consent, approval, authorization, offer,
designation, request or other communication hereunder shall be deemed delivered to the party to
whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic
communication, whether by telex, telegram or telecopier, upon the sender’s receipt of an
appropriate answer back or other written acknowledgement or confirmation of receipt of the entire
notice, approval, demand, report or other communication, (c) if given by first class or registered
or certified mail, return receipt requested, deposited the United States mail postage prepaid, 72
hours after such notice is deposited with the United States mail, (d) if given by overnight courier,
with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by
any other means, upon delivery at the address specified in this Section 12.12.
The City shall cause to be given to S&P notice of any substitution of the Trustee,
any material change in the Indenture or the Facility Lease, or redemption or defeasance of all of
the Outstanding Bonds.
Section 12.13 Effective Date. This Indenture shall become effective upon its execution
and delivery.
Section 12.14 Execution in Counterparts. This Indenture may be executed in several
counterparts, each of which shall be deemed an original, and all of which shall constitute but one
and the same instrument.
Lynwood Public Financing Authority - Page 230 of 244 Agenda Item # 2
4847-6090-2599.1
S-1 [Indenture]
IN WITNESS WHEREOF, the parties hereto have executed and attested this
Indenture by their officers thereunto duly authorized as of the day and year first written above.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Officer
CITY OF LYNWOOD
By:
City Manager
LYNWOOD PUBLIC FINANCING
AUTHORITY
By:
Chief Administrative Officer
Lynwood Public Financing Authority - Page 231 of 244 Agenda Item # 2
4847-6090-2599.1
A-1
EXHIBIT A
DESCRIPTION OF LEASED PROPERTY
All that certain real property, situated in the City of Lynwood, State of California,
described on the attached pages.
Lynwood Public Financing Authority - Page 232 of 244 Agenda Item # 2
4847-6090-2599.1
B-1
EXHIBIT B-1
FORM OF SERIES 2020A BOND
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY
PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
No. R-__ $___________
LYNWOOD PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2020A (FEDERALLY TAXABLE)
Interest Rate Maturity Date Dated CUSIP
% ________ 1, 20__ ___________, 2020
REGISTERED OWNER: CEDE & CO.
PRINCIPAL SUM:
The LYNWOOD PUBLIC FINANCING AUTHORITY, a joint powers authority,
duly created and lawfully existing under the Constitution and laws of the State of California (the
“Authority”), for value received, hereby promises to pay (but only out of the Revenues, as
hereinafter defined) to the registered owner specified above or registered assigns on the maturity
date specified above (subject to any right of prior redemption provided for) the principal sum
specified above, together with interest thereon from the Interest Payment Date (as defined below)
to which interest has been paid or duly provided for next preceding its date of execution, unless
such date of authentication shall be (i) prior to the close of business on __________, in which case
such Series 2020A Bond shall bear interest from its date of delivery, (ii) subsequent to a Record
Date but before the related Interest Payment Date, in which case such Series 2020A Bond shall
bear interest from such Interest Payment Date, or (iii) an Interest Payment Date to which interest
has been paid in full or duly provided for, in which case such Series 2020A Bond shall bear interest
from such date of authentication; provided, however, that if, as shown by the records of the Trustee,
interest shall be in default, each Series 2020A Bond shall bear interest from the last Interest
Payment Date to which such interest has been paid in full or duly provided for. The term “Interest
Payment Date” means _______, 2020 and each _______ 1 and _________ 1 thereafter. The term
“Record Date” means the close of business on the 15th day of the month preceding any Interest
Payment Date, whether or not such day is a Business Day.
Lynwood Public Financing Authority - Page 233 of 244 Agenda Item # 2
4847-6090-2599.1
B-2
The principal of this Series 2020A Bond shall be payable in lawful money of the
United States of America at the corporate trust office of U.S. Bank National Association, as trustee
(the “Trustee”) upon presentation and surrender of this Series 2020A Bond.
Payment of interest on this Series 2020A Bond due on or before the maturity or
prior redemption, thereof shall be made to the person in whose name such Series 2020A Bond is
registered, as of the Record Date preceding the applicable interest payment date, on the registration
books kept by the Trustee at its corporate trust office, such interest to be paid by check mailed by
first class mail on such interest payment date to the registered owner at his address as it appears
on such books. Interest on this Series 2020A Bond shall be payable in lawful money of the United
States of America and shall be calculated on the basis of a 360 day year consisting of twelve 30
day months. This Series 2020A Bond shall not be entitled to any benefit, protection or security
under the Indenture, as hereinafter defined, or become valid or obligatory for any purpose until the
certificate of authentication and registration hereon endorsed shall have been signed by the
Trustee.
The Owner of $1,000,000 or more in aggregate principal amount of the Series
2020A Bonds may request in writing that the Trustee pay the interest on such Series 2020A Bonds
by wire transfer to an account in the United States of America and the Trustee shall comply with
such request for all Interest Payment Dates following the 15th day after receipt of such request.
This Series 2020A Bond is one of a duly authorized issue of bonds of the Authority
designated as its “Lynwood Public Financing Authority Lease Revenue Bonds, Series 2020A
(Federally Taxable)” (the “Series 2020A Bonds”), in the aggregate principal amount $__________
all of like tenor and date (except for such variations, if any, as may be required to designate varying
numbers, maturities and interest rates), and is issued under and pursuant to the provisions of an
indenture, dated as of ________ 1, 2020 (the “Indenture”), among the Trustee, the City of
Lynwood (the “City”) and the Authority (copies of which are on file at the corporate trust office
of the Trustee). Unless the context otherwise requires, capitalized terms not defined herein shall
have the meanings ascribed to them in the Indenture.
The Series 2020A Bonds are limited obligations of the Authority and are payable,
as to interest thereon and principal thereof, solely from the revenues derived from Base Rental
Payments paid by the City pursuant to a Facility Lease, dated as of ________ 1, 2020 (the “Facility
Lease”), between the Authority, as lessor, and the City, as lessee, for the use and possession of the
Leased Property as long as the City has such use and possession of the Leased Property, as well as
from all other benefits, charges, income, proceeds, profits, receipts, rents and revenues derived by
the Authority, as assignee of the City’s rights under the Facility Lease, from operation or use of
the Leased Property (the “Revenues”). All the Series 2020A Bonds are equally and ratably secured
by the Revenues and enjoy the benefits of a security interest in the money held in the funds
established pursuant to the Indenture (other than the Rebate Fund), subject to the provisions of the
Indenture permitting the disbursement thereof for or to the purposes and on the conditions and
terms set forth therein.
The obligation of the City to pay Base Rental Payments does not constitute an
indebtedness of the City for which the City is obligated to levy or pledge any form of taxation or
for which the City has levied or pledged any form of taxation. The obligation of the City to pay
Lynwood Public Financing Authority - Page 234 of 244 Agenda Item # 2
4847-6090-2599.1
B-3
Base Rental Payments does not constitute an indebtedness of the City, the State of California, or
any of its political subdivisions within the meaning of any constitutional or statutory debt
limitation or restriction. The obligation of the City to make the Base Rental Payments is subject
to abatement during any period in which, by reason of material damage, destruction or title defect,
there is substantial interference with the use and occupancy of the Leased Property or portions
thereof or if the Leased Property or portions thereof are taken under the power of eminent domain,
all as more particularly provided in the Facility Lease to which reference is hereby made.
To the extent and in the manner permitted by the terms of the Indenture, the
provisions of the Indenture may be amended or supplemented by the parties thereto, in some
instances without the consent of the registered owners of Series 2020A Bonds. No such
amendment or supplement shall (1) extend the Principal Payment Date of any Series 2020A Bond
or reduce the rate of interest represented thereby or extend the time of payment of such interest or
reduce the amount of principal represented thereby without the prior written consent of the
registered owner of each Series 2020A Bond so affected, or (2) reduce the percentage of registered
owners whose consent is required for the execution of any amendment hereof or supplement hereto
without the prior written consent of the registered owners of all Series 2020A Bonds then
Outstanding, or (3) modify any of the rights or obligations of the Trustee without its prior written
consent thereto, or (4) amend the amendment provisions of the Indenture without the prior written
consent of the registered owners of all Series 2020A Bonds then Outstanding.
The Series 2020A Bonds are authorized to be executed and delivered in the form
of fully registered Series 2020A Bonds without coupons, in denominations of five thousand dollars
($5,000) or any integral multiple thereof (each, an “Authorized Denomination”).
This Series 2020A Bond is transferable by the Owner hereof, in person or by his
attorney duly authorized in writing, at the office of the Trustee in Los Angeles, California, but only
in the manner, subject to the limitations and upon payment of the charges provided in the
Indenture; and upon surrender of this Series 2020A Bond for cancellation, accompanied by
delivery of a duly executed written instrument of transfer, a new Series 2020A Bond or Series
2020A Bonds of Authorized Denominations of the same Principal Payment Date equal to the
principal amount hereof will be executed and delivered by the Trustee to the Owner thereof in
exchange or transfer herefor. The Trustee shall not be required to transfer or exchange any Series
2020A Bond during any period in which it is selecting Series 2020A Bonds for redemption, nor
shall the Trustee be required to transfer or exchange any Series 2020A Bond or portion thereof
selected for redemption from and after the date of mailing the notice of redemption. The Trustee
may treat the Owner hereof as the absolute owner hereof for all purposes, whether or not this Series
2020A Bond shall be overdue, and the Trustee shall not be affected by any knowledge or notice to
the contrary; and payment of the principal of, premium, if any, and interest on this Series 2020A
Bond shall be made only to such Owner as above provided, which payments shall be valid and
effectual to satisfy and discharge the liability on this Series 2020A Bond to the extent of the sum
or sums so paid.
The Series 2020A Bonds are subject to redemption prior to maturity as described
in the Indenture.
Lynwood Public Financing Authority - Page 235 of 244 Agenda Item # 2
4847-6090-2599.1
B-4
As provided in the Indenture, notice of redemption hereof or of any part hereof shall
be mailed, first class postage prepaid, not less than 30 nor more than 60 days before the redemption
date, to the Owner of this Series 2020A Bond at his or her address as it appears in the registration
books maintained by the Trustee and as specified in the Indenture, but neither failure to receive
any such notice nor any defect contained therein shall affect the validity of the proceedings for the
redemption of this Series 2020A Bond. If this Series 2020A Bond is called for redemption and
payment is duly provided therefor as specified in the Indenture, the interest represented hereby
shall cease to accrue from and after the designated redemption date.
The Trustee has no obligation or liability to the registered owners of the Series
2020A Bonds for the payment of the interest or principal or redemption premiums, if any, on the
Series 2020A Bonds; but rather the Trustee’s sole obligation is to administer, for the benefit of the
City, the Authority and the registered owners of the Series 2020A Bonds, the various funds
established under the Indenture. The Authority has no obligation or liability whatsoever to the
registered owners of the Series 2020A Bonds.
The Indenture provides that the occurrences of certain events constitute Events of
Default. Subject to certain limitations and to the rights of the Trustee or the Owners of not less
than a majority in aggregate principal amount of the Series 2020A Bonds at the time Outstanding
shall be entitled to take whatever action at law or in equity may appear necessary or desirable to
enforce its rights as assignee.
IN WITNESS WHEREOF, the Lynwood Public Financing Authority has caused
this Series 2020A Bond to be executed manually by its President and by its Secretary all as of
____________, 2020.
LYNWOOD PUBLIC FINANCING
AUTHORITY
Secretary President
Lynwood Public Financing Authority - Page 236 of 244 Agenda Item # 2
4847-6090-2599.1
B-5
CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This is one of the Series 2020A Bonds described in the within mentioned Indenture
which has been authenticated and registered.
Dated: ___________, 2020 U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By: _____________________________________
Authorized Officer
Lynwood Public Financing Authority - Page 237 of 244 Agenda Item # 2
4847-6090-2599.1
B-6
STATEMENT OF INSURANCE
[TO COME]
Lynwood Public Financing Authority - Page 238 of 244 Agenda Item # 2
4847-6090-2599.1
B-7
FORM OF ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto
__________________ the within Series 2020A Bond and do(es) hereby irrevocably constitute and
appoint ______________________ attorney to transfer such Series 2020A Bond on the register of
the Trustee, with full power of substitution in the premises.
Dated:
SIGNATURE GUARANTEED BY:
Note: The signature(s) to this Assignment must correspond with the name(s) as written on the
face of the within Series 2020A Bond in every particular, without alteration or enlargement
or any change whatsoever, and the signature(s) must be guaranteed by an eligible guarantor
institution.
Social Security Number, Taxpayer Identification Number or other identifying number of Assignee:
________________________________
Lynwood Public Financing Authority - Page 239 of 244 Agenda Item # 2
4847-6090-2599.1
C-1
EXHIBIT C
FORM OF REQUISITION FOR FUNDS FROM THE COSTS OF ISSUANCE FUND
The City of Lynwood, a political subdivision duly organized and existing under and by
virtue of the Constitution and laws of the State of California (the “City”), hereby states and
certifies:
(a) that the undersigned is the duly appointed, qualified and acting
_______________ of the City, and as such, is authorized and qualified to certify the same;
(b) that, pursuant the Indenture, dated as of ________ 1, 2020 (the “Indenture”),
by and among U.S. Bank National Association, as trustee (the “Trustee”), the City and the
Lynwood Public Financing Authority, the Trustee is hereby requested to disburse from the Costs
of Issuance Fund established pursuant to Section 3.03 of the Indenture, to the payees set forth on
Exhibit A attached hereto and by this reference incorporated herein, the amount set forth on Exhibit
A opposite each such payee, for payment of such costs incurred for the purposes identified on said
Exhibit A;
(c) that each obligation has been property incurred and is a proper charge
against the Costs of Issuance Fund and has not been the basis of any previous disbursement; and
(d) that a statement or invoice for each amount requested hereunder is attached
hereto.
IN WITNESS WHEREOF, the undersigned has executed this requisition as of the date set
forth below.
Dated: ______________
CITY OF LYNWOOD
By: ________________________________
Authorized City Officer
Lynwood Public Financing Authority - Page 240 of 244 Agenda Item # 2
4847-6090-2599.1
C-2
EXHIBIT A
Payee Purpose Amount
Lynwood Public Financing Authority - Page 241 of 244 Agenda Item # 2
Agenda Item # 6.
AGENDA STAFF REPORT
DATE: November 17, 2020
TO: Honorable Mayor and Members of the City Council
APPROVED BY: Michelle G. Ramirez, Acting City Manager
PREPARED BY: Maria Quinonez, City Clerk
Silvia Pineda, Assistant to the City Clerk
SUBJECT: PREVIOUS MEETING MINUTES
Recommendation:
Staff recommends that the Lynwood Public Financing Authority approve the following minutes:
September 15, 2020
Background:
N/A
Discussion and Analysis:
N/A
Fiscal Impact:
N/A
Coordinated With:
N/A
ATTACHMENTS:
Description
Regular Meeting LPFA 09/15/20
Lynwood Public Financing Authority - Page 242 of 244 Agenda Item # 3
1
LYNWOOD PUBLIC FINANCING AUTHORITY MEETING
MEETING MINUTES
September 15, 2020
01. CALL TO ORDER
Live Meeting in Council Chamber - 11350 Bullis Road, Lynwood, CA 90262 - or - Web
conference via ZOOM - To participate please join via Zoom or by telephone: 1-669-900-
9128 or 1-253-215-8782 Meeting ID: 878 0249 8972 Passcode: 2020
Meeting was called to order at 6:53 p.m.
President Castro presiding.
02. CERTIFICATION OF AGENDA POSTING BY CITY CLERK
Secretary Quinonez announced that the Agenda had been duly posted in accordance
with the Brown Act.
03. ROLL CALL OF COUNCIL MEMBERS
PRESENT: MEMBERS ALATORRE, SANTANA, SOLACHE, VICE PRESIDENT
CASANOVA, AND PRESIDENT CASTRO
ABSENT: NONE
STAFF PRESENT: Acting City Manager Ramirez, City Attorney Tapia, City Treasure
Camacho and City Clerk Quinonez.
04. GOVERNMENT CODE SECTION 54954.3
Mayor Castro stated the following:
Members of the City Council are also members of the Lynwood Public Financing
Authority, which is concurrently convening with the City Council this evening and each
Council Member is paid an additional stipend of $100 for attending the Lynwood Public
Financing Authority Meeting. Further, the Authority is scheduled to meet four (4) times
per year. If additional meetings are required beyond the scheduled four (4) meetings, the
City Council will only get paid for the first four (4) meetings.
PUBLIC ORAL COMMUNICATIONS
(Regarding Agenda Items Only)
NONE
Lynwood Public Financing Authority - Page 243 of 244 Agenda Item # 3
2
NON-AGENDA PUBLIC ORAL COMMUNICATIONS
NONE
CITY COUNCIL ORAL AND WRITTEN COMMUNICATION
NONE
CONSENT CALENDAR
05. PREVIOUS MEETING MINUTES
MOTION: It was moved by Commissioner Solache, seconded by Vice President
Casanova to approve the consent calendar. Motion carried by unanimous consent.
ROLL CALL:
AYES: MEMBERS ALATORRE, SANTANA, SOLACHE, VICE PRESIDENT
CASANOVA, AND PRESIDENT CASTRO
NOES: NONE
ABSTAIN: NONE
ABSENT: NONE
ADJOURNMENT
Having no further discussion, it was moved to adjourn the Lynwood Public Financing
Authority at 6:54 p.m. Motion carried by unanimous consent.
ROLL CALL:
AYES: MEMBERS ALATORRE, SANTANA, SOLACHE, VICE PRESIDENT
CASANOVA, AND PRESIDENT CASTRO
NOES: NONE
ABSTAIN: NONE
ABSENT: NONE
_________________________ _______________________
Maria Quinonez, Secretary Aide Castro, President
Lynwood Public Financing Authority - Page 244 of 244 Agenda Item # 3