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06 June 26, 2006 Budget & Implementation77253 • • RIVERS/DE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE MEETING AGENDA TIME: 9:30 a.m. DATE: Monday, June 26, 2006 LOCATION: Board Chambers County Administrative Center 4080 Lemon Street, 1st Floor Riverside, CA 92501 RECORDS ***COMMITTEE MEMBERS*** Jeff Stone, Chair / District Three / County of Riverside Barbara Hanna, Vice Chair / Art Welch, City of Banning Roger Berg / Jeff Fox, City of Beaumont Robert Crain / Joseph DeConinck, City of Blythe Gregory S. Pettis / Charles "Bud" England, City of Cathedral City Juan M. DeLara / Richard Macknicki, City of Coachella Alex Bias / Yvonne Parks, City of Desert Hot Springs Bob Magee / Robert L. Schiffner, City of Lake Elsinore Terry Henderson / Don Adolph, City of La Quinta Rick Gibbs / Douglas McAllister, City of] Murrieta Ron Meepos / Alan Seman, City of Rancho Mirage Steve Adams, City of Riverside Jim Ayres / Chris Buydos, City of San Jacinto John F. Tavaglione, District Two / County of Riverside ***STAFF*** Eric Haley, Executive Director Theresia Trevino, Chief Financial Officer ***AREAS OF RESPONSIBILITY*** Annual Budget Development and Oversight Countywide Strategic Plan Legislation Measure A Implementation and Capital Programs Public Communications and Outreach Programs Competitive Grant Programs: TEA 21-CMAQ & STP, Transportation Enhancement and SB 821-Bicycle & Pedestrian Property Management SAFE/Freeway Service Patrol TUMF Program and other areas as may be prescribed by the Commission Comments are welcomed by the Committee, if you wish to provide comments to the Committee, please complete and submit a Testimony Card to the Clerk of the Commission. 11.36.06 • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE www.rctc.org AGENDA* *Actions may be taken on any item listed on the agenda 9:30 a.m. Monday, June 26, 2006 BOARD CHAMBERS County Administrative Center 4080 Lemon Street, 1" Floor Riverside, California In compliance with the Americans with Disabilities Act and Government Code Section 54954.2, if you need special assistance to participate in a Committee meeting, please contact the Clerk of the Board at (951) 787-7141. Notification of at least 48 hours prior to meeting time will assist staff in assuring that reasonable arrangements can be made to provide accessibility at the meeting. 1. CALL TO ORDER 2. ROLL CALL 3. PUBLIC COMMENTS 4. APPROVAL OF MINUTES 5. ADDITIONS/REVISIONS (The Committee may add an item to the Agenda after making a finding that there is a need to take immediate action on the item and that the item came to the attention of the Committee subsequent to the posting of the agenda. An action adding an item to the agenda requires 2/3 vote of the Committee. if there are less than 2/3 of the Committee members present, adding an item to .the agenda requires a unanimous vote. Added items will be placed for discussion at the end of the agenda.) • Budget and Implementation Committee June 26, 2006 Page 2 6. CONSENT CALENDAR - All matters on the Consent Calendar will be approved in a single motion unless a Commissioner(s) requests separate action on specific item(s). Items pulled from the Consent Calendar will be placed for discussion at the end of the agenda. 6A. AMENDMENT TO FY 2005/06 MEASURE A CAPITAL .IMPROVEMENT PLAN FOR LOCAL STREETS AND ROADS FOR ' THE CITY OF CORONA Pg. 1 Overview This item is for the Committee to: 1) Approve the amendment to the FY 2005/06 Measure A Capital Improvement Plan for Local Streets and Roads for the city of Corona as submitted; and 2) Forward to the Commission for final action. 7• AGREEMENT NO. 06-33-038-00 FOR RIVERSIDE -DOWNTOWN METROLINK STATION EAST SIDE PARKING LOT PROJECT Overview This item is for the Committee to: Pg. 4 1) Award Agreement No. 06-33-038-00 for the construction of the Riverside -Downtown Metrolink Station East Side Parking Lot Project to Hal Hays Construction, Inc. for the amount of $1,515,404 plus a contingency amount of $224,596 to cover potential change orders encountered during construction, for a total not to exceed, contract authorization of $1,740,000; 2) Authorize the Chairman, pursuant to legal counsel review, to execute the agreement on behalf of the Commission; 3) Increase the project budget for Riverside -Downtown Metrolink Station East Side Parking Lot project by $1,300,000 in Measure A funds and $1,300,000 in additional project costs and amend the Commuter Rail Short Range Transit Plan to reflect these changes; and 4). Forward to the Commission for final action. r • • Budget and Implementation Committee June 26, 2006 Page 3 8. AWARD OF AGREEMENT NO. 06-25-074-00 FOR THE INTERSTATE 15 COMMUTER RAIL FEASIBILITY STUDY Overview This item is for the Committee to: 9. Pg. 11 1) Award Agreement No. 06-25-074-00 to Wilbur Smith and Associates for the Interstate (I) 15 Commuter Rail Feasibility Study in the not to exceed amount of $100,000; 2) Authorize the Chairman, pursuant to legal counsel review, to execute the Agreement on behalf of the Commission; 3) Amend the FY 2006/07 Commuter Rail Short Range Transit Plan to reflect this study; and 4) Forward to the Commission for final action. AMENDMENT TO AGREEMENT FOR FINANCIAL ADVISORY SERVICES Pg. 13 Overview This item is for the Committee to: 1) Approve Agreement No. 04-19-029-01, Amendment No. 1 to Agreement No. 04-19-029, "Agreement for Financial Advisory Services," to amend the term and rates of the agreement with Fieldman, Rolapp & Associates (Fieldman) for financial advisory services; 2) Authorize the Chairman, pursuant to legal counsel review, to execute the Amendment to the Agreement on behalf of the Commission; and 3) Forward to the Commission for final action. Budget and Implementation Committee June 26, 2006 Page 4 10. INTEREST RATE SWAP Overview This item is for the Committee to: Pg. 17 1) Approve the Riverside County Transportation Commission Swap Policy and revisions to the Debt Management Policy; 2) Adopt Resolution No. 06-014, A Resolution of the Riverside County Transportation Commission Regarding the Swap Policy and Revised Debt Management Policy;" 3) Direct staff to develop and issue a solicitation for a request for proposals for one or more variable -to -fixed interest rate swap transactions related to a total notional amount of $185,000,000; 4) Approve Agreement No. 06-19-072-00, "Agreement for Swap Advisory Services with Fieldman Rolapp Financial Services, LLC," to provide swap advisory services; . 5) Approve Agreement No. 05-19-510-01, Amendment No. 1 to Agreement No. 05-19-510, "Agreement for Bond Counsel Services with Orrick, Herrington, & Sutcliffe LLP," to amend the scope of services and related compensation related to legal services related to the execution of a swap transaction; 6) Authorize the Chairman, pursuant to legal counsel review, to execute the Agreement Nos. 06-19-072-00 and 05-19-510-01 on behalf of the Commission; 7) Adopt Resolution No. 06-015, A Resolution of the Riverside County Transportation Commission Authorizing the Execution of a Swap;" 8) Authorize the Executive Director, pursuant to bond counsel review, to execute the swap transaction documents, including the International Swap and Derivatives Association, Inc. (ISDA) Master Agreement (Local Currency -Single Jurisdiction) (Copyright 1992), as amended by a Schedule and Credit Support Annex,. with the successful counterparties; and 9) Forward to the Commission for final action. Budget and Implementation Committee June 26, 2006 Page 5 11. FY 2007-11 MEASURE A FIVE YEAR CAPITAL IMPROVEMENT PLANS FOR LOCAL STREETS AND ROADS Pg. 149 Overview This item is for the Committee to: 1) Approve the FY 2007-1 1 Measure A Five Year Capital Improvement Plans for Local Streets and Roads as submitted; and 2) Forward to the Commission for final action. 12. FY 2006/07 SB 821 BICYCLE AND PEDESTRIAN FACILITIES PROGRAM FUNDING RECOMMENDATIONS Overview This item is for the Committee to: Pg. 150 1) Approve the FY 2006/07 SB 821 Bicycle and Pedestrian Facilities Program recommended funding as shown on the attached schedule; and 2) Forward to the Commission for final action. 13. AWARD OF STATE LEGISLATIVE ADVOCACY AGREEMENT Pg. 158 Overview 1) Approve Agreement No. 06-14-076-00 for State Legislative Advocacy Services to Smith, Watts & Company; 2) Authorize the Chairman, pursuant to legal counsel review, to execute the agreement on behalf of the Commission; and 3) Forward to the Commission for final action. • Budget and Implementation Committee June 26, 2006 Page 6 14. STATE AND FEDERAL LEGISLATIVE UPDATE Pg. 160 Overview 1) Adopt the following bill position: AB 1699 (Frommer, D-Glendale) — OPPOSE UNLESS AMENDED (Change in Position); 2) Receive and file as an information item; and 3) Forward to the Commission for final action. 15. ITEMS PULLED FROM CONSENT CALENDAR AGENDA 16. COMMISSIONERS / STAFF REPORT Overview 1) This item provides the opportunity for the Commissioners and staff to report on attended and upcoming meeting/conferences and issues related to Commission activities. 17. ADJOURNMENT AND NEXT MEETING The next Budget and Implementation Committee meeting is scheduled to be held at 9:30 A.M., Monday, August 28, 2006, Board Chambers, 15t Floor, County Administrative Center, 4080 Lemon Street, Riverside. ATTENDANCE ROSTER BUDGET AND IMPLEMENTATION COMMITTEE MEETING MONDAY, JUNE 26, 2006 9:30 A.M. NAME (naslo-kv� /111 � ((�� REPRESENTING ( za.vAJl ttv5 TELEPHONE OR E-MAIL # qs( 9 27 t3R � c� 71e) ��6 — 53 9S � - .147 _ gsz-o �74,4(. 3 q(5"-z,"6-Z9 z- i AGENDA ITEM 4 Minutes • RIVERS/DE COUNTY TRANSPORTATION COMM/SS/ON BUDGET AND IMPLEMENTATION "COMMITTEE OF THE WHOLE" (Due to lack of a quorum, the Commissioners present operated as a "Committee of the Whole". Recommendations from the "Committee of the Whole" were submitted to the Commission.) Monday, May 22, 2006 MINUTES CALL TO ORDER Vice Chair Barbara Hanna called the "Committee of the Whole" to order at 9:30 a.m., in the Board Room at the County of Riverside Administrative Center, 4080 Lemon Street, First Floor, Riverside, California, 92501. 2. ROLL CALL Members/Alternates Present Members. Absent Steve Adams Roger Berg Barbara Hanna Terry Henderson Bob Magee John Tavaglione Jim Ayers Alex Bias Robert Crain Juan DeLara Rick Gibbs Ron Meepos Gregory Pettis Jeff Stone* *Chair Jeff Stone assigned his proxy vote to Commissioner John Tavaglione. A letter has been filed with the Clerk of the Board. 3. PUBLIC COMMENTS There were no requests to speak from the public. 4. ADDITIONS / REVISIONS There were no additions or revisions to the agenda. 5. APPROVAL OF MINUTES -April 24, 2006 Approval of the minutes was deferred until the next meeting when a quorum present. Budget and Implementation Committee Minutes May 22, 2006 Page 2 6. CONSENT CALENDAR M/S/C (Henderson/Berg) to present the following Consent Calendar items to the Commission for approval: 6A. INTERFUND LOAN ACTIVITY REPORT Receive and file the Interfund Loan Activity Report for the third quarter ended March 31, 2006. 6B. QUARTERLY FINANCIAL STATEMENTS Receive and file the Quarterly Financial Statements for the third quarter ended March 31, 2006. 7. FUNDING ADJUSTMENT FOR THE STATE ROUTE 74 WIDENING PROJECT BETWEEN 1-15 IN LAKE ELSINORE AND 7T" STREET IN PERRIS Hideo Sugita, Deputy Executive Director, provided background information on the budget adjustments and status report for the SR-74 widening project. Commissioner Bob Magee expressed his appreciation for the status report and stated the need to expedite projects as costs will continue to increase. M/S/C (Henderson/Berg) to recommend to the Commission to approve an increase of $1,807,233 to the project budget for the State Route 74 widening project between 1-15 in the city of Lake Elsinore (Lake Elsinore) and 7". Street in the city of Perris (Perris) from $76,446,874 to $78,254,107. 8. REVISIONS TO THE 1989 MEASURE A LOCAL CIRCULATION INTERCHANGE IMPROVEMENT PROJECTS FOR THE CITY OF RIVERSIDE Hideo Sugita provided an overview of the local interchange improvement program in the city of Riverside that includes the La Sierra Avenue, Van Buren Boulevard and Adams Street interchange projects. He then reviewed the city of Riverside's request to revise funding commitments on these interchange projects. Commissioner Steve Adams noted that the La Sierra interchange project should begin in early 2007, highlighting its regional benefits as this project is part of the SR-91 widening and HOV lane improvements. Budget and Implementation Committee Minutes May 22, 2006 Page 3 In response to Commissioner Terry Henderson's inquiry as to a comparison between escalation of project costs and increases in Measure A revenues, Hideo Sugita responded that while that comparison has not been done, staff can review Measure A receipts and put together information on the project cost as it relates to the overall plan delivery. Commissioner Henderson indicated that she believes it would be of interest to the Commission. M/S/C (Adams/Henderson) to recommend to the Commission to: 1) Approve the city of Riverside's request to split the Commission's 1989 Measure A Local Circulation Interchange project commitment of $11.758 million for the Adams Street Interchange with $3.968 million going to the Van Buren Interchange and $7.790 million to the La Sierra Interchange projects; and 2) Authorize the Executive Director to redistribute the Measure A funds between the La Sierra and Van Buren Interchange projects based on the value of construction bids received. This requires the City to provide written documentation on the bid value to the Commission and this authorization cannot exceed the total amount of Measure A funds approved for these projects in the Strategic Plan. 9. CORONA DEPOT PROPERTY SALE Claudia Chase, Property Administrator, provided an overview of the Commission's acquisition and surplus of the Corona Depot. The Commission has received correspondence from the city of Corona, Redevelopment and Economic Department for the acquisition of the Corona Depot. M/S/C (Tavaglione/Berg) to recommend to the Commission to: 1) Approve Agreement No. 06-51-067-00 for the sale of the Corona Depot, (.97 acres) located at 150 Depot Drive in Corona as shown on the attached map, to the city of Corona in the amount of $753,000; and 2) Authorize the Chair, pursuant to legal counsel review, to execute the agreement on behalf of the Commission. • Budget and Implementation Committee Minutes May 22, 2006 Page 4 10. LAMB CANYON PROPERTY CONVEYANCE TO CALTRANS M/S/C (Tavaglione/Henderson) to recommend to the Commission to: 1) Approve the conveyance of property acquired for the Lamb Canyon project to Caltrans; and 2) Authorize the Chair, pursuant to legal counsel, review, to execute the conveyance documents. 11. MADISON STATION GROUNDS SALE TO THE CITY OF RIVERSIDE M/S/C (Tavaglione/Henderson) to recommend to the Commission to: 1) Approve Agreement No. 06-51-065-00 for the sale of the former Madison Station Grounds, (4.15 acres) located on Railroad Avenue between Madison Street and Jefferson Avenue in Riverside as shown on the attached map, to the city of Riverside in the amount of $1,070,000; 2) Authorize the Chair, pursuant . to legal counsel review, to execute the agreement on behalf of the Commission. 12. APPROVAL OF AGREEMENT NO. 06-51-063-00 WITH CALTRANS FOR THE EXCHANGE OF PROPERTY RELATED TO THE SAN JACINTO BRANCH LINE M/S/C (Tavaglione/Henderson) to recommend to the Commission to: 1) Approve Agreement No. 06-51-063-00 with Caltrans for the exchange of property related to the San Jacinto Branch Line (Parcels 7723-1, 7731-1-A, and 7731-2 .and Parcel 7724-01-05); and 2) Authorize the Chair, pursuant to legal counsel review, to execute the agreement on behalf of the Commission. 13. PROPOSED BUDGET FISCAL YEAR 2006/07 Michele Cisneros, Accounting and Human Resources Manager, presented the proposed Budget for FY 2006/07, highlighting the following areas: • Total Estimated Sources and Uses • Revenues and Expenditures • Management Services • Regional Programs • Capital Programs • Measure A Administration • Budget and Implementation Committee Minutes May 22, 2006 Page 5 M/S/C ITavaglione/Henderson) to recommend the Commission to: 1) Continue the public hearing to receive input and comments on the proposed Fiscal Year 2006/07 Budget; 2) Close the public hearing on June 14, 2006; and 3) Adopt the proposed budget for FY 2006/07. 14. RESOLUTION NO. 06-007 'RESOLUTION OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION ESTABLISHING THE COMMISSION'S APPROPRIATIONS LIMIT FOR FISCAL YEAR 2006/07" M/S/C (HendersonITavaglione) to recommend to the Commission to approve Resolution No. 06-007, 'Resolution of the Riverside County Transportation Commission Establishing the Commission's Appropriations Limit for Fiscal Year 2006/07". 15. ADVANCE OF FY 2006/07 CITY OF HEMET MEASURE A LOCAL STREET AND ROAD FUNDS Theresia Trevino, Chief Financial Officer, provided a brief overview on advancing Measure A funds to city of Hemet for Local Streets and Roads projects. M/S/C (Henderson/Tavaglione) to recommend to the Commission to: 11 Approve an advance of $2,126,000, including accrued interest, to the city of Hemet (City) for its estimated Measure A Local Streets and Roads (LSR) funding for FY 2006/07; and 2) Authorize the Chair, pursuant to legal counsel review, to execute Agreement No. 06-31-068-00, Measure A Local Streets and Roads Advancement Agreement, between the Commission and the City. 16. AGREEMENTS FOR FREEWAY SERVICE PATROL TOW TRUCK SERVICE Brian Cunanan, Staff Analyst, provided background information on the Freeway Service Patrol (FSP) tow truck service for Beat Nos. 4 and 18. Both providers, Tri-City Towing, Inc. and Pepe's Towing Services, Inc. have expressed interest in extending their agreements and have requested a rate increase due to increased fuel and insurance costs. Commissioner Henderson expressed her support for the FSP program and asked if there is a mechanism in place to reverse the rate increase should those costs decrease. Budget and Implementation Committee Minutes May 22, 2006 Page 6 Brian ,Cunanan responded that the policies and procedures currently do not address such a situation and staff will review. M/S/C (HendersonITavaglione) to recommend to the Commission to: 1) Approve Agreement No. 02-45-070-03, Amendment No. 3 to Freeway Service Patrol Tow Truck Agreement No. 02-45-070 with Tri-City Towing, Inc., to extend the term of the agreement and increase the hourly rate from $45.00 to $47.00 for Beat No. 4; 2) Approve Agreement No. 02-45-071-04, Amendment No. 4 to Freeway Service Patrol Tow Truck Agreement. No. 02-45-071 with Pepe's Towing Services, Inc. to extend the term of the agreement and increase the hourly rate from $43.75 to $45.75 for Beat No. 18; and 3) Authorize the Chair, pursuant to legal counsel review,to execute the agreements on behalf of the Commission. 17. APPROVAL OF CITY OF MORENO VALLEY'S BICYCLE TRANSPORTATION. PLAN Jerry. Rivera, Program Manager, provided a brief overview of the city of Moreno Valley's Bicycle Transportation Plan, noting the City's desire to apply for a State Bike Lane Account Grant. M/S/C ITavaglione/Henderson) to recommend to the Commission to approve the city of Moreno Valley's Bicycle Transportation Plan as submitted. 18. STATE AND FEDERALLEGISLATIVE UPDATE John Standiford, Public Affairs Director, provided an overview of HR 5329, which would provide $390 million for needed improvements on the SR-91 and AB 2015, which would directly impact the Commission by changing the Governing Board of the South Coast Air Quality Management District (SCAQMD). M/S/C ITavaglione/Henderson) to recommend to the Commission to approve the following bill positions: a), HR_5329 (Miller, R-Diamond. Bar) - SUPPORT; and b) AB 2015 (Lieu, D-Redondo Beach) OPPOSE. Budget and Implementation Committee Minutes May 22, 2006 Page 7 19. ITEMS PULLED FROM CONSENT CALENDAR No items were pulled from the consent calendar for discussion. 20. COMMENTS BY COMMISSIONERS/STAFF There were no Commissioners or staff reports. 21. ADJOURNMENT There being no further business for consideration by the Budget and Implementation Committee, the meeting was adjourned at 10:10 a.m. The next meeting of the Budget and Implementation Committee is scheduled for August 28, 2006 at 9:30 a.m. Respectfully submitted, Jennifer Harmon Clerk of the Board • AGENDA ITEM 6A • • RIVERS/DE COUNTY TRANSPORTATION COMM/SS/ON DATE: June 26, 2006 TO: Budget and Implementation Committee FROM: Jerry Rivera, Program Manager THROUGH: Theresia Trevino, Chief Financial Officer SUBJECT: Amendment to FY 2005/06 Measure A Capital Improvement Plan for Local Streets and Roads for the City of Corona STAFF RECOMMENDATION: This item is for the Committee to: 1) Approve the amendment to the FY 2005/06 Measure A Capital Improvement Plan for Local Streets and Roads for the city of Corona as submitted; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: i The Measure A Ordinance requires each recipient of local streets and roads monies to annually provide to the Commission a five year plan on how those funds are to be expended in order to receive its Measure A disbursements. In addition, the cities in the Coachella Valley and the County (representing the unincorporated area of the Eastern County) must be participating in CVAG's Transportation Uniform Mitigation Fee program. The agencies are also required to submit an annual certification of Maintenance of Effort along with documentation supporting the calculation. The Measure A plan for the city of Corona was approved by the Commission at its July 13, 2005 meeting. Any revisions to the adopted plan must be returned to the Commission for approval. The city of Corona is requesting to amend its FY 2005/06 Measure A plan to add three new projects. As noted in its letter dated June 6, 2006, the three capital projects are being funded using available fund balance. Attachment: Letter from the city of Corona with revised FY 2005/06 CIP Schedule 1 OFFICE OF: PUBLIC WORKS DEPARTMENT 19511 736-22BD 19511 279-3627 IFAXI Nedl@ci.corona.ca.us (E-mail/ June 6, 2006 PWA-121-06 400 SOUTH VICENTIA AVENUE, P.O. BOX 940, CORONA, CALIFORNIA 92878-0940 CORONA CITY HALL - ONLINE, ALL THE TIME ihttp://www.discovercorona.com) Eric Haley, Executive Director Riverside County Transportation Commission 3560 University Avenue #100 Riverside, CA 92501 Attention: Jerry Rivera SUBJECT: CITY OF CORONA 2005/06 FIVE YEAR CAPITAL IMPROVEMENT PLAN BUDGET Dear Jerry: Submitted to the Riverside County Transportation Commission is a request for revision of the FY 2005/06 Five Year Capital Improvement Plan budget. The Corona City Council has approved Measure A funding for the following capital projects using available fund balance: • $105,050 for Traffic Signal and In -Pavement Crosswalk Lights at various locations • $706,036 for Lincoln Avenue Congestion Relief • $482,700 for Advance Traffic Management System (ATMS) The above capital projects will be reported in Project Status Report as continuing appropriations into the 2006/07 Fiscal Year. If you have any questions please contact Reza Zolghadr, P.E., Senior Civil Engineer at 951- 736-2441, or Barbara Thierjung, Finance Manager at 951-736-2314. Sincerely, ED IBRAHIM, P.E. / Assistant Public Works Director NI/RZ/Irt c: Barbara Thierjung, Finance Manager wp/uMtrnead 2 Agency: City of Corona Prepared By: Reza Zolghadr Phone No.: (951) 736-2441 Date: Revision Date: June 6, 2006 RIVERSIDE COUNTY TRANSPORTATION COMMISSION MEASURE "A" LOCAL FUNDS PROGRAM FY 2005-2006 to 2009-2010 Page 1 of 5 Fiscal Year2005-2006 ITEM NO. PROJECT NAME/LIMITS PROJECT (Category) TYPE FY2005-2006 NEW APPROPRIATIONS TOTAL COST MEASURE ENTITLEMENTS Est. FY2005.2006 1 Pavement Rehabilitation for Local Streets Roads, Bridges and Freeways $ 1,590,000 $ 1,590,000 2 Resurfacing and Pavement Maintenance Roads, Bridges and Freeways 50,000 50,000 3 Pavement Management Study Roads, Bridges and Freeways 35,000 35,000 4 Sidewalk, Curb & Gutter Installation/Repair Roads, Bridges and Freeways 50,000 50,000 5 Major Pavement Rehabilitation Roads, Bridges and Freeways 1,580,000 1,580,000 6 Arterial Widening Roads, Bridges and Freeways 100,000 100,000_ 7 Citywide GIS Application Building, Systems, and Facilities 5,364 5,364 8 Freeway Bridges/Smith Avenue Storm Drain Roads, Bridges and Freeways 532,648 532,648 9 Striping Rehabilitation Roads, Bridges and Freeways 20,000 20,000 10 Local Street Widening, Curb/Gutter Improvements Roads, Bridges and Freeways 120,000 120,000 11 Sidewalk, Curb & Gutter Installation/Replacement Roads, Bridges and Freeways 150,000 150,000 12 Sixth Street Beautification Roads, Bridges and Freeways 500,000 115,286 13 City's Cost Allocation Plan (Overhead) Operational Budget 190,702 190,702 Traffic Signal and In -Pavement Crosswalk Lights 14 (Safe Routes to School - FY 2004-05) Roads, Bridges and Freeways 105,050 - 15 Lincoln Avenue Congestion Relief Roads, Bridges and Freeways 706,036 - 16 Advanced Traffic Management System Lighting and Signals 482,700 0 Original Total Revised Total Estimated Measure A Entitlements Disbursements: Prior Year's Estimated Fund Balance: Difference funded by prior available fund balance. Reference letter dated June 6, 2006. Difference funded by prior available fund balance. $ $ 4,923,714 84;5397000 6,217,500 $ 4,539,000 0 0 O $ 4,539,000 $ 4,539,000 384,714 1,678,500 $ 4,923,714 $ 6,217,500 AGENDA ITEM 7 • • • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: June 26, 2006 TO: Budget and Implementation Committee FROM: Bill Hughes, Bechtel Project Manager Karl Sauer, Bechtel Construction Manager Robert Wunderlich, Bechtel Resident Engineer THROUGH: Hideo Sugita, Deputy Executive Director SUBJECT: Agreement No. 06-33-038-00 for Riverside -Downtown Metrolink Station East Side Parking Lot Project STAFF RECOMMENDATION: This item is for the Committee to: 1) Award Agreement No. 06-33-038-00 for the construction of the Riverside -Downtown Metrolink Station East Side Parking Lot Project to Hal Hays Construction, Inc. for the amount of $1,515,404 plus a contingency amount of $224,596 to cover potential change orders encountered during construction, for a total not to exceed contract authorization of $1,740,000; 2) Authorize the Chairman, pursuant to legal counsel review, to execute the agreement on behalf of the Commission; 3) Increase the project budget for Riverside -Downtown Metrolink Station East Side Parking Lot project by $1,300,000 in Measure A funds and $1,300,000 in additional project costs and amend the Commuter Rail Short Range Transit Plan to reflect these changes; and 4) Forward to the Commission for final action. BACKGROUND INFORMATION: At the May 9, 2001 Commission meeting, the Commission approved the establishment of an Ad Hoc Committee to address policy issues identified in the draft Station Management Plan submitted separately to the Commission at that same meeting. One of the main findings of the draft Station Management Plan was that by 2010, four out of the five, existing and proposed, Metrolink stations were forecasted to have parking deficits. In conjunction with direction from both the Commission and the newly formed Ad Hoc Committee, staff proceeded forward to develop plans for the construction of the new North Main Corona Metrolink Station and the expansion of the existing Riverside -Downtown arid Riverside -La Sierra Metrolink commuter rail stations. The new North Main Corona Station can 4 accommodate approximately 625 vehicles. The Riverside -La Sierra Metrolink Station has been expanded from approximately 350 parking spaces to approximately 1000 parking spaces. The Riverside -Downtown station has been "initially expanded from approximately 700 parking spaces to 825 parking spaces, with the construction of the new Vine St. parking lot, across from the main parking lot. At the January 11, 2006 Commission, the Commission authorized staff to advertise for bids to construct the Riverside -Downtown Metrolink Station East Side Parking Lot Project. The project site is located on Commerce St., between 9th and 10th St., in the city of Riverside. The new parking facility will accommodate 321 additional vehicles, bringing the total parking lot capacity for the Riverside - Downtown Metrolink Station to 1 146 spaces. The project was advertised starting on May 15, 2006 with the bid opening on June 15, 2006. Eight (8) bids were received and opened on June .15, ,2006 at 2:00 PM. A summary of the bids received are shown in Table A: TABLE A Riverside - Downtown Metrolink Station East Side Parking Lot Project Bid Summary Firm (In order from Low bid to High bid) Bid Amount Amount Over Low Bid Engineers Estimate $1,104,973.55 N/A 1 Hillcrest Contracting Corona, CA $1,328,512.61 See Note 1 2 Hal Hays Construction, Inc. Riverside, CA $1,515,403.50 Lowest Responsive Bidder 3 Phoenix Construction Services Riverside, CA $1,806,212.50 $290,809.00 4 Adams/Mallory Const Co., Inc Placentia, CA $1,866,774.50 $351,371.00 5 Riverside Construction Co. Riverside, CA $1,882,321.65 $366,918.15 6 Alliance Streetworks Anaheim, CA $1,887,378.50 $371,975.00 7 Ace Engineering Inc. La Verne, CA $2,010,274.30 $494,870.80 8 LH Engineering Co., Inc. Anaheim, CA $2,912,219.50 $1,396,816.00 • 5 • Note 1: Bid Withdrawn by Hillcrest Contracting due to bid error. Bid disqualified because subcontracted cost exceeds 50% of Total Contract Price The bids were reviewed by legal counsel and staff, and all concurred that the Hal Hays Construction, Inc. bid was the lowest responsive bid received for the project. A summary of the review of the four (4) lowest bids received and the responsiveness of the bids are detailed in Table B: TABLE B Riverside - Downtown Metrolink Station East Side Parking Lot Project Bid Checklist Checklist Item Hillcrest Contracting Hal Hays Construction, Inc. Phoenix Construction Services Adams/Mallory Const Co., Inc 1 Bid Letter Yes Yes Yes Yes 2 Schedule of Prices -- -- -- -- - Bid Sheet Completed Yes Yes Yes Yes - Bid Item Comparison --- --- -- -- - w/Eng's Est Yes Yes Yes Yes - wlother Bidders Yes Yes Yes Yes - Balanced Bid Items Yes Yes Yes Yes 3 Bid Bond Yes Yes Yes Yes 4 List of Subcontractors Yes Yes Yes Yes - Prime Performs > 50% Work No Yes No Yes 5 Bidder Information Forms No Yes Yes Yes - Reference Check N/A TBD N/A TBD 6 Non -Collusion Affidavit Yes Yes Yes Yes 7 Evidence of Insurance To be provided with award To be provided with award To be provided with award To be provided with award 8 Was Bidder Responsive? NO TBD NO TBD The bid submitted by Hillcrest Contracting was withdrawn due to a bid error, which resulted in its total bid price being less than intended. In addition, the total price of its subcontracted work exceeded 50% of its total bid price. The bid submitted by Phoenix Construction Services also showed that the total price of its subcontracted work exceeded 50% of its total bid price. Bids submitted by Hal Hays 6 Construction, Inc. and Adams/Mallory Const Co., Inc. were fully responsive. The results of the reference checks will be presented to the Committee. Table C below summarizes -the subcontractors listed by Hal Hays Construction, 'Inc. TABLE C Riverside - Downtown Metrolink Station East Side Parking Lot Project Hal Hays Construction, Inc. - Subcontractors Name Address Telephone License No. Type of Work Subcontract Amount Golden State Fence 870 N. Main St. Riverside, CA 92501 (951) 686- 3170 299964 Fencing $64,719.00 Marina Landscape 1900 S. Louis St. Anaheim, CA 92805 (714) 939- 6600 492862 Landscaping $241,800.00 C. T. & F:, Inc. 7228 Scout Ave. Bell Gardens, CA (562) 927- 2339 182572 Electrical $355,134.00 Table D summarizes the costs associated with the construction of the Riverside - Downtown Metrolink Station East Side Parking Lot Project for the three (3) lowest bids received: TABLE D Riverside - Downtown Metrolink Station East Side Parking Lot Project Cost Summary ITEM NO. ITEM DESCRIPTION Engineer's Estimate Hal Hays Construction, Inc. Phoenix Construction Services Adams/Mallory Const Co., Inc 1 Mobilization $51,000.00 $75,750.00 $52,000.00 $153,472.00 2 Traffic Control $3,500.00 $4,900.00 $2,500.00 $21,757.00 3 Construction Water $3,000.00 $1,350.00 $800.00 $8,817.00 4 Remove Existing AC Pavement $9,868.00 $9,868.00 $34,538.00 $4,934.00 5 Remove Existing Curb/AC Berm $4,030.00 $3,224.00 $1,410.50 $806.00 6 Remove Existing Drain Inlet $2,000.00 $650.00 $300.00 $5,724.00 7 Remove Existing PCC $6,000.00 $4,500.00 $36,000.00 $4,800.00 $ Sawcut and remove 1-ft AC Pavement $1,128.00 $1,128.00 $987.00 $564.00 9 Clearing and Grubbing $8,000.00 $1.1,300.00 $8,000.00 $6,525.00 10 Tree 'Removal & Disposal $2,700.00 $5,175.00 $9,000.00 $3,816.00 • • TABLE D Riverside - Downtown Metrolink Station East Side Parking Lot Project Cost Summary ITEM NO. ITEM DESCRIPTION Engineer's Estimate Hal Hays Construction, Inc. Phoenix Construction Services Adams/Mallory Const Co., Inc 11 Parking Lot Excavation (export) $40,000.00 $52,000.00 $24,000.00 $64,800.00 12 Road Surface Excavation $2,000.00 $8,000.00 $600.00 $13,600.00 13 SWPPP/Erosion Control $5,500.00 $22,600.00 $6,000.00 $7,640.00 14 Cold Plane per detail on Sheet 2 $462.50 $4,070.00 $14,800.00 $12,765.00 15 Construct 6" Class II Base $96,525.00 $90,090.00 $98,670.00 $134,706.00 16 Construct 0.17-ft AC Pavement $59,760.00 $37,350.00 $59,760.00 $44,820.00 17 Construct 4" AC Pavement $172,020.00 $180,621.00 $272,365.00 $249,429.00 18 Adj. Exist. Water Valves to Grade $1,050.00 $1,806.00 $4,900.00 $3,192.00 19 Raise Existing Manhole to Grade $1,500.00 $3,300.00 $2,100.00 $8,430.00 20 Construct 3-ft Ribbon Gutter $6,153.75 $39,384.00 $54,153.00 $21,333.00 21 Construct 6" Curb and Gutter per City of Riverside Std 200, Type I $32,310.00 $43,977.50 $44,875.00 $62,825.00 22 Construct Cross Gutter per City of Riverside Std 220 $10,120.00 $16,192.00 $13,156.00 $14,168.00 23 Construct Curb per City of Riverside Std 200, Type II $53,300.00 $50,635.00 $45,305.00 $106,600.00 24 Construct Drive Approach per City of Riverside Std 303 $2 272 00 $5,680.00 $5,112.00 $10,508.00 25 Construct Handicapped Ramp $5,250.00 $546.00 $5,874.00 $2,655.00 26 Construct Sidewalk per City of Riverside Std 325 $29 991.50 $43,624.00 $54,530.00 $62,709.50 27 4" White Parking Lot Striping $2,526.80 $6,317.00 $6,317.00 $6,317.00 28 Construct Crosswalk per City Standard $1,200.00 $800.00 $3,500.00 $3,206.00 29 Handicapped Striping per City ADA Standards $10,400.00 $5,056.00 $6,000.00 $5,504.00 30 Install Stop Sign $600.00 $554.00 $500.00 $460.00 31 Irrigation System $85,729.00 $147,400.00 $152,720.00 $92,517.00 32 Install 3- 4" PVC Pipe - sch 80 for Electrical and Irrigation Road Crossing. $2,145.00 $4,455.00 $5,000.00 $4,125.00 33 Landscaping $123,112.00 $103,230.00 $102,300.00 $139,534.00 8 TABLE D Riverside - Downtown Metrolink Station East Side Parking tot Project Cost Summary ITEM NO. ITEM DESCRIPTION Engineer's Estimate Hal Hays Construction, . Inc. Phoenix Construction Services Adams/Mallory Const Co., Inc 34 Landscaping 1 year Maintenance Period $22,000.00 $13,320.00 $15,000.00 $17,176.00 35 4-ft Wheel Stops (See.Note #1) $6,250.00 $3,500.00 $6,250.00 $5,750.00 36 Construct Parkway Drain $4,000.00 $4,800.00 , $1,760.00 $2,400.00 37 Construct Catch Basin Per City Std 405 $8,000.00 $14,700.00 $18,000.00 $2,540.00 38 Install Vending Machine Canopy $55,000.00 $22,696.00 $1,125.00 $34,014.00 39 Construct Wrought Iron Fence $13,170.00 $71,118.00 $118,530.00 $93,068.00 40 Construct Wrought Iron Gate $800.00 $694.00 $2,250.00 $1,226.00 41 Provide and Install Electric Control System & Panel (parking lot lighting) $2,500.00 $6,650.00 $21,230.00 $7,225.00 42 Provide and Install Electrical Conduits and Wire (parking lot lighting) $27,500.00 $51,250.00 $82,500.00 $55,000.00 43 Provide and Install Electrical Poles and Fixtures (parking lot lighting) (See Note #1) $89,100.00 $141,075.00 $214,995.00 $151,800.00 44 Provide and Install Streetlight Fixtures, Poles, Conduits, Wires & Control Systems $38,500.00 $196,570.00 $192,500.00 $212,850.00 45 Install Fossil Filter- Kristar FB-24 $3,000.00 $3,498.00 $4,000.00 $667.00 TOTAL $1,104,973.55 $1,515,403.50 $1,806,212.50 $1,866,774.50 From staff and legal counsel's review of the bids received, staff is recommending that the Commission award Agreement No. 06-33-038-00 for the construction of the Riverside -Downtown Metrolink Station East Side Parking Lot Project to Hal Hays Construction, Inc. for the amount of $1,515,404 plus a contingency amount of $224,596 to cover potential change orders encountered during construction, for a total contract authorization of $1,740,000. The standard Commission construction contract will be used, subject to legal counsel review. Fundincj The original funding allocated to this project was $3,500,000 in Measure, A and $500,000 in LTF funds. After the property purchase and engineering expenses the remaining revenue budget is approximately $500,000. In order to 9 accommodate the total cost of the construction, staff is recommending that the Commission approve increases to the total project budget of $1,300,000 in Measure A funding and $1,300,00 in additional project costs. In addition, staff requests that the Commuter Rail Short Range Transit Plan be amended to reflect the additional $1,300,000 in Measure A funds and $1,300,000 in additional project costs allocated to this project. Financial Information In Fiscal Year Budget: Y Year: FY 2006/07 Amount: $1,740,000 Source of Funds: Measure A funds Budget Adjustment: N GLA No.: 221 33 81301 P3810 Fiscal Procedures Approved: GPil�dt�/ Date: 6/23/06 10 • AGENDA ITEM 8 • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: June 26, 2006 TO: Budget and Implementation Committee FROM: Sheldon Peterson, Rail Programs Manager THROUGH: Stephanie Wiggins, Regional Programs Director SUBJECT: Award of Agreement No. 06-25-074-00 for the Commuter Rail Feasibility Study Interstate 15 STAFF RECOMMENDATION: This item is for the Committee to: 1) Award Agreement No. 06-25-074-00 to Wilbur Smith and Associates for the Interstate (1) 15 Commuter Rail Feasibility Study in the not to exceed amount of $100,000;' 2) Authorize the Chairman, pursuant to legal counsel review, to execute the Agreement on behalf of the Commission; 3) Amend the FY 2006/07 Commuter Rail Short Range Transit Plan to reflect this study; and 4) Forward to the Commission for final action. BACKGROUND INFORMATION: In May 2005, the Commission directed staff to evaluate a new commuter rail line from Temecula to San Diego to accommodate the large number of Riverside County residents who commute south along the 1-15, once the initial commuter rail feasibility study was completed. The proposed 1-15 Commuter Rail Feasibility study will examine this segment. In addition given the growth forecast in the 1-15 corridor, the project will include a study of a conventional commuter rail corridor between Temecula and Corona on the 1-15 corridor, maximizing use wherever possible of the former Santa Fe Railroad right of way between Lake Elsinore and Corona. In November 2005, RCTC completed the Riverside County Commuter Rail Feasibility Study which evaluated several commuter rail corridors throughout the county. The project studied extensions of existing or proposed rail routes to the Coachella Valley, Hemet/San Jacinto, and Temecula via both the 1-215 and Winchester road. The analysis supported advancing two scenarios for inclusion in the next SCAG Regional Transportation Plan update, the Perris Valley extension to Hemet/San Jacinto and the extension to Temecula along the 1-215. 11 Selection Process The Request for Proposal (RFP) was released on May 10, 2006 with a mailing to 20 firms. The RFP was also posted on the Commission's website. The Commission received two proposals by the deadline of June 12, 2006: STV Inc. and Wilbur Smith and Associates. The proposals were reviewed by the Evaluation Committee comprised of representatives from the city of Corona, the Southern California Regional Rail Authority, and the Commission. The firm selected by the committee to perform the study is Wilbur Smith and Associates. Financial Information In Fiscal Year Budget: Y Year: FY 2006/07 Amount: $100,000 Source of Funds: LTF Budget. Ad ustment: N GLA No.: 103-25-81501 P4201 Fiscal Procedures Approved: \pLvolu Date: 6/23/06 12 • AGENDA ITEM 9 • • RIVERS/DE COUNTY TRANSPORTATION COMM/SS/ON DATE: June 26, 2006 TO: Budget and Implementation Committee FROM: Theresia Trevino, Chief Financial Officer THROUGH: Anne Mayer, Deputy Executive Director SUBJECT: Amendment to Agreement for Financial Advisory Services STAFF RECOMMENDATION: This item is for the Committee to: 1) Approve Agreement No. 04-19-029-01, Amendment No. 1 to Agreement No. 04-19-029, "Agreement for Financia► Advisory Services," to amend the term and rates of the agreement with Fieldman, Rolapp & Associates (Fieldman) for financial advisory services; 2) Authorize the Chairman, pursuant to legal counsel review, to execute the Amendment to the Agreement on behalf of the Commission; and 3) Forward to the Commission for final action. BACKGROUND INFORMATION: At its October 2003 meeting, the Commission approved the se►ection of Fieldman to provide financial advisory services to the Commission. The selection was based on the evaluation of six proposals received in response to a request for proposals as well as an interview process. Fieldman is a full -service consulting firm that offers financial and investment advice to state and local governments and non- profit institutions. Agreement No. 04-19-029 with Fieldman expires on August 31, 2006, and compensation is based on the projects assigned to them at the rates set forth in a fee schedule. Since its selection, Fieldman has assisted the Commission in its three most recent rating agency presentations, the establishment of the $185,000,000 commercial paper program related to the 2009 Measure A, development of the strategic partnership advisory services request for proposal, consultation related to financing mechanisms proposed by the county of Riverside for Transportation Uniform Mitigation Fees, and various other matters. In connection with preparation for a long-term debt issue in 2008 or 2009 related to the 2009 Measure A, Fieldman has recently been advising Commission staff regarding an interest rate swap program, which is discussed in a separate agenda item. 13 Staff is very satisfied with the performance of services provided by Fieldman and its understanding of the Commission's programs, goals, and needs. Accordingly, staff recommends that Agreement No. 04-19-029 be extended through December 31, 2009 based on the efforts to date related to the planning and preparation for a debt financing under the 2009 Measure A. Additionally, staff recommends the following fee schedule revisions: Personnel Original (2003) Hourly Rate Revised (2006) Hourly Rate Managing Principal/Executive Officers of the Firm Principal/Senior Vice President Vice President Assistant Vice President Senior Associate Associate of the Firm Analyst Administrative Assistant Clerical (Other) $ 275 240 185 170 N/A 135 N/A 80 35 $ 300 275 225 195 150 125 85 65 35 The rates for lower level staff have not increased or have decreased, and there are rates for new staff levels that may perform services. The top four staff levels have experienced rate increases of 9% for managing principal/executive officer, 15%,for principal/senior vice president, 22% for vice president, and 15% for assistant vice president/senior associate. Since the rates proposed in July 2003 have not been adjusted during the term of the agreement, staff believes the revised rates are fair and reasonable for such professional services. Financial Information In Fiscal Year Budget: Yes Year: FY 2006/07 Amount: Varies Depending on Assignment Source of Funds: Measure A Administration Budget Ad ustment: No GLA No.: S-19-65302 Fiscal Procedures Approved: \i/tbte4":41,Levz Date: 6/26/06 Attachment: Agreement No. 04-19-029-01 14 • e Agreement No. 04-19-029-01 AMENDMENT NO. 1 TO AGREEMENT FOR FINANCIAL ADVISORY SERVICES 1. PARTIES AND DATE This Amendment No. 1 to the Agreement for Financial Advisory Services is made and entered into as of this day of , 2006, by and between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION ("Commission") and FIELDMAN, ROLAPP & ASSOCIATES ("Consultant"). RECITALS 2.1 The Commission and the Consultant have entered into an agreement dated March 2, 2004 for the purpose of providing financial advisory services (the "Master Agreement"). 2.2 The parties now desire to amend the Master Agreement to extend the term for an additional three years and four months and to update Consultant's fee schedule so that Consultant may continue to perform financial advisory tasks, including financings under the 2009 Measure A. TERMS 3.1 The term of the Master Agreement shall be extended for an additional term (the "First Extended Term") of three years and four months ending December 31, 2009. 3.2 Compensation under this Amendment shall be provided in the manner set forth in the Master Agreement. The hourly fee schedule set forth in Exhibit "B" of the Master Agreement shall be amended in its entirety and shall be replaced with the hourly fee schedule set forth below: Managing Principal/Executive Officers of the Firm $ 300 Principals/Senior Vice Presidents $ 275 Vice Presidents $ 225 Assistant Vice Presidents $ 195 Senior Associates $ 150 Associates of the Firm $ 125 Analyst $ 85 15 Administrative Assistants $ 65 Clerical (Other) $ 35 3.3 Except as amended by this Amendment, all provisions of the Master Agreement, including without limitation the indemnity and insurance provisions, shall remain in full force and effect and shall govern the actions of the parties under this Amendment. IN WITNESS. WHEREOF, the parties hereto have executed the Agreement on the date first herein above written. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Marion Ashley, Chairman APPROVED AS TO FORM: By: By: Its: Steve DeBaun, Best, Best & Krieger LLP Counsel to the Riverside County Transportation Commission CONSULTANT FIELDMAN, ROLAPP & ASSOCIATES 16 AGENDA ITEM 10 • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: June 26, 2006 TO: Budget and Implementation Committee FROM: Theresia Trevino, Chief Financial Officer THROUGH: Anne Mayer, Deputy Executive Director SUBJECT: Interest Rate Swap STAFF RECOMMENDATION: This item is for the Committee to: 1) Approve the Riverside County Transportation Commission Swap Policy and revisions to the Debt Management Policy; 2) Adopt Resolution No. 06-014, 'A Resolution of the Riverside County Transportation Commission Regarding the Swap Policy and Revised Debt Management Policy;" 3) Direct staff to develop and issue a solicitation for a request for proposals for one or more variable -to -fixed interest rate swap transactions related to a total notional amount of $185,000,000; 4) Approve Agreement No. 06-19-072-00, "Agreement for Swap Advisory Services with Fieldman Rolapp Financial Services, LLC," to provide swap advisory services; 5) Approve Agreement No. 05-19-510-01, Amendment No. 1 to Agreement No. 05-19-510, "Agreement for Bond Counsel Services with Orrick, Herrington, & Sutcliffe LLP," to amend the scope of services and related compensation related to legal services related to the execution of a swap transaction; 6) Authorize the Chairman, pursuant to legal counsel review, to execute the Agreement Nos. 06-19-072-00 and 05-19-510-01 on behalf of the Commission; 7) Adopt Resolution No. 06-015, "A Resolution of the Riverside County Transportation Commission Authorizing the Execution of a Swap;" 8) Authorize the Executive Director, pursuant to bond counsel review, to execute the swap transaction documents, including the International Swap and Derivatives Association, Inc. (ISDA) Master Agreement (Local Currency -Single Jurisdiction) (Copyright 1992), as amended by a Schedule and Credit Support Annex, with the successful counterparties; and 9) Forward to the Commission for final action. 17 BACKGROUND INFORMATION: In February 2005, the Commission approved a commercial paper program to provide advance funding for projects included in the expenditure plan of the. approved 2009 Measure A. In April 2005, $30,005,000 of commercial paper notes was issued under the $185,000,000 commercial paper program that was established. It has been anticipated that the outstanding commercial paper notes will be refinanced with a long -.term debt issuance in late 2008 or in early 2009. Since the inception of the commercial paper program, interest rates on the notes have varied 'from 2.05% to 3.58%, with a weighted average interest rate of 2.92%. Additionally, since February 2005, the Federal Reserve has increased the Fed Funds rate from 2.25% to 5.00%, and investors are anticipating the results of the Federal Reserve's next meeting on June 29, 2006. The Commission anticipates issuing long-term debt to refinance the commercial paper notes as well as to provide financing to advance fund projects included in the 2009 Measure A expenditure plan. Due to the uncertainty of future interest rates, staff and the Commission's 'financial advisor, Fieldman, Rolapp & Associates (Fieldman), have been discussing financing strategies to achieve a greater level of stability of interest rates upon the issuance of long-term debt: Such discussions have included meetings with investment bankers regarding market information and recommended strategies, which related to interest rate swaps or hedges. Additionally, staff has attended conferences and seminars to obtain an understanding of public finance strategies including interest rate swaps and hedges. It is the opinion of staff and Fieldman that it would be prudent for`the Commission to consider an interest rate swap strategy at this time to insulate the Commission's 2009 Measure A financing program against future interest rate volatility. It is important to note that this strategy is not speculative or a play on expected interest rates. Rather, staff and Fieldman believe that the direction of interest rates in the future is uncertain, that such interest rates will be different than today, and that the fixed rate of interest for tax-exempt long-term debt that could be obtained now is desirable due to the currently flat yield curve and relatively low forward premium cost. As a point of reference, the following is a summary of the range of fixed rates of interest on the long-term debt issued under the Commission 1989 Measure A financing program: 2000 Sales Tax Revenue Bonds 1997 Sales Tax Revenue Bonds, Series A 1997 Sales Tax Revenue Bonds, Series B 4.250% to 5.250% 3.700%`to 5.250% 3.750% to 5.000% 18 1996 Sales Tax Revenue Bonds 1993 Sales Tax Revenue Bonds 1991 Sales Tax Revenue Bonds 3.500% to 6.000% 3.500% to 5.750% 5.600% to 6.700% The use of interest rate swaps by governmental agencies is becoming more common, as such agencies enter into swaps to accomplish three primary objectives: • To reduce borrowing costs; • To better manage or limit interest rate risk; and • To effect a better matching of assets and liabilities. In fact, several transportation agencies including the Orange County Transportation Authority, San Diego Association of Governments (SANDAG), Los Angeles County Metropolitan Transportation Authority, Contra Costa Transportation Authority (CCTA), Santa Clara Valley Transportation Authority, San Joaquin Transportation Authority (SJTA), and Bay Area Toll Authority have entered into swap transactions. SANDAG, CCTA, and SJTA have forward swaps relating to future long-term debt issuances, similar to the type of transaction being contemplated for the Commission. Overview of a Swap Transaction A swap is a contract between a borrower (i.e., the Commission) and counterparty (i.e., a financial institution) to exchange, or swap, cash flows for a defined period of time. In the floating to fixed rate swap under consideration, one party (the Commission) pays a fixed rate to the other, and the other party (the counterparty) pays a floating/variable rate to the other. The swap payments are calculated on a computational base referred to as the notional amount; however, no principal amounts are exchanged between the Commission and the counterparty. When the Commission issues floating rate bonds, it retains the obligation to make interest payments to the bond holders based on a floating rate. This swap is intended to integrate with the floating rate bonds. Under the swap, the Commission will have a floating rate receipt intended to correlate with land offset) its floating rate payment. The primary obligation of the Commission is intended to be the fixed rate payment under the swap. The swap creates a financing structure which, on a net basis, results in fixed rate debt for the Commission —this is called "synthetic fixed rate debt." The floating rates are usually based on objective indices such as the London Inter -Bank Offered Rate (LIBOR) and Bond Market Association (BMA) swap index. The floating rate paid to the bondholders by the borrower theoretically is offset by the floating rate received from the counterparty by the borrower. 19 The following is a graphic illustration of a swap transaction that creates a synthetic fixed rate: Counterparty (swap provider) Swap Variable Rate Fixed Rate Borrower (issuer of debt) Bond Variable Rate Bond Sale Proceeds Bond . Holders SWAP BONDS At the Committee meeting, staff will make a detailed presentation of the mechanics of a swap transaction. Swap Policy As the Commission considers executing a swap transaction, it is prudent financial management to adopt a written swap policy. Such a 'policy should address the following matters: • Commission's rationale for utilizing interest rate swaps; • Permitted instruments; • Approved transaction types; • Risk and benefitanalysis procedures; • Procurement and execution procedures; • Counterparty eligibility requirements; • Collateral requirements; and • Documentation requirements. With the assistance of Fieldman, acting as the. Commission's swap advisor, and Orrick, Herrington, & Sutcliffe LLP (Orrick), as bond counsel, staff has developed the attached swap policy for adoption by the Commission. The adoption of a swap policy recently has been a critical factor considered by the rating agencies for the evaluation of issuers entering into swap arrangements. Accordingly, such a policy would be part of the discussion with the rating agencies during our November 2006 meetings. Swap Bidding Process The Commission's goal is to combine the best elements of a competitive process with the level of document flexibility and customization offered through a negotiated procurement process. Therefore, the Commission's financing team (Fieldman, as swap advisor, and Orrick, as bond counsel) will develop and • • • • implement a process featuring elements of both competitive and negotiated processes. Staff intends to conduct a premarketing effort and implement a process of negotiating the interest rate swap arrangements based on an initial screening of potential counterparties. Initially, participants that have shown particular interest in the Commission's potential swap financing will be forwarded a request for qualifications (RFQ). Additionally, the RFQ will be posted on the Commission's website. The RFQ will seek, among other things, responses related to: • The overall compensation to be paid to the counterparty; • The particular provisions that may require negotiation; and • Substantiation of compliance with the Commission's swap policy pertaining to limitations on potential swap counterparties. This feedback is usually important as structuring considerations for the overall financing plan are finalized and indicates the level of interest in the swap transaction. A formal bid date would be determined, and the final swap terms would be circulated to potential swap providers. On the bid date, bids would be submitted by the swap providers, and two swaps would be entered into with the successful bidders. Since the Commission currently anticipates offering to pay a fixed rate and receive a floating rate, the successful bidders will be those willing to accept the lowest fixed payment in exchange for the desired floating payment. Swap Documentation Upon selection of the swap provider or counterparty, documents will be drafted and executed providing the terms and conditions of the swap. Swap documents are generally based on the International Swaps and Derivatives Association, Inc. (ISDA) Master Agreement which has created uniformity within the market. The Master Agreement is accompanied by a Schedule, Credit Support Annex, and Confirmation. While the Master Agreement is a preprinted form, the Schedule amends the Master Agreement and indicates the elections among the options presented in and additional terms not covered by the Master Agreement. The Credit Support Annex details collateralization requirements, terms, and mechanics. A confirmation which details the terms of each swap transaction is entered into for each swap transaction. Examples of these documents are included as attachments for informational purposes. General Proposal for Swap Transaction for the Commission Based on consultation with Fieldman and Orrick, staff recommends that the Commission enter into the following swap transaction: 21 • The notional amount would be $185,000,000, as the Commission would otherwise reasonably expect to issue long-term debt in 2008 or early 2,009 that would refinance the outstanding commercial paper notes. Staff anticipates that the commercial paper program will be fully utilized over the next two to three years. The amount of any additional long-term debt to be issued and the approximate timing has not been -determined; accordingly, staff does not recommend entering into a swap transaction exceeding a notional amount of $185,000,000. • The term of the swap transaction should be no more than 20 years, as the Commission does not currently anticipate issuing long-term debt with a maturity that approximates the term of the 2009 Measure A, or 30 years. • The swap will commence at a date in 2008 or 2009 when the Commission expects to issue long-term debt. • The Commission would expect to refinance the commercial paper notes with variable rate long-term debt in 2008 or early 2009,resulting in the Commission offering to pay a fixed rate and receive a'floating rate under the swap transaction. However, the Commission may decide not to issue variable rate long-term bonds, in which event the swap would synthetically fix the commercial paper program. • No more than two bids will be selected as winning bids. Advisory Team Agreements Due to the technical nature and complexities of a swap transaction, staff requires the support and advice of advisors with appropriate experience. This team consists of a swap °advisor and bond counsel. Staff therefore recommends that the Commission enter into the following agreements: • Agreement No. 06-19-072-00 with Fieldman; Rolapp Financial Services, LLC, a related company of Fieldman, for swap advisory services with compensation of $65,000 to be paid only, upon execution of the swap transaction. • Agreement No. 05-19-510-01, an amendment of the scope of services to Orrick's existing agreement to include legal services related to the execution of a swap transaction with compensation not to exceed $100,000 to be paid only upon execution of the swap transaction. The above compensation would be paid from commercial paper proceeds upon the execution of a swap transaction. If the swap transaction is not completed, no compensation would be paid to either the swap advisor or bond counsel. Draft agreements for the swap advisor and bond counsel are included as attachments. 22 • • • Swap Risks While the Commission considers an interest rate swap transaction for the benefits described earlier, it must have an understanding of the incremental risks that are assumed compared to a conventional fixed rate bond arrangement. The following are some of the significant risks to a swap transaction: • Basis Risk: Mismatch between the floating rate paid to the bondholders by the Commission and the floating rate received by the Commission from the counterparty. • Counterparty Risk: Failure of the counterparty to perform and make the required payments to the Commission. • Termination Risk: Need to terminate the swap agreement prior to the termination date of the agreement. • Tax Risk: Potential tax events or changes in tax laws that may affect the advantage to issuing tax-exempt debt. Other potential risks include liquidity, interest rate/credit, and rollover. In staff's presentation to the Committee, the risks will be discussed in more detail. Staff and Fieldman are of the opinion that the level of risk to the Commission appears to be minimal compared to the future interest rate stability that would result from this swap transaction. While risk monitoring is an ongoing process once a swap transaction is completed, there are some activities that will not commence until the swap begins in 2008 or 2009. Due to the variable rate nature of the long-term bonds to be issued, it is expected that there will be weekly or monthly swap settlements during the term of the swap for the net payment by the Commission or the net receipt to the Commission. These additional accounting activities would be performed by the Finance Department, whose staff resources will be evaluated over the next few years. Additionally, a swap consultant would be engaged to monitor the performance and effectiveness of the swap by reviewing the floating rate calculations and performing annual mark -to -market valuations for financial disclosure purposes. These additional costs will impact future years' budgets. Next Steps Upon Commission approval, swap terms will be finalized and remaining legal issues resolved so that the bidding process may commence in mid -July 2006. This would be followed by bid closing and selection in mid -August 2006. Staff anticipates presenting the details of the executed swap transaction to the Commission at the September 2006 Commission meeting. 23 Financial Information In Fiscal Year Budget: No Year: FY 2006/07 Amount: $165,000 Source of Funds: Commercial Paper Proceeds Budget Ad ustment: Yes GLA No.: 303-19-65302 P8100 80 $65,000 303-19-65101 P8100 80 $100,000 Fiscal Procedures Approved: \iii_e4,4eay. jit.v Date: 6/26/06 Attachments: 1) Swap Policy 2) Debt Management Policy 3) Resolution No. 06-014 4) Form of Master Agreement, Schedule, Confirmation 5) Agreement No. 06-19-072-00, 6) Agreement No. 05-19-510-01 7) Resolution No. 06-015 Credit Support Annex, and including Form ADV Part ll 24 • RIVERSIDE COUNTY TRANSPORTATION COMMISSION INTEREST RATE SWAP POLICY I. INTRODUCTION The purpose of this Interest Rate Swap Policy (Policy) of the Riverside County Transportation Commission (RCTC) is to establish guidelines for the use and management of all interest rate management agreements, including, but not limited to, interest rate swaps, swaptions, caps, collars and floors (collectively Swaps or Agreements) incurred in connection with the issuance of bonds, notes and other obligations (collectively, the Bonds). This Policy sets forth the manner of execution of swaps, provides for security and payment provisions, risk considerations and certain other relevant provisions in the context of being responsive to the 2003 Recommended Practices of the Government Finance Officers Association (GFOA) regarding the contents of an interest rate swap policy. The failure by RCTC to comply with any provision of this Policy shall not invalidate or impair any Agreement. • I1. AUTHORITY • ' RCTC is authorized to issue Bonds and to enter into Swaps from time to time to better manage assets and liabilities and take advantage of market conditions to lower overall costs and reduce interest rate risk. RCTC has issued this Policy to provide guidance as to how RCTC intends to use and manage Swaps. While it is the intention of RCTC to adhere to this Policy in applicable circumstances, RCTC recognizes that changes in the capital markets and other unforeseen circumstances may from time to time produce situations that are not covered by the Policy which will require modifications or exceptions to achieve policy goals. The Executive Director and Chief Financial Officer and their authorized designee(s) (the Authorized Representative) are the designated administrators of this Policy. The Governing Board of RCTC (the Board) shall have "oversight" on the approval of each Agreement. However, the Authorized Representative, subject to Board approval, shall have the authority to enter into each Swap. Each Agreement shall be structured by staff and members of the financing team. The Authorized Representative shall have the day-to-day responsibility for implementing, and managing the Agreements. 25 RCTC shall be authorized to enter into Swaps only with qualified counterparties (each a Counterparty). Counterparties shall be selected pursuant to the criteria set forth in this Policy. This Policy shall be reviewed on an annual basis by the Authorized Representative. Any recommended changes shall be presented to the Governing Board/Budget and Implementation Committee for their consideration. III. PURPOSE The, issuance of Bonds involves a variety of interest payment obligations and risks that a variety of financial instruments are available to reduce, offset, or hedge. The structure of RCTC's debt is often designed to manage the assets and liabilities on its balance sheet. It is the policy of RCTC to also consider the use of Swaps and other financial instruments to better manage its assets and liabilities.. RCTC may execute a Swap if the transaction can be expected to result in one or more of the following or any similar type of benefit: ■ Reduce exposure to changes in interest rates on a particular financial transaction or in the context of the management of interest rate risk derived from RCTC's overall asset/liability balance; ■ Result in a lower net expected cost of borrowing with respect to the Bonds; • Manage variable interest rate exposure consistent with prudent debt practices; ■ Manage exposure to changing market conditions in advance of anticipated issuance of Bonds (through the use of anticipatory hedging instruments); • Achieve more flexibility in meeting overall financial objectives that cannot be achieved in conventional markets. For example, entering into a swaption with an upfront payment; ■ Provide customized cash flows to match required payment obligations or revenue projections. RCTC will not use Agreements that: ■ .Are speculative or create extraordinary leverage; ■ Lack adequate liquidity to terminate without incurring a significant bid/ask spread; ■ Provide insufficient price transparency to allow reasonable valuation; or • Provide exposure to currency risk, sovereignty risk, commodity risk or the use of credit derivatives - unless directly .linked .to RCTC's or the Counterparty's credit. 26 • IV. ASPECTS OF RISK EXPOSURE ASSOCIATED WITH SWAPS Before entering into a Swap, RCTC shall evaluate all the risks inherent in the Agreement. These risks to be evaluated should include basis risk, yield curve/maturity mismatch, tax risk, Counterparty risk, termination risk, rollover risk, liquidity risk and credit risk. TYPE OF RISK Basis risk DESCRIPTION '" - The mismatch between actual variable rate debt service and variable rate indices used to determine Swap payments. Defines the risk that the normal relationship between indices or prices might change. EVALUATION METHODOLOGY, RCTC will review and consider based on the historical trading differentials between the indices relevant to the Swap agreement. Yield Curve/ Maturity Mismatch This type of position is typically a deliberate arbitrage play or to take advantage of the shape of the yield curve. The risk created when swap payments are based on indices that lie along different parts of the yield curve (e.g. 7-day rates vs. 30-year rates). RCTC will evaluate historical trading relationships, and make sure to have adequate reserves or a hedging mechanism to offset unexpected movements. Tax risk The risk created by potential tax events that could affect Swap payments. RCTC will review the tax events in proposed Agreements. RCTC will evaluate the impact of potential changes in tax law on LIBOR indexed Swaps. Counterparty risk The failure of the Counterparty to make required payments. RCTC will monitor exposure levels, ratings thresholds, and collateralization requirements. Termination risk The need to terminate the Agreement in a market that dictates a termination payment by the issuer. RCTC will compute its termination exposure for all existing and proposed Swaps at market value and under a worst -case scenario. Rollover/ Mismatch risk The mismatch of the maturity of the Swap and the maturity of the underlying Bonds. RCTC will determine its capacity to issue variable rate bonds that may be outstanding after the maturity of the Swap. 27 TYPE_ RISK` Liquidity risk Credit risk The inability to continue or renew a liquidity facility. The occurrence of an event modifying the credit ratingof the Issuer or its Counterparty. EVALUATION METHODOLOGY RCTC will evaluate the expected availability of liquidity support for swapped and unhedged variable rate debt. RCTC will monitor the ratings of its Counterparties and guarantors. Risk exposure should not be measured solely in terms of notional amount, but rather how changes in interest rates would affect RCTC's exposure on all of its Swaps (as measured by mark -to market and termination risk exposure). The mark -to -market and termination value of the entire swap portfolio should be measured at least semi-annually by an independent third party. In addition, RCTC should measure the termination risk for the respective Counterparty each time it enters into anew Agreement. Termination Value Risk Limit The aggregate termination payment risk for all existing and projected Swaps shall equal that amount that would be paid by an individual Counterparty based on the reasonably expected termination payment of the proposed Counterparty for the existing swaps and the proposed swap. The method of such analysis may provide a worst -case termination value, using a methodology such as a (Value At Risk) VAR Analysis, or a parallel yield curve sensitivity analysis PV(01) method. Maximum Counterparty Termination Value RCTC shall endeavor to diversify its exposure to Counterparties. To that end, before entering into an Agreement, it should determine its exposure to the relevant Counterparty and determine how the proposed Agreement would affect RCTC's additional risk to termination. Maximum Counterparty Termination ' Exposure refers to the aggregate mark -to - market exposure to a counterparty net of the mark -to -market value of any collateral pledged to RCTC by such counterparty. RCTC's goal is to limit its Maximum Counterparty Termination Exposure attributable to a single swap counterparty, as set forth below. 28 • • Counterparty Long -Term Rating (lower prevailing) Maximum Termination Value Exposure* AAA $75 Million AA1/AA+ $50 Million Al/A+ $25 Million * The table above provides general exposure guidelines with respect to whether RCTC should enter into an additional agreement with an existing Counterparty. RCTC may make exceptions to the guidelines at any time to the extent that the execution of a Swap achieves one or more of the outlined benefits in this Policy or provides other benefits to RCTC. These limits shall only apply as of the time a Swap or related transaction, such as a cap, collar, etc. is entered into, and thus may be exceeded during the term of a Swap or Swaps with the same Counterparty. Additional limits may be established for each Counterparty as well as the relative level of risk associated with each existing and projected Swap. Case -by -Case Analysis RCTC should also take into account RCTC's financial position and overall asset/liability management strategy when evaluating its termination exposure for each transaction. The Authorized Representative shall determine the appropriate term for a Swap on a case -by -case basis. The slope of the swap curve, the marginal change in swap rates from year to year along the swap curve, and the impact that the term of the swap has on the overall exposure of RCTC in connection with its Bonds shall be considered in determining the appropriate term of any Swap. In connection with the issuance of Bonds, the term of a Swap shall not extend beyond the final maturity date of the applicable issue of Bonds, or in the case of a refunding transaction, beyond the final maturity date of the refunding Bonds. The total net notional amount of all Swaps related to an issue of Bonds should not exceed the amount of the related outstanding Bonds. For purposes of calculating the net notional amount, credit shall be given to any Swaps that offset for a specific bond transaction. 29 V. LONG-TERM IMPLICATIONS In evaluating a particular transaction involving the use of swaps, RCTC shall review long-term implications associated with entering into each agreement, including costs of borrowing, historical interest rate trends, variable rate capacity, credit enhancement capacity, liquidity capacity, opportunities to refund related debt obligations and other similar considerations. IMPACT OF USE OF LIQUIDITY RCTC shall consider the impact of any variable rate bonds issued in combination with a Swap on the availability and cost of liquidity support. , CALL OPTION VALUE CONSIDERATIONS When . considering the relative advantage of variable rate bonds issued in combination with a Swap versus fixed rate Bonds, RCTC will take into consideration the value of any call option on fixed rate Bonds. When comparing potential cost savings by utilizing a swap, RCTC should take into consideration that a synthetic fixed-rate swap does not usually have an optional call provision; and therefore, should evaluate the potential impact on future cost savings and flexibility. QUALIFIED HEDGES RCTC understands that, (1) if payments on and receipts from the Agreement are to be taken into account in computing the yield on the related Bonds, the .Agreement must meet the requirements for a "qualified. hedge" under federal tax law (sometimes referred to as an "integrated" Swap); and (2) if one of the goals of entering into the Agreement is to convert variable yield bonds into fixed yield bonds (sometimes referred to as a "super integrated swap"), then certain additional requirements must be met. In both of these situations, the terms of the Agreement and the process for entering into the Agreement must be reviewed and approved in advance by tax counsel. VI. QUALIFIED SWAP COUNTERPARTIES Unless approved by the Board, RCTCwillwork with qualified Swap Counterparties that have a general credit rating of: (i) at least "Aa3" or "AA-" by ;two of the nationally recognized rating agencies and not ratedlower than "Aa3" or "AA-" by any nationally recognized rating agency, or (ii) at least "A1" or "A+" by two of the nationally recognized rating agencies and has a continuing "AAA subsidiary as rated by at least two nationally recognized credit rating agencies. The nationally recognized rating agencies are Moody's Investors Services, Inc., Standard and Poor's Rating Services and Fitch Ratings. 30 • • Swap Counterparties must have a demonstrated record of successfully executing Swap agreements as well as minimum capitalization of at least $500 million. Swap Counterparties should serve as principal on each transaction not as "agent" in order to assure most efficient pricing and direct responsibility. In addition to the rating criteria specified herein, RCTC will seek additional credit enhancement and safeguards in the form of: i. Contingent credit support or enhancement; ii. Collatera► consistent with the policies contained herein; Ratings downgrade triggers; iv. Guaranty of parent, if any; and/or v. Replacement Swap Agreements. VII, FORM OF SWAP AGREEMENTS It is RCTC's intention to have a form of Swap Agreement to be used in all Swap Agreements, modified as necessary to meet the needs of a particular transaction. The form of the Agreement executed by RCTC shall contain terms and conditions as set forth in the International Swap and Derivatives Association, Inc. (ISDA) Master Agreement, including any schedules, and confirmations. All Agreements shall be subject to the approval of the Authorized Representative The Agreements shall include payment, term, security, collateral, default, remedy, termination, and other terms, conditions and provisions as the Authorized Representative deems necessary or desirable. RCTC may use legal counsel and/or outside professional advisors to assist in preparation of the swap documents. VIII. TERMINATION PROVISIONS RCTC shall consider including in all Agreements provisions granting RCTC the right to optionally terminate an Agreement at any time over the term of the Agreement. Any termination of an Agreement shall be made by the Authorized Representative. A termination event is deemed to occur should the Swap Counterparty (or its credit support provider) fail to maintain the ratings below and the Swap Counterparty has not delivered any collateral as required under the Credit Support Annex with RCTC: 1. Credit Rating of at least "Baal" from Moody's; or 2. Credit Rating of at least "BBB+" from S&P; or, 3. Credit Rating of at least "BBB+" from Fitch 31 4,. An equivalent rating determined by a nationally recognized ratings service acceptable to both parties. Furthermore, an additional termination event is deemed to occur should the Swap Counterparty (or its credit support providers) have one or more outstanding issues of rated unsecured, unenhanced senior debt and none of such issues has a rating of at least (i) Baa2 or higher as determined by Moody's Investors Service, Inc., or (ii) BBB or higher as determined by Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc. or (iii) an equivalent investment grade rating determined by a nationally -recognized rating service acceptable to both parties. A termination payment to or from RCTC may be required in the event of termination of an Agreement due to a default or a decrease in credit rating of either RCTC or the Swap Counterparty. It is the intent of RCTC to avoid making a termination payment out of 'available RCTC funds to a Counterparty that does not meet its contractual obligations. Prior to making any such termination payment, the Authorized Representative shall evaluate whether it is financially advantageous for RCTC to obtain a replacement Counterparty to avoid making such termination payment or finance the termination payment through a long-term financing product. For payments on early termination and optional termination, Market Quotation, and the Second Method, as defined in the 1992 Form of the ISDA will apply. IX. SECURITY AND SOURCE OF REPAYMENT While RCTC has a preference to subordinate swap payments to debt service payments, RCTC may use the same security and source of repayment (pari pasu) for the Swap as is used for the underlying Bonds. RCTC shall subordinate the termination payment under the swap to the debt service on the underlying bonds. RCTC shall consult with Bond Counsel regarding the legal requirements and compliance with RCTC's legal documentation associated with making the payments under the Swap on a parity or non -parity basis with the applicable outstanding Bonds: X. SPECIFIED INDEBTEDNESS The specified indebtedness related to credit events in any Agreement should be narrowly defined and refers only to indebtedness of RCTC that could have a materially adverse effect on RCTC's; ability to perform .its obligations under the Swap. Debt should typically only include obligations within the same, or higher, lien as the Swap obligation. 32 • XI. GOVERNING LAW Governing law for Swaps may be New York or California, except that the capacity, power and authority of RCTC to enter into a Swap shall be governed by and construed in accordance with law of the State of California. , XII. EVENTS OF DEFAULT Events of default of a Swap Counterparty shall include, but are not limited to the following: 1. Failure to make payments when due; 2. Breach of representations and warranties; 3. Illegality; 4. Failure to comply with downgrade provisions and/or provide collateral as required; and 5. Failure to comply with any other provisions of the Agreement after a specified notice period. XII1. COLLATERAL REQUIREMENTS As part of any Agreement, RCTC may require, or be required to post collateral or other credit enhancement to secure any or all Swap payment obligations. As appropriate, the Authorized Representative may require collateral or other credit enhancement to be posted by each Swap Counterparty under the following circumstances: ■ Each Swap Counterparty may be required to post collateral if the credit rating .of the Swap Counterparty or parent falls below the "A- or A3". Collateral for further decreases in credit ratings of each Swap Counterparty shall be posted by each Swap Counterparty in accordance with the provisions contained in the credit support annex to each Agreement. ■ Collateral shall consist of cash, U.S. Treasury Securities, or Agency Securities. ■ Collateral shall be deposited with a third party trustee, or as mutually agreed upon between RCTC and each Swap Counterparty. ■ A list of acceptable securities that may be posted as collateral and the valuation of such collateral will be determined and mutually agreed upon during negotiation of the Agreement. ■ The market value of the collateral shall be determined on at least a monthly basis. 33 ▪ RCTC will determine reasonable threshold limits for increments of collateral posting based on a sliding scale reflective of credit ratings. ■ The Authorized Representative shall determine on a case -by -case basis whether other forms of credit enhancement are more beneficial to RCTC. XIV. OTHER CRITERIA RCTC may select a Swap Counterparty through either a competitive or negotiated process. The selection of a Swap Counterparty shall be done on a -case -by -case basis. The conditions to be considered in determining the process shall include: ■ Traditional swap or financial products such as synthetic fixed -.rate swaps, reverse swaps caps, floors, collars, and swaptions without significant deviations from standard ISDA contract. The proposed structure does not require customized features. ■ Several counterparties are eligible and willing to provide bid(s). ■ Terms of the swap match the underlying bond structure (i.e.. same or shorter maturity, payment dates, amortization schedule). ■ Marketing of the Swap will require complex explanations about the security for repayment or credit quality. ■ Demand is limited among Swap Counterparties. ■ Coordination of multiple components of the financing is required. ■ The Swap has non-standard features, such as one way collateral. • Bond insurance is not available or not offered. ■ Counterparty risk (termination exposure) to other providers is limited. ■ Counterparties are likely to demand individual changes in bid documents. ■ A Swap Counterparty has provided a structure or concept that is unique. - The timing and facilitation benefit to RCTC of using a Swap Counterparty that isalso managing an accompanying bond issue. • • The transaction structure or financing structure has been developed, for RCTC by a Counterparty and RCTC has determined that it is in its best interest to proceed with proposed transaction or a similar structure:'. RCTC shall use outside professional advisors to assist in the price negotiation. RCTC shall obtain an opinion from an independent party that the terms and conditions of any financial product entered into reflect a fair market value as of the execution date. XV.., ONGOING REPORTING REQUIREMENTS Written records noting. the status of all Agreements will be maintained by RCTC and shall include the following information: 34 • • • • Highlights of all material changes to Agreements or new Agreements entered into by RCTC since the last report, and a summary of any Agreements that were terminated. ■ Basic term sheet containing trade date, effective date and termination date of each of the Agreement, as well key terms such as: notional amount, rate paid by each Counterparty, day count basis, payment dates, and amortization/accretion schedules. This term sheet will also contain Counterparty contact information. • Most recent (at least annually) mark -to -market valuation, performed by an independent third party advisor. ■ For each Swap Counterparty, shall provide the total notional amount position, the average life of each Agreement, the available capacity to enter into a Swap, and the remaining term of each Agreement. ■ The credit rating of each Swap Counterparty and credit enhancer insuring the Swap payments. ■ Actual collateral posting by the Swap Counterparty, if any, per Agreement and in total by Swap Counterparty. ■ Information concerning any default by a Swap Counterparty and the results of the default, including but not limited to, the financial impact to RCTC if any. RCTC shall reflect the use of derivatives on its financial statements in accordance with GASB Technical Bulletin No. 2003-1. The disclosure requirements include: 1. Objective of the Derivative 2. Significant Terms 3. Fair Value 4. Associated Debt 5. Risks 35 GLOSSARY OF TERMS Agency Security — Negotiable debt obligations which are issued and/or guaranteed as to both principal and Interest by the Federal Home Loan Mortgage Corporation (FHLMC), the federal National Mortgage Association (FNMA), or the. Government National Mortgage Association (GNMA) excluding interest only securities, principal only securities, residual interest, and Collateralized Mortgage Obligations (CMO's). Amortization Risk - Amortization risk refers to the cost of servicing debt or making swap payments due to a mismatch between the bonds and the notional amount of the related outstanding Swap. Basis Risk - Basis risk refers to a mismatch between the interest rate received from the swap contract and the interest actually owed on RCTC's bonds. The risk, for example, in a floating to fixed rate swap is that the variable rate interest payments will be less than the variable interest payments actually owed on the associated bonds. BMA Index - The Bond Market Association Municipal Swap Index, the principal benchmark for short-term, tax-exempt rates among municipal issuers. A market basket index of over 200 actively traded, highly rated, non-AMT tax-exempt variable rate issues that reset their rates every Wednesday. Confirmation — A form that is executed for a specific swap or financial product transaction and details the specific terms and conditions applicable to that agreement (fixed rate, floating rate index, payment dates, calculation methodology, amortization, maturity date, etc.). Continuing AAA subsidiary — A wholly owned subsidiary of a Bank or Broker/Dealer organized to transact business as a "AAA" Counterparty to eligible clients. Eligible clients are those clients acceptable to the rating agencies. To the extent a "Trigger Event" occurs, the entity will maintain all of its Agreements to their original maturity with the assistance of an independent derivatives portfolio manager. A Trigger Event is typically a downgrade of the parent company, a bankruptcy of the parent company, failure to make a payment and/or failure to deliver collateral. Counterparty - A principal to a swap or other derivative agreement, as opposed to an agent such as a broker. Counterparty Risk - The risk that the swap Counterparty will not fulfill its obligations as specified by the terms of an ISDA Master Agreement or other similar contract. Under a fixed payer swap, for example, if the Counterparty defaults, RCTC would be exposed to an unhedged variable rate bond position. The • • 36 • • creditworthiness of the Counterparty is indicated by its credit rating. RCTC has established minimum rating criteria for swap counterparties. Credit Risk - The occurrence of an event modifying the credit rating of RCTC or its Counterparty. Credit Events can trigger certain termination provisions or collateral provisions as outlined in the Agreements. Credit Support Annex - An attachment to the ISDA that covers the mutual posting ' of collateral, if required. This schedule is based on the net mark -to -market values , of the cash flows in the swap. Forward Starting Swap - An interest rate swap in which the "swap coupon" and terms of the agreement are established today, but the start of the swap is delayed until some date in the future. ' Hedge - A position taken in order to offset the risk associated with some other position. Most often, the initial position is a cash position and the hedge position involves a risk -management instrument such as a swap. Interest Rate Cap - An instrument that pays off on each settlement date based on the market value of a reference rate (i.e. BMA or LIBOR) and a specified contract rate; effectively establishing a maximum on a variable rate. Interest Rate Collar - An instrument that provides protection within a band of interest rates; a combination of purchasing an Interest Rate Cap and selling Interest Rate Floor. Generally, it is structured so that the net cost of the collar is zero or close to zero. This means that the expense for the interest rate cap premium is offset by the credit received for the interest rate floor. Interest Rate Floor - An instrument that pays off on each settlement date based on the market value of a reference rate (i.e. BMA or LIBOR) and a specified contract rate; effectively establishing a minimum on a variable rate. Interest Rate Risk - The risk that variable rates will increase and thereby cause an increase in variable rate debt service costs and negatively impact cash flow margins. Interest Rate Swap - A contract between two parties to exchange cash flows over a predetermined length of time. Cash flows are calculated periodically based on a fixed or variable interest rate against a set notional amount (amount used only for calculation of interest payments). Principal is not exchanged. 37 ISDA - The International Swap Dealers Association - The global trade association whose members are dealers in the derivatives industry. Most Swaps are executed under standard documentation created by ISDA. ISDA Master Agreement The primary document for the terms and conditions governing the swaps market. The ISDA Master Agreement contains the terms for - events of default, termination events, representations and covenants, early termination provisions and payment calculations. LIBOR - The London InterBank Offered Rate. The rate at which banks will lend Eurodollars to each other over various length terms: (e.g., 1-month, 3-month, 6- month, 12-month etc.). The most active dollar -based -taxable interest rate benchmark utilized globally. Notional Amount - The stipulated principal amount for a swap transaction. There is no transfer of ownership in the principal for a swap; but there is an exchange in the cash flows for the designated coupons. Rollover Risk - The risk that the term of the swap contract does not match the term of the related bonds being hedged. Upon the maturity of the swap, the risk may need to be re -hedged, causing RCTC to incur re -hedging costs. Schedule to the ISDA Master Agreement — An attachments) to the ISDA Master Agreement that specifies what options for the various terms. in the Master Agreement have been selected to govern the derivative transactions executed under the agreement. Swap — A contractual agreement evidenced by a single document in which two or more parties agree to exchange make periodic (net) payments for an agreed period of time based upon a notional amount of principal. Swaption - An option on a swap. The swaption purchaser has the right to enter a specific swap for a defined period of time. This option can be exercised on a specific exercise date or series of exercise dates. Tax Risk - All issuers who issue tax-exempt variable rate debt inherently accept risk stemming from changes in marginal income tax rates. This is a result of the tax codes impact on the trading value of tax-exempt bonds. As marginal tax rates decline, the after tax value of tax-exempt income declines, forcing the tax-exempt rates to increase. This risk is also known as a "tax event" risk, a form of basis risk under swap contracts. Percentage of LIBOR swaps and certain BMA swaps with tax event triggers, which can change the basis under the swap to a LIBOR basis from BMA, can expose issuers to tax event risk. 38 Termination Risk - The risk that the swap could be terminated as a result of any of several events, which may include a ratings downgrade for RCTC or the swap Counterparty, covenant violation by either party, bankruptcy of either party, swap payment default by either party, and default events under a bond indenture. RCTC could owe a termination payment to the Counterparty or receive a termination payment from the Counterparty, depending on how interest rates at the time of termination compare with the fixed rate on the swap. Yield Curve - Refers to the graphical or tabular representation of interest rates across different maturities. The presentation often starts with the shortest -term rates and extends towards longer maturities. It reflects the market's views about implied inflation/deflation, liquidity, economic and financial activity, and other market forces. 39 A. GOALS AND CREDIT OBJECTIVES RCTC's goals and credit objectives are to: • Serve the people of Riverside County in the fulfillment of RCTC's policy and transportation objectives, • Comply with all State and Federal laws and regulations governing the issuance of debt, • Promptly repay when due the principal and interest on all debt issued and outstanding, • Implement debt programs with the highest possible credit ratings which provide the necessary flexibility in order to achieve the lowest possible borrowing costs on RCTC's debt obligations, , • Ensure that RCTC's debt proceeds are invested in safe, liquid and secure investments that earn competitive market rates of return in accordance with RCTC's Annual Investment Policy and indenture, • Establish policies and procedures for participation in RCTC's debt financing, • Hold debt financing participants accountable to such policies and procedures, • Reward adherence to RCTC's policies and procedures and good performance by the debt financing participants with continued participation in RCTC's debt financing program, • Explore and implement innovative structuring ideas when they are prudent and consistent with the statements listed above, and thus • Protect the funds that Riverside County taxpayers have entrusted to RCTC. B. CREDIT RATING OBJECTIVES RCTC seeks to obtain and maintain the highest possible debt ratings while at same time providing the appropriate and necessary flexibility in its bond financing documents. Sales Tax Revenue Bonds RCTC currently maintains an AA rating from Moody's Investor Service and an Aa-2 from Standard and Poor's. The outstanding debt issues as of June 30, 2005 are as follows: 1. 1993 Sales Tax Revenue Bonds (Limited Tax Bonds), Series A, Principal Amount $136,610,000. 2. 1996 Sales Tax Refunding Bonds (Limited Tax Bonds), Series A, Principal Amount $61,765,000 3. 1997 Sales Tax Revenue Bonds (Limited Tax Bonds), Series A, Principal Amount $47,910,000. 4. 1997 Junior Sales Tax Revenue Bonds (Limited Tax Bonds), Series B, Principal Amount $13,245,000. 5. 2000 Sales Tax Revenue Bonds (Limited Tax Bonds), Series A, Principal Amount $35,825,000. 6. 2005 Commercial Paper Notes (Limited Tax Bonds), Series A and B, Authorized Amount $185,000,000. F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC - 12/2/05 41 • C. SELECTING THE APPROPRIATE METHOD OF DEBT SALE It is in the interest of RCTC to sell its public debt using the method of sale that is expected to achieve the best sale results, taking into account both short-range and long-range implications for Riverside County taxpayers. The CFO will advise the Budget and Implementation Committee of the most appropriate method of sale in light of the prevailing financial, market and transaction -specific conditions. D. APPOINTMENT OF A FINANCIAL ADVISOR The CFO, with the approval of the Budget and Implementation Committee and the Commissioners, may select a financial advisor to assist in the issuance and administration of RCTC's debt. The services of the financial advisor may include, but are not limited to: • Monitoring all fixed income markets, • Evaluating proposals submitted to the CFO, • Analyzing the costs and risks of debt issues, • Reviewing the structuring and pricing of debt issues, • Advising on terms and conditions of credit facilities dealing with the issuance of variable rate debt, • Assisting in the preparation of official statements, and • Reviewing presentation materials for rating agencies, investors and insurers. The services of a financial advisor will be obtained through a competitive evaluation of proposals. The criteria to be used in evaluating and selecting a financial advisor include: • Experience in providing formal financial advisory services, • Experience with diverse and complex financial structuring requirements, • Experience and reputation of assigned personnel, and • Fees and expenses. RCTC's financial advisor will provide RCTC with objective advice and analysis, maintain the confidentiality of RCTC's financial plans and be free from any conflict of interest as defined by the: • CFO and all California statutes and regulations governing financial advisors. RCTC's financial advisor may not participate in any of RCTC's syndicates in the sale of debt. E. APPOINTMENT OF LEGAL COUNSEL The CFO, with the approval of the Budget and Implementation Committee and the Commissioners, must select a legal counsel to assist in the issuance of RCTC's debt. All debt issued by RCTC must include a written opinion of legal counsel affirming that RCTC is authorized to issue the proposed debt, that RCTC has met all the constitutional and statutory requirements necessary for the issuance of the proposed debt and a determination of the proposed debt's income tax status. This approving legal opinion and other documents relating to the issuance of the proposed debt must be prepared by a nationally F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC - 12/2/05 42 recognized private legal counsel with extensive experience in municipal finance and tax matters. The services of the legal counsel may include, but are not limited to: • Rendering a legal opinion with respect to the authorization and valid issuance of debt obligations of RCTC including whether the interest paid on the debt is tax exempt under federal and State of California laws; • Preparing all necessary legal documents in connection with the authorization, sale, issuance and delivery of bonds and other obligations; • Assisting in the preparation of the preliminary and final official statements and commercial paper memorandum; • Participating in discussions with potential investors, insurers and credit rating agencies, if requested, and - • Providing continuing advice, as requested, on the proper use and administration of bond proceeds under applicable laws and the indenture, particularly arbitrage tracking and rebate requirements. F. APPOINTMENT OF UNDERWRITERS The CFO, with the approval of the Budget and Implementation Committee and the Commissioners, may select a pool of qualified underwriters. The appointment will be based upon a competitive evaluation of objective criteria. The best -qualified firm will be appointed as the book -running senior manager for long-term debt. The best -qualified firm will be appointed as the dealer for commercial paper. Criteria to be used in the appointment of qualified underwriters will include: • Demonstrated ability to manage complex financial transactions, • Demonstrated ability to structure debt issues efficiently and effectively, • Demonstrated ability to sell debt to institutional and retail investors, • Demonstrated willingness to put capital at risk, • Quality and applicability of financing ideas, • Experience and reputation of assigned personnel, and • Fees and expenses. The CFO will monitor the performance of the members of the underwriting pool and recommend changes as appropriate. The underwriters selected to participate in RCTC's underwriting pool must follow certain rules for participation: Minimum Underwriter Qualifications 1. The firm must maintain minimum net capital of at least $500,000. 2. The firm must hold and maintain all licenses and registrations, required by applicable federal and state laws for businesses offering underwriting or investment banking services. All licenses and registrations must be current and in good standing with each of the following: • the U.S. Securities and Exchange Commission (SEC), F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC - 12/2/05 43 • the National Association of Securities Dealers (NASD), and • the California Department of Corporations (CDC). G. PROFESSIONAL CONDUCT All of RCTC's debt financing participants shall maintain the highest standards of professional conduct at all times: 1. Municipal Securities Rulemaking Board (MSRB) Rules, including Rule G-37, shall be followed at all times. 2. RCTC expects debt financing participants to assist RCTC's staff in achieving its goals and objectives as defined in this Comprehensive Debt Management Policy. 3. All debt financing participants shall make cooperation with RCTC's staff their highest priority. H. NEW ISSUANCE AND BOND PROCEEDS MINIMUM BALANCE RCTC has developed a Strategic Plan (Plan) which sets forth the transportation programs and services to be provided to the residents of the County. The Plan also contains cash flow analysis for the capital program with corresponding analysis projecting the available sources and uses of funds verifying RCTC's financial ability and commitment to deliver current and planned programs and services. The RCTC Plan is based on a set of assumptions developed through detailed data collection and analysis of historical data concerning revenues, economic forecasts and trend projections. The main sources of revenues include sales tax revenues, contributions from other agencies and federal operating assistance grants. The largest sales tax revenue source is the Measure A 'Y2 cent sales and use tax. The revenue generated from Measure A is expended on the projects contained in the Measure A Ordinance. RCTC's Measure A program is capital intensive. RCTC will issue its debt as needed in order to fund the Measure A program. RCTC must be able at all times to pay contractors and vendors for Measure A work in progress. Therefore, the CFO will work with the Deputy Executive Director to forecast the Measure A program construction draw down requirements. Based upon Measure A program construction draw down requirements and the conclusions resulting from the Plan, the CFO shall attempt to keep a reasonable amount of bond proceeds (approximately 4 months of Measure A program construction draw down requirements) available for construction draw down purposes. The CFO may increase the size of the Measure A tax-exempt commercial paper program to maintain liquidity in the Measure A program construction draw down account. I. MANAGING THE COMPETITIVE SALES PROCESS The CFO is responsible for implementing and managing RCTC's competitive bid debt sale process. If the CFO selects a competitive bid process for a sale of debt, the CFO will instruct RCTC's financial advisor to deliver a preliminary official statement and notice of sale to prospective underwriters and buyers that clearly states the location, time and requirements of the bid. After a successful competitive bid, the CFO will instruct RCTC's F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC - 12/2/05 44 financial advisor to work closely with the winning underwriter(s) in order to prepare and deliver the final official statement at closing. J. MANAGING THE NEGOTIATED SALES PROCESS The CFO is responsible for implementing and managing RCTC's negotiated debt sale process. Introduction A. RCTC expects its underwriters to participate in a valuable and significant way with respect to the structuring and pricing of each debt issue, sales performance and various other aspects of the.financing. B. Underwriters are expected to make themselves available to participate, when requested, .in information and other meetings prior to the issuance of debt. C. Underwriters are expected to cooperate fully with the book -running senior manager in a way that provides the maximum benefit to RCTC. D The book -running senior manager is responsible for developing a time and responsibility schedule that will allow for the timely and successful completion of the financing. The book -running senior manager is responsible for communicating RCTC's finance plan and timing to the other managing underwriters in the syndicate. Syndicate Management Process A. Liability 1. Prior to the day of pricing, the book -running, senior manager must provide to the CFO a recommended liability assignment for each underwriter in the underwriting syndicate. The CFO will review the recommended assignments and make any necessary adjustments. Upon approval by the CFO, the liability assignments of each underwriter must be incorporated into the Agreement Among Underwriters (AAU) by the book -running senior manager. 2. As a general rule, the liability assignments must not exceed the underwriting ability of the underwriters in the syndicate to whom they are assigned. B. AAU The AAU must include the liability assignments of each managing underwriter, the priority of orders for the purpose of allocation and the takedown designation policy. The book -running senior manager must provide a copy of the AAU to each managing underwriter in the syndicate. Each underwriter in the syndicate must review the terms and conditions set forth in the AAU and return a signed copy of the AAU to the book -running senior manager the day of the pricing. C. Underwriting Gross Spread Components; Fees and Expenses • The management fee, if any, will be distributed to the managing underwriters based upon their relative contribution to the development and implementation of the financing plan. • Proposed takedowns (i.e. sales commissions) for all maturities must be included as part of the proposed pricing terms delivered by the book -running senior manager to F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC - 12/2/05 45 RCTC prior to the final pre -pricing discussions. All takedowns are subject to review and approval by the CFO. • The expense component of the underwriting gross spread must be submitted by the book -running senior manager to RCTC's CFO for approval prior to the day of pricing. The CFO reserves the right to review and approve all fees and expenses and to request their substantiation. An estimate of the expense component of the underwriting gross spread must be submitted by the book -running senior manager to the CFO no later than one week prior to the pricing. RCTC expects the book -running senior manager to keep expense items and costs of issuance to an absolute minimum. • In general, RCTC will not reimburse the book -running senior manager for clearance fees except for the Depository Trust Company ("DTC") charge on issues that are registered in book -entry form only. RCTC will not reimburse the book -running senior manager for MRSB, Public Securities Association and California Public Securities Association expenses. • There will be no consideration of an underwriting risk component of the gross underwriting spread until after the order period closes. At that time, the CFO and the book -running senior manager will review the book of orders and discuss the need, if any, for including an underwriting risk component in the gross underwriter's spread for unsold bonds. There will be no negotiation of the underwriting risk component of the gross underwriter's spread after the CFO has given the verbal award to the book -running senior manager. D. Selling Groups The book -running senior manager will discuss with the CFO the advantages and/or disadvantages of using a selling group for the financing. If the CFO decides to use a selling group, the book -running senior manager will provide a list of recommended firms for RCTC's approval at least one week prior to the day of pricing. E. Retention and Takedown Designation Policies • The book -running senior manager will discuss the use of retention with the CFO at least one week prior to the day of pricing. During this discussion, the book -running senior manager will provide to the CFO the proposed retention amounts by maturity for each underwriter in the syndicate. • If the use of retention is advised by the book -running senior manager and agreed upon by the CFO, the book -running senior manager will make retention amounts and maturities available to the underwriters as soon as possible prior to the day of pricing. • Any change in the retention to the managing underwriters must be approved by the CFO prior to its release. • At least one week prior to the day of pricing, the book -running senior manager must provide the CFO a proposed priority of orders for the purpose of allocation and a proposed policy for the designation of takedown on net designated orders. The policy must include a maximum percentage of takedown to be designated to any one firm, as well as a minimum number of firms to be designated on any one net designated order. It is anticipated that each underwriter in the syndicate will be allowed to place net designated orders on all RCTC debt sales. Upon approval by the CFO, the priority of orders and the designation policy must be communicated to the underwriters and included in the F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC - 12/2/05 46 preliminary pricing wire. Any changes to the designation policy must be approved by the CFO and communicated to all underwriters in the syndicate and selling group members, if any, and RCTC. F. Pricing Procedures • Prior to the pre -pricing meeting or conference call (one business day ,prior to the day of the pricing) the book -running senior manager must deliver. to the CFO the proposed pricing terms. This is to allow for the thorough evaluation of the proposed pricing terms by the CFO. The list of the proposed pricing terms must include principal amounts, coupons, yields, optional redemption prices, and takedowns, per maturity. • One day prior to the day of the pricing, the book -running senior manager must initiate a pre -pricing meeting or conference call vvith. the CFO to discuss the proposed pricing terms, order period, underwriting gross spread components; market conditions and other necessary pricing information. • A draft copy of the preliminary pricing wire must be provided to the CFO upon, the completion of the pre -pricing meeting or conference call. Prior to its release, the preliminary pricing wire is subject to the approval of the CFO. The preliminary pricing wire must include, among other things, all pricing terms agreed upon by the CFOand the book -running senior manager during the pre -pricing meeting or conference call. • On the morning of the day of the pricing (and prior to the start of the order period), if the book -running senior manager believes that a change in any of the pricing terms approved at the pre -pricing meeting or on the pre -pricing conference call is required, the book -running senior manager must contact the CFO to review proposed changes and any suggested changes in light of the current market conditions. Any change in the initial pricing terms must be approved by the CFO and promptly communicated to the underwriters and syndicate and selling group members, if any. • The book -running senior manager must track the receipts of orders broken down by maturity, amount, type and firm. Status reports of the pricing, including total orders received for each maturity, amount, type and firm, may be requested by the CFO at any time during the order period. The Dalnet "Orders and Allotments by Maturity" report is an acceptable report for these purposes. • The book -running senior manager must receive approval from the CFO before terminating any order period on any maturity before the previously determined close of the order period. • At the close of the order period, the book -running senior manager must provide in writing and in a format acceptable to the CFO', a listing of the total orders received for each maturity, amount, type and firm, through the end of the order period. At this time the book -running senior manager must also make a concerted effort to provide the CFO with the true interest cost of the issue. The book -running senior manager must initiate a meeting or conference call with the CFO to review the book of orders and negotiate any change in pricing terms, prior to the verbal award of the issue to the book -running senior manager as the representative of the underwriters in the syndicate and selling group members, if any: • The CFO may agree to a verbal award of the bonds and sign a bond purchase contract with the book -running senior manager as representative for the underwriters in the syndicate after consultation with and approval from the Commission. • A complete set of final computer analyses must be provided to the CFO before the CFO signs the bond purchase contract. The computer analyses must include, but , not necessarily be limited to, a table of sources and uses of funds, a summary of F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC 12/2/05 47 • assumptions and results (including significant dates, underwriting gross spread breakdown, ratings, true interest cost, etc.) and any additional tables that include coupons, yields, prices, takedowns, principal amounts and related debt service by maturity. • The book -running senior manager and underwriter's counsel is jointly responsible for coordinating the execution of the bond purchase contract. • The CFO reserves the right to postpone the pricing if the above pricing procedures are not strictly followed. G. Allocation of Bonds The book -running senior manager will be responsible for ensuring that the overall allocation of bond meets RCTC goals of: (a) obtaining the best price for the issue and (b) providing each underwriting firm involved with bond allocations that are commensurate with the work performed (i.e., the type and amount of orders submitted). The CFO reserves the right to monitor the order taking process and to review and approve bond allocations prior to their release. H. Post -Sale Support • In accordance with MSRB rules, sales credits designated by an institutional investor must be distributed within 30 days after the delivery of the bonds. • In accordance with MSRB rules, final settlement of the underwriting account and the distribution of any profit to members must be made within 60 days of delivery of the bonds. • The underwriting syndicate agrees to comply with any syndicate rules prohibiting the selling of bonds below the public offering price (less the full takedown) prior to the release of syndicate restrictions. In addition, each managing underwriter in the syndicate agrees to inform the CFO of any non-compliance with such syndicate rules. • For seven business days following the release of syndicate restrictions, the managing underwriters in the syndicate agree to inform the CFO of any firm significantly lowering the price of the bonds in the secondary market below market levels. • The book -running senior manager must be prepared to provide the CFO on an ongoing basis for at least seven business days following the release of the syndicate restrictions secondary market price levels, unsold balances, and the level of trading activity of the bonds. • RCTC expects the managing underwriters in the syndicate to provide liquidity in the secondary market for its bonds on an ongoing basis. I. Post -Sale Evaluation RCTC has a policy of acknowledging good performance and building accountability into its relationships with its managing underwriters. RCTC will conduct post -sale evaluations of the underwriting account to ensure that its policies are adhered to and that sales performance is documented. • The book -running senior manager must provide the CFO with a final pricing book. The final pricing book must include, but not necessarily be limited to, the following information: the time and responsibility schedule; the working group distribution list; F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC - 12/2/05 48 a discussion of the market conditions leading up to and during the final pricing; the preliminary and final pricing wires; media coverage; rating agency credit reports; a full set of computer analyses; a table identifying takedown and designation dollars by firm; and a table identifying designations on net designated orders. The book - running senior manager's final pricing book must be provided to the CFO within 60 days of the day of the closing. • The financial advisor must also provide the CFO with its own final pricing report. The final pricing report must include, but not necessarily be limited to, the following information: a discussion of the market conditions leading up to and during the final pricing; a discussion on the sales process; a pricing comparison of similar credits in California and the national markets and the preliminary and final pricing wires. The financial advisor's final pricing report must be provided to the CFO within 30 days of the day of the pricing. • In addition to the book -running senior manager, each underwriter is encouraged to provide the CFO with a confidential written analysis of the sale of the bonds. K. MANAGING THE SALE OF COMMERCIAL PAPER The CFO is responsible for implementing and managing RCTC's sale of commercial paper. The CFO shall work closely with RCTC's commercial paper dealer to develop a marketing strategy for the initial sale and subsequent frequent rollover of commercial paper amounts and maturities. The marketing strategy for the initial sale and subsequent frequent roll-over of commercial paper amounts and maturities shall take into account the short-term yield curve as well as RCTC's philosophy to have a significant number of diverse commercial paper investors. The CFO will require RCTC's commercial paper dealer to provide quarterly and annual reports detailing the commercial paper average cost, average maturity and a list of commercial paper investors. Subject to the approval of its liquidity and/or letter -of -credit provider, RCTC reserves the right to change the number of commercial paper dealers for the commercial paper program., L. REFUNDING OPPORTUNITIES An advance refunding involves refunding bonds in advance of the bond's first optional redemption date. An advance refunding is an important debt management tool for RCTC. Advance refundings are commonly used to achieve interest cost savings, remove or change burdensome bond covenants or to restructure future debt service payments. Advance refundings are limited by federal tax law and must be used judiciously. RCTC generally will only pursue an advance refunding if the threshold present value savings level (net of all issuance costs and any cash contribution to the refunding) is at least three percent of the par value of the refunded bonds. However, in certain circumstances, the CFO after consultation with and approval by the Commission, may agree that lower savings levels may be justified. RCTC's debt management practices anticipate the potential for advance refundings. When RCTC issues debt careful attention is given to pricing considerations that will affect future advance refunding flexibility such as: • Optional redemption provisions and F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC - 12/2/05 49 • • • Coupon characteristics. In addition, it is important to create a refunding defeasance escrow that will produce the greatest savings level. A defeasance escrow is efficient if the yield on the defeasance escrow is as close as possible (i.e., generally less than 100"' of a basis point) to the arbitrage yield on the refunding bonds. The CFO will select the appropriate defeasance securities. M. FIXED RATE VERSUS VARIABLE RATE DEBT The CFO and the Commission recognize that variable rate securities are a useful debt management tool that traditionally have had lower interest rate costs than fixed rate debt. RCTC's current goal is to maintain a debt program which consists of approximately 20% to 25% of variable rate debt (which includes commercial paper) with the remaining 75% to 80% kept as fixed rate debt; however, variable rate debt that is the subject of an active floating to fixed rate interest rate swap is not considered to be floating rate debt for the purpose of computing RCTC's total proportion of variable rate debt. RCTC's book -running senior manager, commercial paper dealer and financial advisor shall advise the CFO. if the rating agencies and/or institutional investors feel that 20% to 25% of RCTC's debt in the variable rate mode is too large a percentage. N. DERIVATIVES RCTC will continue to explore the use of derivative products as appropriate and in accordance with the Investment Policy, provided that the derivative products: • Hedge variable rate debt exposure, • Lower interest rate costs, or • Minimize risks to RCTC. Derivative products for debt shall not be used for the purpose of interest rate speculation. The Commission has adopted a separate Swap Policy related to swap transactions that should be referred to for such transactions. The CFO has the sole responsibility for determining which prospective debt products for new issue debt are derivatives. Derivative products debt instruments may be incorporated into RCTC's debt program only after the CFO has informed the Chief Executive Officer and the Commissioners of the purpose and the risks associated with the derivative product debt instruments including but not limited to: • Interest rate risk, • Counter -party credit risks, • Termination risks, and • Tax implications. If appropriate, the CFO, after consultation and approval by the Commissioners, may determine a minimum level of savings required before implementing a derivative product debt instrument. If the Commission authorizes the use of derivative products, the CFO will provide the Commissioners within twenty-four hours a memo detailing any activity related to the use of derivative products. F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC - 12/2/05 50 O. PRIMARY AND SECONDARY MARKET DISCLOSURE A trustee has been appointed for the benefit of the Measure A Sales Tax Revenue Bonds. The trustee shall perform all functions and duties required under the terms and conditions set forth in the respective indentures. For example, RCTC is required to distribute an Annual Report within 7 months of RCTC's June 30 fiscal year-end to a recognized municipal securities information repository (NRMSIR) and the state repository. The Annual Report must include audited financial statements, an update (as of RCTC's June 30 fiscal year-end) for the table entitled "Sales Tax Receipts and Historical Debt Service Coverage Ratios" and an update of the table entitled "Debt Service for All Outstanding Bonds" in RCTC's Official Statement. In addition to the responsibilities required by the respective indentures, RCTC has a commitment to continuing to disclose material information after the sale of its debt. The CFO is responsible for implementing and managing RCTC's legal and professional commitment to continuing to disclose material information after the sale of its debt. In adherence to Securities and Exchange Commission Rule 15c2-12(b)(5), the Commission's Continuing Disclosure Agreement with its trustee agrees to provide its Annual Report and notice of material events to the NRMSIR and state repository for dissemination to interested parties. Material events" are defined as: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on the debt service reserve funds reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; and 6. Adverse tax opinions or events adversely affecting the 'tax-exempt status of any bonds or COPs; 7. Modifications to rights of Bondholders; 8. Optional, contingent or unscheduled bonds calls; 9. Defeasances; 10. Release, substitution or sale of property securing the payment of any bond or COPS. 11. Rating changes. P. ° RATING AGENCIES The CFO is responsible for implementing and managing RCTC's ratingagencies relations program. The CFO recognizes the importance of immediate and timely disclosure of relevant financial and program information concerning each of RCTC's debt programs to, the rating agencies.. The CFO shall promptly respond to any inquiry from any rating agency analyst. In addition, the CFO and one or more representatives of RCTC's Commissioners shall periodically meet with the rating agencies in order discuss RCTC's recent financial results, financial projections, Board policy, specific RCTC programs such as Measure A as well as the general economy in Riverside County and Southern California and other matters. Q. INVESTOR RELATIONS F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC - 12/2/05 51 • Member Order: An order for bonds placed by a member of the syndicate where the bonds would be confirmed to that member at syndicate terms. Municipal Securities Rulemaking Board IMSRBI: An independent self -regulatory organization established by the Securities Acts Amendments of 1975, which is charged with primary rulemaking Commission over broker -dealers and brokers in municipal securities. National Association of Securities Dealers (NASD): A self-regulating and self -financed organization which acts as a buffer between the Securities and Exchange Commission (SEC) and broker -dealers. The NASD operates in municipal securities according to a special set of municipal bond rules written by the MSRB. Net Designated Order: An order for bonds submitted by a syndicate member in which all or a portion of the takedown is to be credited to firms designated by the purchaser of the bonds according to relative designated by the said purchaser. Priority Order: A retail or a net designated order. Retail Order: An order for bonds placed by an individual or, as determined by the CFO, a retail order may also include an order placed by a bank trust department or an investment advisor for an individual. Retention: An amount of bonds that will be guaranteed to be available for sale by each member of the syndicate. Rule 10b-5: A regulation of the SEC adopted pursuant to the Securities and Exchange Act of 1934, which makes it unlawful for any person to employ any device, scheme, or artifice to defraud, to make any untrue statement of a material fact or to omit a material fact necessary to make statements made, in the light of the circumstances under which they were made, not misleading; or to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. Securities and Exchange Commission (SEC): The federal agency that oversees and regulates stock, bond and other financial market participants. Selling Group: A group of underwriters formed to aid in the distribution of the bonds in a bond financing. Selling group members do not assume any financial or legal liability in the financing. Syndicate: A group of underwriters formed to purchase and re -offer an issuer's bonds for sale to the public. Each syndicate member has a share in the liability of the issue. Syndicate Participation Percentages: A sales participation goal for each syndicate member determined by RCTC and its CFO for RCTC bond issues. Takedown: The total discount at which members of syndicates buy bonds from an account - composed of two parts: concession and takedown. True Interest Cost: The rate, compounded semi-annually, necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received on the closing date of the bond issue. F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC - 12/2/05 53 Trust Indenture:.A contract between an issuer and a trustee, for the benefit of investors. The trustee administers the funds specified in the indenture and implements the remedies provided in case of default. Underwriter's Gross Spread: In a negotiated sale, the difference between the price, the underwriter pays the issuer and the original re -offering price to the public; includes the management fee, expenses, and sales commissions (takedown and concession). Ft/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC - 12/2/05 54 • • RESOLUTION NO. 06-014 RESOLUTION OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION REGARDING THE SWAP POLICY AND REVISED DEBT MANAGEMENT POLICY WHEREAS, the Riverside County Transportation Commission (the "Commission") currently retains the authority to add, delete or otherwise modify the Commission's policies and procedures. NOW, THEREFORE, the Riverside County Transportation Commission does hereby resolve as follows: Section 1. The Riverside County Transportation Commission hereby adopts the Swap Policy. Section 2. The Riverside County Transportation Commission hereby adopts the Debt Management Policy, as revised for (1) the main objectives in the sale of debt to include reference to the debt limitation for the 2009 Measure A, (2) Section M (Fixed Rate Versus Variable Rate Debt), and Section N (Derivatives) as a result of the adoption of a separate swap policy. APPROVED AND ADOPTED this 12th day of July, 2006. Marion Ashley, Chair Riverside County Transportation Commission ATTEST: Jennifer Harmon Clerk of the Board 55 I, Jennifer Harmon, Clerk of the Board, do hereby certify that the foregoing Resolution No. 06-014 was duly and regularly adopted by the Riverside County Transportation Commission at a regular meeting thereof, held on the 12' day of July, 2006, and that the foregoing is a full, true and correct copy of said Resolution. Jennifer Harmon Clerk of the Board 56 • (Local Currency -Single Jurisdiction) ISDA. International Swaps and Derivatives Association, Inc. MASTER AGREEMENT dated as of [ ], 2006 and RIVERSIDE COUNTY TRANSPORTATION COMMISSION have entered and/or anticipate entering into one or more transactions (each a "Transaction") that are or will be governed by this Master Agreement, which includes the schedule (the "Schedule"), and the documents and other confirming evidence (each a "Confirmation") exchanged between the parties confirming those Transactions. Accordingly, the parties agree as follows:- 1. Interpretation (a) Definitions. The terms defined in Section 12 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement. (b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement (including the Schedule), such Confirmation will prevail for the purpose of the relevant Transaction. (c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this "Agreement"), and the parties would not otherwise enter into any Transactions. 2. Obligations (a) General Conditions. (i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement. (ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for Copyright O 1992 by International Swaps and Derivatives Association, Inc. NH46739.8 57 payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement. (iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement. (b) Change of Account. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change. (c) Netting. If on any date amounts would otherwise be payable: (i) in the same currency; and (ii) in respect of the same Transaction, by each party to the other, then, on such date, each party's obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount. The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being subject to the election, together with the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date). This election may be made separately for different groups of Transactions and will apply separately to each pairing of branches or offices through which the parties make and receive payments or deliveries. (d) Default Interest; Other Amounts. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as such overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment, at the Default Rate. Such interest will be calculated on the basis of daily compounding and the actual Copyright C 1992 by International Swaps and Derivatives Association, Inca - NH46739.8 7 58 • • number of days elapsed. If, prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of any obligation required to be settled by delivery, it will compensate the other party on demand if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement. 3. Representations Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into) that: — (a) Basic Representations. (i) Status. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing; (ii) Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorize such execution, delivery and performance; (iii) No Violation or Conflict. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets; (iv) Consents. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and (v) Obligations Binding. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). (b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party. Copyright EC) 1992 by International Swaps and Derivatives Association, Inc. i NH46739.8 59 (c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court; tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document. (d) Accuracy of Specified Information. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect. 4. Agreements Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party: (a) Furnish Specified Information. It will deliver to theotherparty any forms, documents or certificates specified in the Schedule or any Confirmation by: the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable. (b) Maintain Authorizations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other Issuer that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future. (c) Comply with Laws.. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party. 5. Events of Default and Termination Events (a) Events of Default. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes an event of default (an 'Event of Default") with respect to such party: (i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or 2(d) required to be made by it if such failure is not remedied on or before the third Local Business Day after notice of such failure is given to the party; (ii) . Breach of Agreement. Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 2(d) or to give notice of a Termination Event) to be complied with or performed by the party in accordance with this Agreement Copyright ® 1992 by International Swaps and Derivatives Association, Inc 4 60 NH46739.8 • if such failure is not remedied on or before the thirtieth day after notice of such failure is given to the party; (iii) Credit Support Default. (1) Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed; (2) the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document to be in full force and effect for the purpose of this Agreement (in either case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or (3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document; (iv) Misrepresentation. A representation made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated; (v) Default under Specified Transaction. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three Local Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf); (vi) Cross Default. If "Cross Default" is specified in the Schedule as applying to the party, the occurrence or existence of (I) a default, event of default or other similar condition or event (however described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under Copyright © 1992 by International Swaps and Derivatives Association, Inc. 5 NH46739.8 61 such agreements or instruments, before it would otherwise have been due and payable or (2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than the applicable ThresholdAmount under such agreements or instruments (after giving effect to any applicable notice requirement or grace period); (vii) Bankruptcy. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:— (1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding -up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding -up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding=up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts or (viii) Merger Without Assumption. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer.— (1) the resulting; surviving or transferee . entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by Copyright ® 1992 by International Swaps and Derivatives Association, Inc. NH46739.8 6 • 62 • • operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement; or (2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement. (b) Termination Events. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes an Illegality if the event is specified in (i) below, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to (ii) below or an Additional Termination Event if the event is specified pursuant to (iii) below: (i) Illegality. Due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory Issuer with competent jurisdiction of any applicable law after such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for such party (which will be the Affected Party):— (1) to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or (2) to perform, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction; (ii) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified in the Schedule as applying to the party, such party ("X"), any Credit Support Provider of X or any applicable Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or transferee entity is materially weaker than that of X, such Credit Support Provider or such Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or (iii) Additional Termination Event. If any "Additional Termination Event" is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the Schedule or such Confirmation). Copyright © 1992 by International Swaps and Derivatives Association, Inc. 7 63 NH46739.8 (c) - Event of Default and Illegality. If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an. Illegality, it, will be treated as an Illegality and will not constitute an Event of Default. 6. Early Termination (a) Right to Terminate Following Event of Default. If at any time an Event of Default with respect to a party (the 'Defaulting Party") has occurred and is then continuing, the other party (the "Non -defaulting Party") may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, "Automatic Early Termination" is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institutionof the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8). (b) Right to Terminate Following Termination Event. (i) Notice. If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction and will also give such other information about that Termination Event as the other party may reasonably require. (ii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to avoid that Termination Event. (iii) Right to Terminate. If— (1) an agreement under Section 6(b)(ii) has not been effected with respect to all Affected Transactions within .30 days after an Affected Party gives notice under Section 6(b)(i); or (2) an Illegality other than that referred to in Section 6(b)(ii), a Credit Event Upon Merger or an Additional Termination Event occurs, either party in the case of an Illegality, any Affected' Party in the case of an Additional Termination Event if there is more than one Affected Party, or the party which is not the Affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, by not more than 20 days notice to the other party and provided that the relevant Termination Event is then continuing, designate a day Copyright 0 1992 by International Swaps and Derivatives Association, Inc. R 64 NH46739.8 • not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions. (c) Effect of Designation. (i) If notice designating an Early Termination Date is given under Section 6(a) or (b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing. (ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(d) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement. The amount, if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e). (d) Calculations. (i) Statement. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation obtained in determining a Market Quotation, the records of the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such quotation. (ii) Payment Date. An amount calculated as being due in respect of any Early Termination Date under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on the day which is two Local Business Days after the day on which notice of the amount payable is effective (in the case of an Early Termination Date which is designated as a result of a Termination Event). Such amount will be paid together with (to the extent permitted under applicable law) interest thereon (before as well as after judgment), from (and including) the relevant Early Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. (e) Payments on Early Termination. If an Early Termination Date occurs, the following provisions shall apply based on the parties' election in the Schedule of a payment measure, either "Market Quotation" or "Loss," and a payment method, either the "First Method" or the "Second Method." If the parties fail to designate a payment measure or payment method in the Schedule, it will be deemed that "Market Quotation" or the "Second Method," as the case may be, shall apply. The amount, if any, payable in respect of an Early Termination Date and determined pursuant to this Section will be subject to any Set-off. Copyright ® 1992 by International Swaps and Derivatives Association, Inc. 9 NH46739.8 65 (i) Default: Events of Default. If the Early Termination Date results from an Event of (1) First Method and Market Quotation. If the First Method and Market Quotation apply, the Defaulting Party will pay to the Non -defaulting Party the excess, if a positive number, of (A) the sum of the Settlement Amount (determined by the Non -defaulting Party) in respect of the Terminated Transactions and the Unpaid Amounts owing to the Non -defaulting. Party over (B) the Unpaid Amounts owing to the Defaulting Party. (2) First Method and Loss. If the First Method and Loss apply, the Defaulting Party will pay to the Non -defaulting Party, if a positive number, the Non -defaulting Party's Loss in respect of this Agreement. (3) Second Method and Market Quotation. If the Second Method and Market Quotation apply, an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the Non -defaulting Party) in respect of the Terminated Transactions and the Unpaid Amounts owing to the Non -defaulting Party less (B) the Unpaid Amounts owing to the Defaulting Party. If that amount is a positive number, the Defaulting Party will pay . it to the Non - defaulting Party; if it is a negative number, the Non -defaulting Party will pay the absolute value of that amount to the Defaulting Party. (4) Second Method and Loss. If the Second Method- and Loss apply, an amount will be payable equal to the Non -defaulting Parry's Loss in respect of this Agreement. If that amount is a positive number, the Defaulting Party will pay it to the Non -defaulting Party; if it is a negative number, the Non -defaulting Party will pay the absolute value of that amount to the Defaulting Party. (ii) Termination Events. If the Early Termination Date results from a Termination Event:— (1) One Affected Party. If there is one Affected Party, the amount payable will be determinedinaccordance with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in either case, references to the Defaulting Party and to the Non -defaulting Party will be deemed to be references to the Affected Party and the party which is not the Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being terminated, Loss shall be calculated in respect of all Terminated Transactions. (2) Two Affected Parties. If there are two Affected Parties: (A) if Market Quotation applies, each party will determine a Settlement Amount in respect of the'Terminated Transactions, and an Copyright © 1992 by International Swaps and Derivatives Association; Inc. NH46739.8 10 • 66 • amount will be payable equal to (I) the sum of (a) one-half of the difference between the Settlement Amount of the party with the higher Settlement Amount ("X") and the Settlement Amount of the party with the lower Settlement Amount ("Y") and (b) the Unpaid Amounts owing to X less (II) the Unpaid Amounts owing to Y; and (B) if Loss applies, each party will determine its Loss in respect of this Agreement (or, if fewer than all the Transactions are being terminated, in respect of all Terminated Transactions) and an amount will be payable equal to one-half of the difference between the Loss of the party with the higher Loss ("X") and the Loss of the party with the lower Loss ("Y"). If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of that amount to Y. (iii) Adjustment far Bankruptcy. In circumstances where an Early Termination Date occurs because "Automatic Early Termination" applies in respect of a party, the amount determined under this Section 6(e) will be subject to such adjustments as are appropriate and permitted by law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(ii). (iv) Pre Estimate. The parties agree that if Market Quotation applies an amount recoverable under this Section 6(e) is a reasonable pre -estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks and except as otherwise provided in this Agreement neither party will be entitled to recover any additional damages as a consequence of such losses. 7. Transfer Neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that: — (a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and (b) a party may make such a transfer of all or any part of its interest in any amount payable to it from a Defaulting Party under Section 6(e). Any purported transfer that is not in compliance with this Section will be void. 8. Miscellaneous Copyright © 1992 by International Swaps and Derivatives Association, Inc. 11 NH46739 B 67 (a) Entire Agreement:- This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral. communication and prior writings with respect thereto. (b) Amendments. No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system. (c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction. (d) Remedies Cumulative. Except as provided in this Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law. (e) Counterparts and Confirmations. (i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original. (ii) The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex or electronic message constitutes a Confirmation. (0 No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege. (g) Headings. The headings used in this Agreement are for convenience • of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement. Copyright ® 1992 by international Swaps and Derivatives Association, Inc. NH46739.8 t7 68 • 9. Expenses A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection. 10. Notices (a) Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated: (i) if in writing and delivered in person or by courier, on the date it is delivered; (ii) if sent by telex, on the date the recipient's answerback is received; (iii) if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender's facsimile machine); (iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; or (v) if sent by electronic messaging system, on the date that electronic message is received, unless the date of that delivery (or attempted delivery ) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day. (b) Change of Addresses. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it. 11. Governing Law and Jurisdiction (a) Governing Law. This Agreement will be governed by and construed in accordance with the law specified in the Schedule. Copyright m 1992 by International Swaps and Derivatives Association, Inc. 69 NH46739.8 (b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement ('Proceedings"), each party irrevocably: (i) submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law, or to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and (ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States," as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction. (c) Waiver of Immunities. Each party irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds' from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings. 12. Definitions As used in this Agreement: "Additional Termination Event" has the meaning specified in Section 5(b). "Affected Party" has the meaning specified in Section 5(b). "Affected Transactions" means (a) with respect to any Termination Event consisting of an Illegality, all Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination Event, all Transactions. "Affiliate" means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, "control" of any entity or person means ownership of a majority of the voting power of the entity or person. Copyright © 1992 by International Swaps and Derivatives Association, Inc. 14 70 NH46739.8 • • "Applicable Rate" means: — (a) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate; (b) in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate; (c) in respect of all other obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Non -defaulting Party, the Non -default Rate; and (d) in all other cases, the Termination Rate. "consent" includes a consent, approval, action, authorization, exemption, notice, filing, registration or exchange control consent. "Credit Event Upon Merger" has the meaning specified in Section 5(b). "Credit Support Document" means any agreement or instrument that is specified as such in this Agreement. "Credit Support Provider" has the meaning specified in the Schedule. "Default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1 % per annum. "Defaulting Party" has the meaning specified in Section 6(a). "Early Termination Date" means the date determined in accordance with Section 6(a) or 6(b)(iii). "Event of Default" has the meaning specified in Section 5(a) and, if applicable, in the Schedule. "Illegality" has the meaning specified in Section 5(b). "law" includes any treaty, law, rule or regulation and "lawful' and "unlawful" will be construed accordingly. "Local Business Day" means, subject to the Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account is located, (c) in relation to any notice or other Copyright © 1992 by International Swaps and Derivatives Association, Inc. 15 71 NH46739.6 communication, including notice contemplated under Section 5(a)(i), in the city specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction. "Loss" means, with respect to this Agreement or one or more Terminated Transactions, as the case may be, and a party, an amount that party reasonably determines in good faith to be its total losses and costs (or gain, in which case • expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at the election of such party but without duplication, loss or cost• incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and out-of-pocket expenses referred to under .Section 9. A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. A party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets. "Market Quotation" means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from _ Reference Market -makers. Each quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of an agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference Market -maker to enter into a transaction (the "Replacement Transaction") that would have the effect of preserving. for such party the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date. For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are tobeexcluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included. The Replacement Transaction would be subject to such documentation as such party and the Reference Market -maker may, in good faith, agree. The party making the determination (or its agent) will request each Reference Market -maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation Copyright C 1992 by International Swaps and Derivatives Association, Inc. NH46739.8 16 72 • • will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be determined. "Non -default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the Non -defaulting Party (as certified by it) if it were to fund the relevant amount. "Non -defaulting Party" has the meaning specified in Section 6(a). "Potential Event of Default" means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default. "Reference Market -makers" means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same city. "Scheduled Payment Date" means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction. "Set-off' means set-off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer. "Settlement Amount" means, with respect to a party and any Early Termination Date, the sum of: — (a) the Market Quotations (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is determined; and (b) such party's Loss (whether positive or negative and without reference to any Unpaid Amounts) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation cannot be determined or would not (in the reasonable belief of the party making the determination) produce a commercially reasonable result. "Specified Entiry"has the meaning specified in the Schedule. "Specified Indebtedness" means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money. "Specified Transaction" means, subject to the Schedule, (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between one party to this Copyright © 1992 by International Swaps and Derivatives Association, Inc. 17 73 NH46739.8 Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross -currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation. "Terminated Transactions" means with respect to any Early Termination Date (a) if resulting from a Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions (in either case) in effect immediately before the effectiveness of the notice designating that Early Termination Date (or, if "Automatic Early Termination" applies, immediately before that Early Termination Date). "Termination Event" means an Illegality or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event. "Termination Rate" means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts. "Unpaid Amounts" owing to any party means, with respect to an Early Termination 'Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable -but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated "Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered as of the originally scheduled date for delivery, in each case together with (to the extent permitted under applicable law) interest, in the currency of such amounts, from (and including) the date such amounts or obligations were or would have been required to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate Such amounts of interest will be calculated on the basis of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred to in clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it shall be the average of the fair market values reasonably determined by both parties. Copyright © 1992 by International Swaps and Derivatives Association, Inc. 1R 74 NH96739& • IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: By: Name: Title: Date: [ ], 2006 Name: Title: Date: [ Copyright ® 1992 by International Swaps and Derivatives Association, Inc. ], 2006 NI146739.8 CHI 3498515v.1 75 (Local Currency Single Jurisdiction) ISDA. International Swap Dealers Association, Inc. U.S. MUNICIPAL COUNTERPARTY SCHEDULE to the Master Agreement dated as of , 2006 Between [COUNTERPARTY] and RIVERSIDE COUNTY TRANSPORTATION COMMISSION ("Party A") ("Party B") Part 1. PART 1: Termination Provisions (a) "Specified Entity" means in relation to Party A for the purpose of: - Section 5(a)(v) (Default under Specified Transaction), none; Section 5(a)(vi) (Cross Default), none; Section 5(a)(vii) (Bankruptcy), none; and Section 5(b)(ii) (Credit Event Upon Merger), none; in relation to Party B for the purpose of: - Section 5(a)(v) (Default under Specified Transaction) none; Section 5(a)(vi) (Cross Default), none; Section 5(a)(vii) (Bankruptcy), • none; and Section 5(b)(ii) (Credit Event Upon Merger), none. (b) "Specified Transaction" will have the meaning specified in Section 12. (c) The "Cross -Default" provisions of Section 5(a)(vi) (as amended in Part 5(0) will apply to Party A and will apply to Party B. In connection therewith: US_WEST260041317.1 43124-2 BA4BA4 76 • • • With respect to Party A, "Specified Indebtedness" will have the meaning specified in Section 12, except that such term shall not include obligations in respect of deposits received in the ordinary course of a parry's banking business. With respect to Party B, "Specified Indebtedness" will mean any indebtedness under the Covered Indenture. "Threshold Amount" means, with respect to Party A, an amount equal to two percent (2%) of the Shareholders' Equity of [COUNTERPARTY PARENT] and, with respect to Party B, $10,000,000. "Shareholders' Equity" means, with respect to Party A, at any time, the sum (as shown in its most recent annual audited financial statements) of (i) its capital stock (including preferred stock) outstanding, taken at par value, (ii) its capital surplus and (iii) its retained earnings, minus (iv) treasury stock, each to be determined in accordance with generally accepted accounting principles. (d) The "Credit Event Upon Merger" provisions of Section 5(b)(ii) will apply to Party A will apply to Party B. (e) The "Automatic Early Termination" provision of Section 6(a) will not apply to Party A will not apply to Parry B. (0 Payments on Early Termination. For the purpose of Section 6(e): (g) (i) Market Quotation will apply. (ii) The Second Method will apply. Additional Termination Event will apply. The following events shall constitute Additional Termination Events hereunder: (i) A Ratings Event occurs with respect to Party B, and Party B fails, within thirty (30) General Business Days of such Ratings Event, to assign this Agreement and all Transactions hereunder to a third parry reasonably satisfactory to Party A. For purposes of this Termination Event, "Ratings Event" means that (i) the unenhanced ratings (without regard to any third party credit enhancement) on the senior lien bonds is lower than "Baal" by Moody's Investor Services, Inc. or any successor thereto ("Moody's"), or "BBB" by Standard and Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. or any successor thereto ("S&P"), or (ii) either such rating is withdrawn (other than as a result of the final maturity of all of the senior lien bonds) or suspended. "General Business Days" means any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in the City of New York. Party B shall be the sole Affected Party with respect to this Additional Termination Event. (ii) A Ratings Event occurs with respect to Party A, and Party A fails, within thirty (30) General Business Days of such Ratings Event, to assign this Agreement and all Transactions hereunder to a third party reasonably satisfactory to Party B. For purposes US_ WEST:260041317_1 43124-2 BA4/BA4 2 77 (h) of this Termination Event, "Ratings Event" means that (i) the unenhanced ratings (without regard to any third party credit enhancement) of its long-term certificates of deposit are lower than "Baal" by Moody's, or'.'BBB" by •S&P, or (ii) either such rating is withdrawn or suspended. Party A shall be the sole Affected Party with respect to this Additional Termination Event. Events of Default. (i) Bankruptcy. Clause (6) of Section 5(a)(vii) of this Agreement is hereby amended to read in its entirety as follows: "(6)(A) seeks or becomes subject to the appointment of an, administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets or (B) in the base of a Government Entity, any Credit Support Provider of such Government Entity or any applicable Specified Entity of such Government Entity, (I) there shall be appointed or designated with respect to it, an entity such as an organization, board, commission, authority, agency or body to monitor, review, oversee, recommend or declare a financial emergency or similar state of financial distress with respect to it or (II) there shall be declared by it or by any legislative or regulatory body with competent jurisdiction over it; the existence of.a state of financial emergency or similar state of financial distress in respect 'of it;". (ii) Merger Without Assumption. Section 5(a)(viii) of this Agreement is hereby amended to read in its entirety as follows: "(viii) Merger Without Assumption. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity (or, without limiting the foregoing, if such party is a Government Entity, an entity such as an organization, board, commission, authority, agency or body succeeds to the principal functions of, or powers and duties granted to, such party or any Credit Support Provider of such party) and, at the time of such consolidation, amalgamation, merger, transfer or succession: (1) the resulting, surviving, transferee or successor entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement; or (2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving, transferee or successor entity of its obligations under, this Agreement." (i) Termination Events. Section 5(b)(ii) of this Agreement is hereby amended to read in its entirety as follows: "(ii) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified in the Schedule as applying to the party, such party ("X"), any Credit Support Provider of X or any applicable Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity (or, without limiting the foregoing, if X is a US_WEST260041317.1 43124-2 BA4/BA4 3 78 • • Government Entity, an entity such as an organization, board, commission, authority, agency or body succeeds to the principal functions of, or powers and duties granted to, X, any Credit Support Provider of X or any Specified Entity of X) and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving, transferee or successor entity is materially weaker than that of X, such Credit Support Provider or such Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the sole Affected Party); provided, however, that the term "materially weaker" as used therein shall mean, (i) with respect to Party A, if the outstanding unsecured unsubordinated debt, long-term deposits or certificates of deposit of Party A cease to be rated at least Baa2 by Moody's, BBB by S&P, or BBB by Fitch and (ii) with respect to Party B, if the senior lien bonds of Party B ceases to be rated at least Baa2 by Moody's, BBB by S&P, or BBB by Fitch; or". PART 2: Agreement to Deliver Documents For the purpose of Section 4(a) of this Agreement, each party agrees to deliver the following documents: - Party required to deliver document Form/Document/Certificate Date by which to be delivered Covered by Section 3(d) Representation Party B Party A Party A US_ WEST:260041317.1 43124-2 BA4/BA4 Audited financial statements of Party B containing audited, consolidated financial statements certified by independent certified public accountants and prepared in accordance with generally accepted accounting principles in the country in which such party is organized Annual Report of [COUNTERPARTY PARENT] containing audited, consolidated financial statements certified by independent certified public accountants and prepared in accordance with generally accepted accounting principles in the country in which such party is organized Credit Support Document(s) 4 As soon as available Yes and in any event within 180 days after the end of each fiscal year of Party B To be made available Yes on [WEBSITE] as soon as available and in any event within 120 days after the end of each fiscal year of Party A Upon execution and delivery of this Agreement No 79 Party required to deliver document Form/Document/Certificate Date by which to be Covered by delivered Section 3(d) Representation Party B Parry A Party A and Party B Party A and Party B Party B (a) Opinion of Counsel satisfactory to Party A substantially in the form Of Exhibit I hereto Opinion of Counsel satisfactory to Party B substantially in the form of Exhibit II hereto Certified copies of all corporate authorizations and any other documents with respect to the execution, delivery and performance of this Agreement and any Credit Support Document, as applicable Certificate of incumbency and/or specimen signatures of individuals executing this Agreement and any Credit Support Document Executed copy of the Covered Indenture Upon execution and No delivery of this Agreement and each Transaction confirmed hereunder Upon execution and No delivery of this Agreement and each Transaction confirmed hereunder Upon execution and Yes delivery of this Agreement Upon execution and delivery of this Agreement and thereafter upon request of the other party Yes Upon execution and Yes delivery of this . Agreement PART 3: Miscellaneous Address for Notices. For the purpose of Section 10(a) of this Agreement: - Address for notice or communications to Party A: [COUNTERPARTY] Attention: Telephone No.: Facsimile No.: US_ WEST:260041317.1 43124-2 BA4BA4 5 80 • with a copy to: [COUN 1'ERPARTY] Attention: Facsimile No.: ' Address for financial statements to Party A: [COUNTERPARTYJ Attention: Address for notice or communications to Party B: Riverside County Transportation Commission 4080 Lemon Street, 3rd Floor Riverside, California 92502 Attention: Chief Financial Officer Telephone: (951) 787-7926 Fax: (951)787-7141 , (b) Calculation Agent. The Calculation Agent is Party A, provided, that if an Event of Default with respect to Party A as the Defaulting Party has occurred and is continuing, the Calculation Agent shall be a Reference Market -maker selected by Party B. (c) Credit Support Document Details of any Credit Support Document: Each of the following, as amended, supplemented, modified, renewed, replaced, consolidated, substituted or extended from time to time, is a "Credit Support Document': In relation to Party B, the Covered Indenture. In relation to Party A, the ISDA Credit Support Annex in the form annexed hereto and made a part hereof. (d) Credit Support Provider. Credit Support Provider means in relation to Party A: Not applicable. Credit Support Provider means in relation to Party B: Not applicable. (e) Governing Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of New York without reference to its conflict of laws doctrine. Notwithstanding the foregoing, the parties agree that matters relating to the powers, authority and capacity of Party B to enter into the Agreement or any Transaction shall be governed by and construed in accordance with the laws of the State of California. (0 Netting of Payments. Subparagraph (ii) of Section 2(c) shall not apply to any Transactions; provided, however, if the parties otherwise so agree, then subparagraph (ii) of Section 2(c) shall apply. U S_ W EST260041317.1 43124-2 BA4BA4 6 81 (g) "Affiliate" will have the meaning specified in Section 12 of this Agreement. (h) "Bonds" or "Notes" means any bonds of Party B issued pursuant to the Covered Indenture. (i) "Covered Indenture" means the Indenture, dated as of March 1, 2005, between the Riverside County Transportation Commission and U.S. Bank Trust National Association, as trustee, as amended and supplemented following the date hereof in accordance with the terms hereof and thereof. (I) "Covered Indenture Incorporation Date" means the date hereof. (m) "Government Entity" means Party B. PART 4: Municipal Counterparty Provisions (a) Obligations. Section 2(a)(iii) of this Agreement is hereby amended to read. in its entirety as follows: (b) "(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default, Potential Event of Default or Incipient Illegality with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement." Representations. (i) The introductory clause of Section 3 of this Agreement is hereby amended to read in its entirety as follows: "Each party represents to the other party (which_ representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(a) and 3(e), at all times until the termination of this Agreement) that:". (ii) Section 3(a)(ii) of this Agreement is hereby amended to read in its entirety as follows: "(ii) Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action and made all necessary determinations and findings to authorize such execution, delivery' and performance;" (iii) Section 3(b) of this Agreement is hereby amended to read in its entirety as follows: US_WEST:260041317.1 43124-2 BA4BA4 82 • • "(b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its knowledge, Incipient Illegality (in the case of a. Government Entity) or Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party." (iv) Section 3 of this Agreement is hereby amended by adding the following subsection "(e)" thereto, which subsection shall only apply to the Government Entity: "(e) Non -Speculation. This Agreement has been, and each Transaction hereunder will be (and, if applicable, has been), entered into for purposes of managing its borrowings and not for purposes of speculation." (v) Section 3 of this Agreement is hereby amended by adding the following subsection "(0" thereto: "(f) Party B is subject to the filing of claims, service of process and to suit for damages in connection with its obligations under this Agreement and each Transaction under this Agreement pursuant to and in accordance with the laws of the State of California (the "State") applicable to Party B, including but not limited to Part 3 of Division 3.6 of Title 1 of the Government Code of the State and Section 240201 of the Public Utilities Code of the State. Party B is a "local public entity" as defined in Section 900.4 of the Government Code of the State. (c) Agreements. (i) The introductory clause of Section 4 of this Agreement is hereby amended to read in its entirety as follows: "Each party agrees with the other (or, in the case of Section 4(d) and (e), the Government Entity agrees with the other party) that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:" (ii) Section 4 of this Agreement is hereby amended by adding the following subsections "(d)" and "(e)" thereto: "(d) Compliance with Covered Indenture. The Government Entity will observe, perform and fulfill each provision in the Covered Indenture which materially affects Party A applicable to such Government Entity in effect on the Covered Indenture Incorporation Date, as any of those provisions may be amended, supplemented or modified for purposes of this Agreement with the prior written consent of the other party hereto (the "Incorporated Provisions"), with the effect that such other party hereto will have the benefit of each of the Incorporated Provisions (including without limitation, covenants, right to consent to certain actions subject to consent under the Covered Indenture and delivery of financial statements and other notices and information). In the event the Covered Indenture ceases to be in effect prior to the termination of this Agreement, the Incorporated Provisions (other than those provisions requiring payments in respect of bonds, notes, warrants or other similar instruments issued under the Covered Indenture) wilt remain in full force and effect for purposes of this Agreement as though set forth herein until such date on which all of the US_WEST:260041317.1 43124-2 BA4/BA4 8 83 US_WEST:260041317.1 43124-2 BA4BA4 obligations of the Government Entity under this Agreement and any obligations. of the Government Entity or any Credit Support Provider of the Government Entity under a Credit Support Document have been fully ;satisfied. The Incorporated Provisions are hereby incorporated by reference and made a part of this Agreement to the same extent as if such provisions were set forth herein. For purposes of this Agreement, the Incorporated Provisions shall be construed as though (i) all references therein to any party making loans, extensions of credit or financial accommodations thereunder or commitments therefor (the "Financings") were to the other party hereto and (ii) to the extent that such Incorporated Provisions are conditioned on or relate to the existence of such. Financings or the Government Entity having any obligations in connection therewith, all references to such Financings or obligations were to the obligations of the Government Entity under this Agreement. Any amendment, supplement modification or waiver of any of the Incorporated Provisions which would materially and adversely affect the rights or obligations of Party A without the prior written consent of the other party hereto shall have no force and effect with respect to this Agreement. Any such amendment, supplement or modification for which such consent is obtained shall be part of the Incorporated Provisions for purposes of this Agreement. (e) Notice of Incipient Illegality. If an Incipient Illegality occurs, the Government Entity will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Incipient Illegality and will also give such other information about that Incipient Illegality as the other party may reasonably require." (d) Jurisdiction. .Section 11(b) of this Agreement is hereby amended to read in its entirety as follows: "(b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement ('Proceedings'), each party irrevocably'. (i) submits, to the fullest extent permitted by applicable law, to the non- exclusive jurisdiction of each of the courts of the State of New York, the United States District Court located in the Borough of Manhattan in New York City, the, courts of the State of California and the United States District Court, Southern District of California; and (ii) waives, to the fullest extent permitted, by applicable law,, (1) any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court,-(2) any claim that such Proceedings have been brought in an inconvenient forum and (3) the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. (iii) agrees that neither party shall bringProceedings in any other jurisdiction.". (e) Definitions. Section 12 of this Agreement is hereby amended to add the following definitions in their appropriate alphabetical order: "'Covered Indenture' has the meaning specified in the Schedule." " 'Covered Indenture Incorporation Date' has the meaning specified in the Schedule." 9 84 • (a) " 'Government Entity' has the meaning specified in the Schedule." 'Incipient Illegality' means the enactment into law by any legislative body with competent jurisdiction over the Government Entity of legislation which renders unlawful (i) the performance by such government entity of any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of a Transaction or the compliance by such Government Entity with any other material provision of this Agreement relating to such Transaction or (ii) the performance by the Government Entity or a Credit Support Provider of such Government Entity of any contingent or other obligation which the government entity (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction." (i) PART 5: Other Provisions Delivery of Confirmations. For each Transaction entered into hereunder, Party A shall promptly send to Party B a Confirmation via facsimile transmission. Party B agrees to respond to such Confirmation within two (2) Local Business Days, either confirming agreement thereto or requesting a correction of any error(s) contained therein. Failure by Party A to send a Confirmation or of Party B to respond within such period shall not affect the validity or enforceability of such Transaction. Absent manifest error, there shall be a presumption that the terms contained in such Confirmation are the terms of the Transaction. (b) Bankruptcy. Section 5(a)(vii)(3) of this Agreement is hereby amended by the substitution of the following therefor: "(3) sends a notice convening a meeting to propose a voluntary arrangement of creditors, or any class thereof, or makes a general assignment, arrangement or composition with or for the benefit of its creditors, or any class thereof:" (c) Notice by Facsimile Transmission. Section 10(a) is hereby amended by deleting the parenthetical "(except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system)". (d) Recording of Conversations. Each party to this Agreement acknowledges and agrees to the tape recording of conversations between trading and marketing personnel of the parties to this Agreement whether by one or other or both of the parties or their agents, and that any such tape recordings may be submitted in evidence in any proceedings relating to the Agreement. (e) Cross Default. Section 5(a)(vi) of this Agreement is hereby amended by the following: (i) with respect to any Specified Indebtedness that is not capable of being declared due and payable as a result of the occurrence or existence of a default, event of default or other similar condition or event (however described) under the agreement or instrument relating to such Specified Indebtedness, the words "which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable" shall be deleted from clause (1) of such Section 5(a)(vi) and the words "and the bondholders or trustee are permitted to exercise any remedies under the agreements and instruments" shall be added in its place. US_ WEST:260041317.1 43124-2 BA4BA4 10 85 (fl (g) (h) adding the following after the semicolon at the end thereof: "provided, however, that notwithstanding the foregoing (but subject to any provision to the contrary contained in any such agreement or instrument), an Event of Default shall not occur under either (1) or (2) above if the default, event of default or other similar condition or event referred to in (1) or the failure to pay referred to in (2) is caused not (even in part) by the unavailability of funds but is caused solely due to a technical or administrative error which has been remedied within three Local Business Days after notice .of such failure is given to the part Section 3(a) of this Agreement is amended by (i) deleting the word "and" at the end of clause (iv); (ii) deleting the period at the end of clause (v) and inserting therein ' ; and ; and (iii) by inserting the following additional representation: "(vi) Eligible Contract Participant. Each party represents to the other party (which representation will be deemed to be repeated by each party on each date on which a Transaction is entered into) that it is an "eligible contract participant" as defined in Section la(12) of the U.S. Commodity Exchange Act, 7 U.S.C. Section la(12)",. Additional Representations. Section 3 is revised so as to add the following subsection (g) at the end thereof: "(g) Relationship Between Parties. Each party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction): (i) Non -Reliance. It is acting for its own account, and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is . appropriate or proper for it based upon its own judgment and upon advice from. such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction; it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that Transaction. (ii) Assessment and Understanding. It .is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction_ (iii) Status of Parties. The other party is not acting as a fiduciary for or an adviser to it in respect of that Transaction." Agreement to Arbitrate. (i) General. In the event the waiver in Part 5(i) herein is not permitted by applicable law, any claim, counterclaim, demand, cause of action, dispute, and controversy arising out of or relating to this Agreement or the relationship established by this Agreement, any provision hereof, the alleged breach thereof, or in any way relating to the subject matter of this Agreement, involving the parties and/or their respective representatives (collectively the "Claims"), even though some or all of such Claims allegedly are extra -contractual in nature, whether such Claims sound in contract, tort, or otherwise, at law or in equity, under state or US_WEST:260041317.1 43124-2 BA4BA4 11 • • 86 • • federal law, whether provided by statute or the common law, for damages or any other relief, shall be resolved by binding arbitration. (ii) Conduct Of The Arbitration, And Authority Of The Arbitrators. Arbitration shall be governed by the Federal Arbitration Act and conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the "AAA Rules"). The validity, construction, and interpretation of this agreement to arbitrate, and all procedural aspects of the arbitration conducted pursuant hereto shall be decided by the arbitrators. In deciding the substance of the parties' Claims, the arbitrators shall refer to the Goveming Law. It is agreed that the arbitrators shall have no authority to award treble, exemplary or punitive damages of any type under any circumstances whether or not such damages may be available under state or federal law, or under the Federal Arbitration Act, or under the AAA Rules, the parties hereby waiving their right, if any, to recover any such damages. (iii) Forum For The Arbitration And Selection Of Arbitrators. The arbitration proceeding shall be conducted in the State of California. Within thirty days of the notice of initiation of the arbitration procedure, each party shall select one arbitrator. Within thirty days of such appointment, the two arbitrators shall select a third arbitrator. The third arbitrator shall be an attorney who has over eight years professional experience in over-the-counter derivative products and who has not previously been employed by either party and does not have a direct or indirect interest in either party or the subject matter of the arbitration. If the two arbitrators are unable to agree upon a third arbitrator within the time designated above, then the third arbitrator shall be selected in accordance with R-11 of the AAA Rules, with the American Arbitration Association providing a list of names of individuals from the National Roster who satisfy the criteria set forth in the immediately preceding sentence, upon the expiration of the time designated above for such agreement. While the third arbitrator shall be neutral, the two party -appointed arbitrators are not required to be neutral, and it shall not be grounds for removal of either of the two party -appointed arbitrators or for vacating the arbitrators' award that either of such arbitrators has past or present relationships with the party that appointed such arbitrator. (i) Waiver of Right to Trial by Jury. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. (j) USA PATRIOT Act Notice.) Party A hereby notifies Party B that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies Party B, which information includes the name and address of Party B and other information that will allow Party A to identify Party B in accordance with the Act. (k) Additional Covenant of Party B. Party B hereby covenants that it shall not terminate any Transaction hereunder unless it has funds immediately available to pay when due any and all termination payments owed by it upon such termination. (1) Additional Representations of Counterparty. Counterparty represents, covenants and warrants This provision is included as a means of compliance with the notice requirements contained in the regulations under the USA PATRIOT Act. US_ WEST:260041317.1 43124-2 BA4/BA4 12 87 (m) .that it has authorized the Notes in an aggregate principal amount not to exceed $200,000,000 and that it shall maintain outstanding Notes or Bonds in an aggregate principal amount not less than the notional amount of all outstanding parity swap transactions, including the Transactions. Security and Source of Payment of Party B's Obligations. As security for PartyB's obligation to make regularly scheduled payments to Party A under this Agreement with respect to each Transaction hereunder (the "Parity Amounts"), Parry B hereby pledges and grants a lien and charge upon Revenues on a parity with the lien thereon to secure the payment of principal and interest on the Notes and any Parity Debt (as that term is defined in the Covered Indenture), including any Advances or Bank Loans. Capitalized terms used in this Part 5(m) and not otherwise defined in this Agreement shall have the meanings ascribed to them in the Covered Indenture. IN WITNESS WHEREOF, the parties have executed this Schedule by their duly authorized officers as of the date hereof. [COUNTERPARTY] RIVERSIDE COUNTY TRANSPORTATION COMMISSION By. By. Name: Name: Title: Title: US_WEST:260041317.1 43124-2 BA4BA4 13 • 88 • • EXHIBIT I [FORM OF OPINION OF INTERNAL COUNSEL TO PARTY B] ,200_ [COUNTERPARTY] Re: Master Agreement and Confirmation between the Riverside County Transportation Commission and [COUNTERPARTYI Ladies and Gentlemen: I am counsel to the Riverside County Transportation Commission (the "Commission" or "Party B") in connection with the execution and delivery by Party B of (1) the ISDA Master Agreement, dated as of , 2006, between [COUNTERPARTY] ("Party A") and Party B, including the Schedule attached thereto (the "Master Agreement') and (2) a Confirmation under the Master Agreement, dated 2006, relating to an interest rate swap Transaction (the Confirmation and the Master Agreement are collectively referred to herein as the "Agreement'). Capitalized terms used but not otherwise defined herein have the meanings assigned thereto in the Agreement. The Agreement has been entered into by Party B pursuant to Resolution No. adopted by the governing board of the Commission on , 2006 (the "Resolution"), in connection with the issuance or carrying of the authorized aggregate principal amount of $200,000,000 Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds), Series A and Series B (the "Notes"). The Agreement was entered into by Party B in order to, and based on a determination by its governing body that the Agreement is designed to, reduce the amount or duration of payment, rate, spread or similar risk or result in an overall lower cost of borrowing when used in combination with the Notes, after due consideration for the creditworthiness of Party A. The Notes are payable from, and secured by, the collections received by the Commission from a one-half cent retail transactions and use tax (the "Sales Tax") imposed by the Commission pursuant to the Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance adopted on May 8, 2002 (the "Ordinance"). The Sales Tax was approved by more than two-thirds of the voters of the County of Riverside voting on the Sales Tax at a general election held on November 5, 2002. The Sales Tax is collected at the rate of zero percent (0%) until June 30, 2009, the date of expiration of a one-half cent sales tax imposed by the Commission pursuant to the Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance (the "1988 Ordinance") adopted by the governing body of the Commission on July 6, 1988, which was approved by the voters at a general election held on November 8, 1988, and thereafter at the rate of one-half of one percent (1/2%) for a period not to exceed 30 years. Pursuant to the Ordinance, the Sales Tax revenues may be applied to implement the expenditure plan approved by the Ordinance (the "Expenditure Plan") and to pay debt service on bonds (such as the Notes) issued to finance capital expenditures identified in the Expenditure Plan. US_ WEST:260041317.1 43124-2 BA4/BA4 14 89 In rendering this opinion, I have examined an executed original or copy of the Agreement, the Ordinance, the Resolution, and such records, documents, instruments, certificates of public officials, of Party B, and such questions of law as I have deemed necessary for the purpose of rendering the opinions set forth herein. In such examination, I have assumed the genuineness of all signatures and the authenticity of all items submitted to me as originals and the conformity to originals of all items submitted to me as certified copies and the authenticity of the originals of such copies. As to certain matters of fact relevant to the opinions hereinafter expressed, I have relied upon certifications, statements, representations, and warranties of Party B, Party A and their respective representatives, including statements, representations and warranties contained in the Agreement, and I have assumed and have not independently verified that all such certifications, statements, representations and warranties are true and accurate. I have assumed that Party A has the legal capacity, power and authority to execute, deliver and perform its obligations under the Agreement and that the Agreement constitutes the legal, valid and binding agreement of Party A and is enforceable against Party A in accordance with the terms thereof. Based upon the foregoing and having regard to such legal considerations as I have deemed relevant, I am of the opinion, subject to the qualifications expressed herein, that: 1. Party B is a public entity duly organized and validly existing under the law of the State of California. 2. Party B has the power and authority to execute and deliver the Agreement and to perform its obligations thereunder and has taken all necessary action to authorize such execution and delivery and the performance of those obligations. 3. The execution and delivery by Party B of the Agreement and its performance of its obligations thereunder do not to any material extent violate or conflict with the Constitution of the State or any law, regulation, rule, decree, order or judgment or any contractual restriction binding or affecting it or its property. 4. No approval, consent or authorization of any governmental or public agency or authority or any other institution not already obtained is required for the execution by Party B of, or performance of Party B's obligations under, the Agreement. 5. The Agreement has been duly authorized, executed and delivered by Party B and constitutes the legal, valid and binding obligation of Party B enforceable in accordance with the terms of the Agreement. 6. 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, or, to the best of my knowledge, threatened against Party B which (a) in any way questions the existence of Parry B or the titles of the officers of Parry B to their respective offices, (b) seeks to restrain or enjoin the execution or delivery or implementation of the Agreement or the application of payments by Party B thereunder, (c) in any way contests or affects the validity of the Agreement, (d) in any way contests the powers of Party B or the execution and delivery of the Agreement, or (e) may result in any material adverse change in the financial condition of Party B. The opinions expressed herein are subject to the following qualifications: A. The enforceability of the Agreement and each Bond Document to which it is a party and the rights and remedies thereunder are subject to and may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws from time to time in effect US_ WEST:260041317.1 43124-2 BA4BA4 15 90 • r relating to or affecting generally the enforcement of creditors' rights, (ii) general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding at law or in equity) and (iii) the limitations on remedies against public entities in the State of California. B. The opinion expressed in paragraph 5 above is subject to the qualification that I express no opinion regarding the enforceability of Section 6(e) of the Agreement insofar as it purports to obligate a party, on termination of the Agreement, to pay an amount in excess of that measured by the lowest quotation from a Reference Market -maker. In addition, in connection with any such early termination on the grounds of default, a court might limit the non -defaulting party's recovery to its actual damages in the circumstances, imposing its own settlement procedures in lieu of the provisions of Section 6(e) of the Agreement. No opinion is expressed with respect to any indemnification, contribution, choice of law, choice of forum or waiver provision contained in the Agreement. C. I express no opinion with respect to the legal availability of Sales Tax revenues to pay a Settlement Amount payable by Party B upon the occurrence of an Early Termination Date or in the event Notes are not outstanding in the required amount. D. My opinion expressed above is limited to the laws of the State of California and the federal laws of the United States of America. I call your attention to the fact that the Agreement is governed by New York law. I have not examined the question of what law would govern the interpretation or enforcement of the Agreement and my opinion above is based on the assumption, for purposes of this opinion, that the laws of the State of California, where applicable, and the federal laws of the United States would govern the provisions of such Agreement and the transactions contemplated thereby. I have rendered the opinions expressed herein based on facts and circumstances existing, and applicable laws, rules, regulations, court decisions and regulatory authority determinations in effect, on the date hereof. I disclaim any obligation to update or supplement this opinion letter for events occurring or coming to my attention after the date hereof. I am furnishing this letter to the addressees solely for their benefit, and no other person is entitled to rely hereon. Without the prior written consent of the undersigned, this letter may not be used, circulated, quoted, or otherwise referred to for any other purpose not disclosed or delivered to, or relied upon by, anyone other than the addressees. Very truly yours, US_WEST:260041317.1 43124-2 BA4BA4 16 91 [DATE] [COUNTERPARTY] [ADDRESS] Ladies and Gentlemen: US_WEST:260041317.1 43124-2 BA4BA4 17 EXHIBIT II 92 • • (Bilateral Form) (ISDA Agreements Subject to New York Law Only) ISDA. International Swaps and Derivatives Association, Inc. CREDIT SUPPORT ANNEX to the Schedule to the Master Agreement dated as of , 2006 Between [Counterparty] and Riverside County Transportation Commission ("Party A") ("Party B") This Annex supplements, forms part of, and is subject to, the above -referenced Agreement, is part of its Schedule and is a Credit Support Document under this Agreement with respect to each party. Accordingly, the parties agree as follows: - Paragraph 1. Interpretation (a) Definitions and Inconsistency. Capitalized terms not otherwise defined herein or elsewhere in this Agreement have the meanings specified pursuant to Paragraph 12, and all references in this Annex to Paragraphs are to Paragraphs of this Annex. In the event of any inconsistency between this Annex and the other provisions of this Schedule, this Annex will prevail, and in the event of any inconsistency between Paragraph 13 and the other provisions of this Annex, Paragraph 13 will prevail. (b) Secured Parry and Pledgor. All references in this Annex to the "Secured Party" will be to either party when acting in that capacity and all corresponding references to the "Pledgor" will be to the other party when acting in that capacity; provided, however, that if Other Posted Support is held by a party to this Annex, all references herein to that party as the Secured Party with respect to that Other Posted Support will be to that party as the beneficiary thereof and will not subject that support or that party as the beneficiary thereof to provisions of law generally relating to security interests and secured parties. Paragraph 2. Security Interest Each party, as the Pledgor, hereby pledges to the other party, as the Secured Party, as security for its Obligations, and grants to the Secured Party a first priority continuing security interest in, lien on and right of Set-off against all Posted Collateral Transferred to or received by the Secured Party hereunder. Upon the Transfer by the Secured Party US_WSST:260042569.2 43124-2 INAC/MAC 1 ISDACir 1994 93 to the Pledgor of Posted Collateral, the security interest and lien granted hereunder on that Posted Collateral will be released immediately and, to the extent possible, without any further action by either party. Paragraph 3. Credit Support Obligations (a) Delivery Amount. Subject to Paragraphs 4 and 5, upon a demand made by the Secured Party on or promptly following a Valuation Date, if the Delivery Amount for that Valuation Date equals or exceeds the Pledgor's Minimum Transfer Amount; then the Pledgor will Transfer to the Secured Party Eligible Credit Support having a Value as of the date of Transfer at least equal to the applicable Delivery Amount (rounded pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the "Delivery Amount" applicable to the Pledgor for any Valuation Date will equal the amount by which: (i) the Credit Support Amount exceeds (ii) the Value as of that Valuation Date of all Posted Credit Support held by the Secured Party. (b) Return Amount. Subject to Paragraphs 4 and 5, upon a demand made by the Pledgor on or promptly following a Valuation Date, if the Return Amount for that Valuation Date equals or exceeds the Secured Party's Minimum Transfer Amount, then the Secured Party will Transfer to the Pledgor Posted Credit Support specified by the Pledgor in that demand having a Value as of the date of Transfer as close as practicable to the applicable Return Amount (rounded pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the "Return Amount" applicable to the Secured Party for any Valuation Date will equal the amount by which: (i) the Value as of that Valuation Date of all Posted Credit Support held by the Secured Party exceeds (ii) the Credit Support Amount. "Credit Support Amount" means, unless otherwise specified in Paragraph 13, for any Valuation Date (i) the Secured Party's Exposure for that Valuation Date plus (ii) the aggregate of all Independent Amounts applicable to the Pledgor, if any, minus (iii) all Independent Amounts applicable to the Secured Party, if any, minus (iv) the Pledgor's Threshold; provided, however, that the Credit Support Amount will be deemed to be zero whenever the calculation of Credit Support Amount yields a number less than zero. Paragraph 4. Conditions Precedent, Transfer Timing, Calculations and Substitutions (a) Conditions Precedent. Each Transfer obligation of the Pledgor under Paragraphs 3 and 5 and of the Secured Party under Paragraphs 3, 4(d)(ii), 5 and 6(d) is subject to the conditions precedent that: (i) no Event of Default, Potential Event of Default or Specified Condition has occurred and is continuing with respect to the other party; and (ii) no Early Termination Date for which any unsatisfied payment obligations exist has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the other party. (b) Transfer Timing. Subject to Paragraphs 4(a) and 5 and unless otherwise specified, if a demand for the Transfer of Eligible Credit Support or Posted Credit Support is made by the Notification Time, then the relevant Transfer will be made not later than the close of business on the next Local Business Day; if a demand is made after the Notification Time, then the relevant Transfer will be made not later than the close of business on the second Local Business Day thereafter. (c) Calculations. All calculations of Value and Exposure for purposes of Paragraphs 3 and 6(d) will be made by the Valuation Agent as of the Valuation Time. The Valuation Agent will notify each party (or the other party, if US_ WEST:260042569.2 43124-2 MAC/MAC 2 ISDA® 1994 94 • • the Valuation Agent is a party) of its calculations not later than the Notification Time on the Local Business Day following the applicable Valuation Date (or in the case of Paragraph 6(d), following the date of calculation). (d) Substitutions. (i) Unless otherwise specified in Paragraph 13, upon notice to the Secured Party specifying the items of Posted Credit Support to be exchanged, the Pledgor may, on any Local Business Day, Transfer to the Secured Party substitute Eligible Credit Support (the "Substitute Credit Support"); and' (ii) subject to Paragraph 4(a), the Secured Party will Transfer to the Pledgor the items of Posted Credit Support specified by the Pledgor in its notice not later than the Local Business Day following the date on which the Secured Party receives the Substitute Credit Support, unless otherwise specified in Paragraph 13 (the "Substitution Date"); provided that the Secured Party will only be obligated to Transfer Posted Credit Support with a Value as of the date of Transfer of that Posted Credit Support equal to the Value as of that date of the Substitute Credit Support. Paragraph 5. Dispute Resolution If a party (a "Disputing Party") disputes (I) the Valuation Agent's calculation of a Delivery Amount or a Return Amount or (II) the Value of any Transfer of Eligible Credit Support or Posted Credit Support, then (1) the Disputing Party will notify the other party and the Valuation Agent (if the Valuation Agent is not the other party) not later than the close of business on the Local Business Day following (X) the date that the demand is made under Paragraph 3 in the case of (I) above or (Y) the date of Transfer in the case of (II) above, (2) subject to Paragraph 4(a), the appropriate party will Transfer the undisputed amount to the other party not later than the close of business on the Local Business Day following (X) the date that the demand is made under Paragraph 3 in the case of (I) above or (Y) the date of Transfer in the case of (11) above, (3) the parties will consult with each other in an attempt to resolve the dispute and (4) if they fail to resolve the dispute by the Resolution Time, then: (i) In the case of a dispute involving a Delivery Amount or Return Amount, unless otherwise specified in Paragraph 13, the Valuation Agent will recalculate the Exposure and the Value as of the Recalculation Date by: (A) utilizing any calculations of Exposure for the Transactions (or Swap Transactions) that the parties have agreed arc not in dispute; (B) calculating the Exposure for the Transactions (or Swap Transactions) in dispute by seeking four actual quotations at mid -market from Reference Market -makers for purposes of calculating Market Quotation, and taking the arithmetic average of those obtained; provided that if four quotations are not available for a particular Transaction (or Swap Transaction), then fewer than four quotations may be used for that Transaction (or Swap Transaction); and if no quotations are available for a particular Transaction (or Swap Transaction), then the Valuation Agent's original calculations will be used for that Transaction (or Swap Transaction); and (C) utilizing the procedures specified in Paragraph 13 for calculating the Value, if disputed, of Posted Credit Support. (ii) In the case of a dispute involving the Value of any Transfer of Eligible Credit Support or Posted Credit Support, the Valuation Agent will recalculate the Value as of the date of Transfer pursuant to Paragraph 13. Following a recalculation pursuant to this Paragraph, the Valuation Agent will notify each party (or the other party, if the Valuation Agent is a party) not later than the Notification Time on the Local Business Day following the Resolution Time. The appropriate party will, upon demand following that notice by the Valuation Agent or a resolution pursuant to (3) above and subject to Paragraphs 4(a) and 4(b), make the appropriate Transfer. US_ WEST:260042569.2 43124-2 MAC/MAC 3 ISDA® 1994 95 Paragraph 6. Holding and Using Posted Collateral (a) Care of Posted Collateral. Without limiting the Secured Party's rights under Paragraph 6(c), the Secured Party will exercise reasonable care to assure the safe custody of all Posted Collateral to the extent required by applicable law; and in any event the Secured Party will be deemed to have exercised reasonable care if it exercises at least the same degree of care as it would exercise with respect to its own property. Except as specified in the preceding sentence, the Secured Party will have no duty with respect to Posted Collateral, including, without limitation, any duty to collect any Distributions, or enforce or preserve any rights pertaining thereto. (b) Eligibility to Hold Posted Collateral; Custodians. (i) General. Subject to the satisfaction of any conditions specified in Paragraph 13 for holding Posted Collateral, the Secured Party will be entitled to hold Posted Collateral . or to appoint an agent (a "Custodian") to hold Posted Collateral for the Secured Party. Upon notice by the Secured Party to the Pledgor of the appointment of a Custodian, the Pledgor's obligations to make any Transfer will be discharged by making the Transfer to that Custodian. The holding of Posted Collateral by a Custodian will be deemed to be the holding of that Posted Collateral by the Secured Party for which the Custodian is acting. (ii) Failure to Satisfy Conditions. If the Secured Party or its Custodian fails to satisfy any conditions for holding Posted Collateral, then upon a demand made by the Pledgor, the Secured Party will, not later than five Local Business Days after the demand, Transfer or cause its Custodian to Transfer all Posted Collateral held by it to a Custodian that satisfies those conditions or to the Secured Party if it satisfies those conditions. (iii) Liability. The Secured Party will be liable for the acts or omissions of its Custodian to the same extent that the Secured Party would be liable hereunder for its own acts or omissions. (c) Use of Posted Collateral. Unless otherwise specified in Paragraph 13 and without limiting the rights and obligations of the parties under Paragraphs 3, 4(d)(ii), 5, 6(d) and 8, if the Secured Party is not a Defaulting Party or an Affected Party with respect to a Specified Condition and no Early Termination Date has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Secured Party, then the Secured Party will, notwithstanding Section 9-207 of the New York Uniform Commercial Code, have the right to: (i) sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of; or otherwise use in its business any Posted Collateral, it holds, free from any claim or right of any nature whatsoever of the Pledgor, including any equity or right of redemption by the Pledgor; and (ii) register any Posted Collateral in the name of the Secured Party, its Custodian or a nominee for either. For purposes of the obligation to Transfer Eligible Credit Support or Posted Credit Support pursuant to Paragraphs 3 and 5 and any rights or remedies authorized under this Agreement, the Secured Party will be deemed to continue to hold all Posted Collateral and to receive Distributions made thereon, regardless of whether the Secured Party has exercised any rights with respect to any Posted Collateral pursuant to (i) or (ii) above. (d) Distributions and Interest Amount. (i) Distributions. Subject to Paragraph 4(a), if the Secured Party receives or is deemed to receive Distributions on a Local Business Day, it will Transfer to the Pledgor not later than the following Local Business Day any Distributions it receives or is deemed to receive to the extent that a Delivery Amount would not be created or increased by that Transfer, as calculated by the Valuation Agent (and the date of calculation will be deemed to be a Valuation Date for this purpose). US WEST:260042569.2 43124-2 MAC/MAC '1SDA® 1994 • 96 • • • (ii) Interest Amount. Unless otherwise specified in Paragraph 13 and subject to Paragraph 4(a), in lieu of any interest, dividends or other amounts paid or deemed to have been paid with respect to Posted Collateral in the form of Cash (all of which may be retained by the Secured Party), the Secured Party will Transfer to the Pledgor at the times specified in Paragraph 13 the Interest Amount to the extent that a Delivery Amount would not be created or increased by that Transfer, as calculated by the Valuation Agent (and the date of calculation will be deemed to be a Valuation Date for this purpose). The Interest Amount or portion thereof not Transferred pursuant to this Paragraph will constitute Posted Collateral in the form of Cash and will be subject to the security interest granted under Paragraph 2. Paragraph 7. Events of Default For purposes of Section 5(a)(iii)(I ) of this Agreement, an Event of Default will exist with respect to a party if: (i) that party fails (or fails to cause its Custodian) to make, when due, any Transfer of Eligible Collateral, Posted Collateral or the Interest Amount, as applicable, required to be made by it and that failure continues for two Local Business Days after notice of that failure is given to that party; (ii) that party fails to comply with any restriction or prohibition specified in this Annex with respect to any of the rights specified in Paragraph 6(c) and that failure continues for five Local Business Days after notice of that failure is given to that party; or (iii) that party fails to comply with or perform any agreement or obligation other than those specified in Paragraphs 7(i) and 7(ii) and that failure continues for 30 days after notice of that failure is given to that patty. Paragraph 8. Certain Rights and Remedies (a) Secured Parry's Rights and Remedies. If at any time (1) an Event of Default or Specified Condition with respect to the Pledgor has occurred and is continuing or (2) an Early Termination Date has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Pledgor, then, unless the Pledgor has paid in full all of its Obligations that are then due, the Secured Party may exercise one or more of the following rights and remedies: (i) all rights and remedies available to a secured party under applicable law with respect to Posted Collateral held by the Secured Party; (ii) any other rights and remedies available to the Secured Party under the terms of Other Posted Support, if any; (iii) the right to Set-off any amounts payable by the Pledgor with respect to any Obligations against any Posted Collateral or the Cash equivalent of any Posted Collateral held by the Secured Party (or any obligation of the Secured Party to Transfer that Posted Collateral); and (iv) the right to liquidate any Posted Collateral held by the Secured Party through one or more public or private sales or other dispositions with such notice, if any, as may be required under applicable law, free from any claim or right of any nature whatsoever of the Pledgor, including any equity or right of redemption by the Pledgor (with the Secured Party having the right to purchase any or all of the Posted Collateral to be sold) and to apply the proceeds (or the Cash equivalent thereof) from the liquidation of the Posted Collateral to any amounts payable by the Pledgor with respect to any Obligations in that order as the Secured Patty may elect. Each party acknowledges and agrees that Posted Collateral in the form of securities may decline speedily in value and is of a type customarily sold on a recognized market, and, accordingly, the Pledgor is not entitled to prior notice of any sale of that Posted Collateral by the Secured Party, except any notice that is required under applicable law and cannot be waived. US_WEST:260042569.2 43124-2 MAC/MAC 5 ISDA®1994 97 (b) Pledgor's Rights and Remedies. If at any time an Early Termination Date has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Secured Party, then (except in the case of an Early Termination Date relating to less than all Transactions (or Swap Transactions) where the Secured Party has paid in full all of its obligations that are then due under Section 6(e) of this Agreement): (i) the Pledgor may exercise all rights and remedies available to a pledgor under applicable law with respect to Posted Collateral held by the Secured Party; (ii) the Pledgor may exercise any other rights and remedies available to the Pledgor under the terms of Other Posted Support, if any; (iii) the Secured Party will be obligated immediately to Transfer all Posted Collateral and the Interest _ Amount to the Pledgor; and (iv) to the extent that Posted Collateral or the Interest Amount is not so Transferred pursuant to (iii) above, the Pledgor may: (A) Set-off any amounts payable by the Pledgor with respect to any Obligations against any Posted Collateral or the Cash equivalent of any Posted Collateral held by the Secured Party (or any obligation of the Secured Party to Transfer that Posted Collateral); and (B) to the extent that the Pledgor does not Set-off under (iv)(A) above, withhold payment of any remaining amounts payable by the Pledgor with respect to any Obligations, up to the Value of any remaining Posted Collateral held by the Secured Party, until that Posted Collateral is Transferred to the Pledgor. (c) Deficiencies and Excess Proceeds. The Secured Party will Transfer to the Pledgor any proceeds and Posted Credit Support remaining after liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b) after satisfaction in full of all amounts payable by the Pledgor with respect to any Obligations; the Pledgor in all events will remain liable for any amounts remaining unpaid after any liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b). (d) Final Returns. When no amounts are or thereafter may become payable by the Pledgor with respect to any Obligations (except for any potential liability under Section 2(d) of this Agreement), the Secured Party will Transfer to the Pledgor all Posted Credit Support and the Interest Amount, if any. Paragraph 9. Representations Each party represents to the other party (which representations will be deemed to be repeated as of each date on which it, as the Pledgor, Transfers Eligible Collateral) that: (i) it has the power to grant a security interest in and lien on any Eligible Collateral it Transfers as the Pledgor and has taken all necessary actions to authorize the granting of that security interest and lien; (ii) it is the sole owner of or otherwise has the right to Transfer all Eligible Collateral it Transfers to the Secured Party hereunder, free and clear of any security interest, lien, encumbrance or other restrictions other than the security interest and lien granted under Paragraph 2; (iii) upon the Transfer of any Eligible Collateral to the Secured Party under the terms of this Annex, the Secured Party will have a valid and perfected first priority security interest therein (assuming that any central clearing corporation or any third -party financial intermediary or other entity not within the control of the Pledgor involved in the Transfer of that Eligible Collateral gives the notices and takes the action required of it under applicable law for perfection of that interest); and (iv) the performance by it of its obligations under this Annex will not result in the creation of any security interest; lien or other encumbrance on any Posted Collateral other than the security interest and lien granted under Paragraph 2. US WEST:2600425692 43124-2 MAC/MAC 6 1SDA®1994 98 • • • Paragraph 10. Expenses (a) General. Except as otherwise provided in Paragraphs 10(b) and 10(c), each party will pay its own costs and expenses in connection with performing its obligations under this Annex and neither party will be liable for any costs and expenses incurred by the other party in connection herewith. (b) Posted Credit Support. The Pledgor will promptly pay when due all taxes, assessments or charges of any nature that are imposed with respect to Posted Credit Support held by the Secured Party upon becoming aware of the same, regardless of whether any portion of that Posted Credit Support is subsequently disposed of under Paragraph 6(c), except for those taxes, assessments and charges that result from the exercise of the Secured Party's rights under Paragraph 6(c). (c) Liquidation/Application of Posted Credit Support. All reasonable costs and expenses incurred by or on behalf of the Secured Party or the Pledgor in connection with the liquidation and/or application of any Posted Credit Support under Paragraph 8 will be payable, on demand and pursuant to the Expenses Section of this Agreement, by the Defaulting Party or, if there is no Defaulting Party, equally by the parties. Paragraph 11. Miscellaneous (a) Default Interest. A Secured Party that fails to make, when due, any Transfer of Posted Collateral or the Interest Amount will be obligated to pay the Pledgor (to the extent permitted under applicable law) an amount equal to interest at the Default Rate multiplied by the Value of the items of property that were required to be Transferred, from (and including) the date that Posted Collateral or Interest Amount was required to be Transferred to (but excluding) the date of Transfer of that Posted Collateral or Interest Amount. This interest will be calculated on the basis of daily compounding and the actual number of days elapsed. (b) Further Assurances. Promptly following a demand made by a party, the other party will execute, deliver, file and record any financing statement, specific assignment or other document and take any other action that may be necessary or desirable and reasonably requested by that party to create, preserve, perfect or validate any security interest or lien granted under Paragraph 2, to enable that party to exercise or enforce its rights under this Annex with respect to Posted Credit Support or an interest Amount or to effect or document a release of a security interest on Posted Collateral or an Interest Amount. (c) Further Protection. The Pledgor will promptly give notice to the Secured Party of, and defend against, any suit, action, proceeding or lien that involves Posted Credit Support Transferred by the Pledgor or that could adversely affect the security interest and lien granted by it under Paragraph 2, unless that suit, action, proceeding or lien results from the exercise of the Secured Party's rights under Paragraph 6(c). (d) Good Faith and Commercially Reasonable Manner. Performance of all obligations under this Annex, including, but not limited to, all calculations, valuations and determinations made by either party, will be made in good faith and in a commercially reasonable manner. (e) Demands and Notices. All demands and notices made by a party under this Annex will be made as specified in the Notices Section of this Agreement, except as otherwise provided in Paragraph 13. (0 Specifications of Certain Matters. Anything referred to in this Annex as being specified in Paragraph 13 also may be specified in one or more Confirmations or other documents and this Annex will be construed accordingly. US_WEST:260042569.2 43124-2 MAC/MAC 7 ISDA®1994 99 Paragraph 12. Definitions As used in this Annex: - "Cash" means the lawful currency of the United States of America. "Credit Support Amount"has the meaning specified in Paragraph 3. "Custodian" has the meaning specified in Paragraphs 6(b)(i) and 13. "Delivery Amount" has the meaning specified in Paragraph 3(a). "Disputing Party"has the meaning specified in Paragraph 5. "Distributions" means with respect to Posted Collateral other than Cash, all principal, interest and other payments and distributions of cash or other property with respect thereto, regardless of whether the Secured Party has disposed of that Posted Collateral under Paragraph 6(c). Distributions will not include any item of property acquired by the Secured Party upon any disposition or liquidation of Posted Collateral or, with respect to any Posted Collateral in the form of Cash, any distributions on that collateral, unless otherwise specified herein. "Eligible Collateral" means, with respect to a party, the items, if any, specified as such for that party in Paragraph. 13.` "Eligible Credit Support" means Eligible Collateral and Other Eligible Support. "Exposure" means for any Valuation Date or other date for which Exposure is calculated and subject to Paragraph 5 in the case of a dispute, the amount, if any, that would be payable to a party that is the Secured Party by the other party (expressed as a positive number) or by a party that is the Secured Party to the.. other party (expressed as a negative number) pursuant to Section 6(e)(ii)(2)(A) of this Agreement as if all Transactions (or Swap Transactions) were being terminated as of the relevant Valuation Time; provided that Market Quotation will be determined by the Valuation Agent using its estimates at mid -market of the amounts that would be paid for Replacement Transactions (as that term is defined in the definition of "Market Quotation"). "Independent,Amount" means, with respect to a• party, the amount specified as such for that party in Paragraph 13; if no amount is specified, zero. "Interest Amount" means, with respect to an Interest Period, the aggregate sum of the amounts of interest calculated for each day in that Interest Period on the principal amount of Posted Collateral in the form of Cash held by the Secured Party on that day, determined by the Secured Party for each such day as follows: (x) the amount of that Cash on that day; multiplied by (y) the Interest Rate in effect for that day; divided by (z) 360. "Interest Period" means the period from (and including) the last Local Business Day on which an Interest Amount was Transferred (or, if no Interest Amount has yet been Transferred, the Local Business Day on which Posted Collateral in the form of Cash was Transferred to or received by the Secured Party) to (but excluding) the Local Business Day on which the current Interest Amount is to be Transferred. "Interest Rate" means the rate specified in Paragraph 13. US_WEST:260042569.2 43124-2 MAC/MAC 8 ISDA® 1994 • 100 • "Local Business Day", unless otherwise specified in Paragraph 13, has the meaning specified in the Definitions Section of this Agreement, except that references to a payment in clause (b) thereof will be deemed to include a Transfer under this Annex. "Minimum Transfer Amount" means, with respect to a party, the amount specified as such for that party in Paragraph 13; if no amount is specified, zero. "Notification Time" has the meaning specified in Paragraph 13. "Obligations" means, with respect to a party, all present and future obligations of that party under this Agreement and any additional obligations specified for that party in Paragraph 13. "Other Eligible Support" means, with respect to a party, the items, if any, specified as such for that party in Paragraph 13. "Other Posted Support" means all Other Eligible Support Transferred to the Secured Party that remains in effect for the benefit of that Secured Party. "Pledgor" means either party, when that party (i) receives a demand for or is required to Transfer Eligible Credit Support under Paragraph 3(a) or (ii) has Transferred Eligible Credit Support under Paragraph 3(a). "Posted Collateral" means all Eligible Collateral, other property, Distributions, and all proceeds thereof that have been Transferred to or received by the Secured Party under this Annex and not Transferred to the Pledgor pursuant to Paragraph 3(b), 4(d)(ii) or 6(d)(i) or released by the Secured Party under Paragraph 8. Any Interest Amount or portion thereof not Transferred pursuant to Paragraph 6(d)(ii) will constitute Posted Collateral in the form of Cash. "Posted Credit Support" means Posted Collateral and Other Posted Support. "Recalculation Date" means the Valuation Date that gives rise to the dispute under Paragraph 5; provided, however, that if a subsequent Valuation Date occurs under Paragraph 3 prior to the resolution of the dispute, then the "Recalculation Date" means the most recent Valuation Date under Paragraph 3. "Resolution Time" has the meaning specified in Paragraph 13. "Return Amount" has the meaning specified in Paragraph 3(b). "Secured Party" means either party, when that party (i) makes a demand for or is entitled to receive Eligible Credit Support under Paragraph 3(a) or (ii) holds or is deemed to hold Posted Credit Support. "Specified Condition" means, with respect to a party, any event specified as such for that party in Paragraph 13. "Substitute Credit Support" has the meaning specified in Paragraph 4(d)(i). "Substitution Date" has the meaning specified in Paragraph 4(d)(ii). "Threshold" means, with respect to a party, the amount specified as such for that party in Paragraph 13; if no amount is specified, zero. "Transfer" means, with respect to any Eligible Credit Support, Posted Credit Support or Interest Amount, and in accordance with the instructions of the Secured Party, Pledgor or Custodian, as applicable: (i) in the case of Cash, payment or delivery by wire transfer into one or more bank accounts specified by the recipient; (ii) in the case of certificated securities that cannot be paid or delivered by book -entry, payment or delivery in appropriate physical form to the recipient or its account accompanied by any duly executed instruments 9 ISDA®1994 US_WEST:260042569.2 43124-2 MAC/MAC 101 of transfer, assignments in blank, transfer tax stamps and any other documents necessary to constitute a - legally valid transfer to the recipient; (iii) in the case of securities that can be paid or delivered by book -entry, the giving of written instructions to the relevant depository institution or other entity specified by the recipient, together with a written copy thereof to the recipient, sufficient if complied with to result in a legally effective transfer of the relevant interest to the recipient; and (iv) in the case of Other Eligible Support or Other Posted Support, as specified in Paragraph 13. "Valuation Agent" has the meaning specified in Paragraph 13. "Valuation Date" means each date specified in or otherwise determined pursuant to Paragraph 13. "Valuation Percentage" means, for any item of Eligible Collateral, the percentage specified in Paragraph 13. "Valuation Time" has the meaning specified in Paragraph 13. "Value" means for any Valuation Date or other date for which Value is calculated and, subject to Paragraph 5 in the case of a dispute, with respect to: (i) Eligible Collateral or Posted Collateral that is: (A) Cash; the amount thereof; and (B) a security, the bid price obtained by the Valuation Agent multiplied by the applicable Valuation Percentage, if any; (ii) Posted Collateral that consists of items that are not specified as Eligible Collateral, zero; and (iii)Other Eligible Support and Other Posted Support, as specified in Paragraph 13. . US_W EST:260042569.2 43124-2 MAC/MAC 10 ISDA®1994 102 • • CREDIT SUPPORT ANNEX to the Schedule to the Master Agreement dated as of , 2006 between [Counterparty] and Riverside County Transportation Commission ("Party A") ("Party B") Paragraph 13. Elections and Variables (a) Security Interest for "Obligations". The term "Obligations" as used in this Annex includes the following additional obligations: With respect to Party A: Not Applicable. With respect to Party B: Not Applicable. (b) Credit Support Obligations. (i) Delivery Amount, Return Amount and Credit Support Amount. (A) "Delivery Amount' has the meaning specified in Paragraph 3(a). (B) "Return Amount' has the meaning specified in Paragraph 3(b). (C) "Credit Support Amount' has the meaning specified in Paragraph 3, except that if an Independent Amount is specified for a party, the Credit Support Amount for such party shall never be less than the Independent Amount. (ii) Eligible Collateral. The following items will qualify as "Eligible Collateral' for the party specified: Party A Party B Valuation Percentage (A) Cash US_WEST:260042434.1 1 43124-2 MAC/MAC [X] [X] 100% 103 (B) negotiable debt obligations [X] [X] 99% issued by the U.S. Treasury Department having a remaining maturity of not more than one year ("Treasury Bills") (C) negotiable debt obligations [X] issued by the U.S. Treasury Department having a remaining maturity of more than one year but not more than 10 years ("Treasury Notes") (D) negotiable debt obligations [X] issued by the U.S Treasury Department having a remaining original maturity of more than 10 years ("Treasury Bonds") (E) negotiable debt obligations [X] which are issued and/or guaranteed as to both principal and Interest by the Federal Home Loan Mortgage Corporation ("FHLMC"), the Federal National Mortgage Association ("FNMA"), or the Government National Mortgage Association ("GNMA"), including mortgage -backed securities and REMICs (collectively, "Agency Securities"), but excluding interest only securities, principal only securities and residual interests. [X] [X] [X] 98%, 98% 95% (iii) Other Eligible Support. The following items will qualify as "Other Eligible Support" for the party specified: Any other type of collateral acceptable to the Secured Party in its sole discretion. (iv) Thresholds. (A) "Independent Amount" means with respect to Party A: None, unless otherwise specified in a Confirmation. US_WEST:260042434.1 43124-2 MAC/MAC: 104 • "Independent Amount" means with respect to Party B: None, unless otherwise specified in a Confirmation. (B) "Threshold" means with respect to Party A: See Table I attached hereto. (C) "Minimum Transfer Amount" means with respect to Party A and Party B: See Table I attached hereto. (D) Rounding. The Delivery Amount and Return Amount will be rounded up and down, respectively, to the nearest integral multiple of $10,000. (c) Valuation and Timing. (i) "Valuation Agent" means, for purposes of Paragraphs 3 and 5, the party making the demand under Paragraph 3; for purposes of Paragraph 6(d), the Secured Party receiving or deemed to receive the Distributions or the Interest Amount, as applicable; and for purposes of Paragraph 4(d), the Secured Party for purposes of calculating the Value in connection with substitutions. (ii) "Valuation Date" means each New York Business Day. (iii) "Valuation Time" means the close of business in the city of the Valuation Agent on the Local Business Day before the Valuation Date or date of calculation, as applicable; provided that the calculations of Value and Exposure will be made as of approximately the same time on the same date. (iv) "Notification Time" means no later than 1:00 p.m., New York time, on a Local Business Day; provided, however, that the Valuation Agent will only give notice of its calculations to a party upon request by such party. (d) Conditions Precedent and Secured Party's Rights and Remedies. The following Termination Event(s) will be a "Specified Condition" for the party specified (that party being the Affected Party if the Termination Event occurs with respect to that party): With respect to Party A and Party B, Credit Event Upon Merger, Additional Termination Event and Illegality. (e) Substitution. (i) "Substitution Date" has the meaning specified in Paragraph 4(d)(ii). (ii) Consent. The Pledgor is not required to obtain the Secured Party's consent for any substitutions pursuant to Paragraph 4(d). (f) Dispute Resolution. US_WEST:260042434.1 43124-2 MAC/MAC 3 105 (g) (i) "Resolution Time" means 1:00 p.m., New York time, on the Local Business Day following the date on which the notice is given that gives rise to a dispute under Paragraph 5. (ii) "Value". For the purpose of Paragraph 5(i)(C) and 5(ii), the Value of Posted Credit Support will be calculated as follows: (iii) (A) The Value of Cash will be the face amount thereof, multiplied by the applicable Valuation Percentage. (B) With respect to any Treasury Bills, Treasury Notes, Treasury Bonds, Agency Securities (referred to herein as "Securities"), the sum of (I) (x) the mean of the high bid and low asked prices quoted on such date by any principal market maker for such Securities chosen by the Disputing Party, or (y) if no quotations are available from a principal market maker on such date, the mean of such high bid and low asked prices as of the day, next preceding such date, on which such quotations were available, plus (II) the accrued interest on such Securities (except to the extent Transferred to a party pursuant to any applicable provision of this Agreement or included in the applicable price referred to in (I) of this clause (B)) as of such date, multiplied by the applicable Valuation Percentage. "Alternative". The provisions of Paragraph 5 will apply. Holding and Using Posted Collateral. (i) Eligibility to Hold Posted Collateral; Custodians. Party A and its Custodian will be entitled to hold Posted Collateral pursuant to Paragraph 6(b); provided that the following conditions applicable to it are satisfied: (A) Party A is not a Defaulting Party. (B) No Specified Condition has occurred and is continuing with respect to Party A. (C) Posted Collateral is held only in the United States.' Initially, the Custodian for Party A is Goldman Sachs & Co. via an account held in The Bank of New York. Parry B and its Custodian will be entitled to hold Posted Collateral pursuant to Paragraph 6(b), provided that the following conditions applicable to it are satisfied: (A) Party B is not a Defaulting Party. ' The Counterparty must agree to hold Collateral only in the United States. US_ WEST:260042434.1 43124-2 MAC/MAC 4 106 • (B) No Specified Condition has occurred and is continuing with respect to Party B. (C) Posted Collateral is held only in the United States. Initially, the Custodian for Party B is (ii) Use of Posted Collateral. The provisions of Paragraph 6(c) will apply to Party A and Party B. (h) Distributions and Interest Amount. (i) Interest Rate. The "Interest Rate" will be the Federal Funds (Effective) rate published in N.Y. Federal Reserve Statistical Release H.15(519) for that day. (ii) - Transfer of Interest Amount. The Transfer of the Interest Amount will be made on the first Local Business Day of each calendar month (in respect of amounts accrued to the end of the previous calendar month) and on any Local Business Day when the cash collateral is returned in its entirety. (iii) Alternative to Interest Amount. Not Applicable. (i) Other Eligible Support and Other Posted Support. (1) (i) "Value" with respect to Other Eligible Support and Other Posted Support means: Not Applicable. (ii) "Transfer" with respect to Other Eligible Support and Other Posted Support means: Not Applicable. Demands and Notices. All demands, specifications and notices under this Annex will be made pursuant to the Notices Section of this Agreement, unless otherwise specified here: With respect to Party A: With respect to Party B: • (k) Addresses for Transfers. US_ WEST:260042434.1 43124-2 MAC/MAC [Counterparty Address] Tel.: Fax: Attn: E-mail: 4080 Lemon Street Riverside, California 92502 Tel.: (951) 787-7926 Fax: (951) 787-7141 Attn: Chief Financial Officer 5 1 107 (1) Party A: To be specified by Party A in writing. Party B: To be specified by Party B in writing. Other Provisions: (i) Paragraph 7 Subparagraph (i) Events of Default is hereby amended by changing the words in the third line thereof "two Local Business Days" to "one Local Business Day". (ii) Agreement as to Single Secured Party and Pledgor. Party A and Party B agree that, notwithstanding anything to the contrary in the recital to this Annex, Paragraph 1(b) or Paragraph 2 or the definitions in Paragraph 12, (a) the term "Secured Party" as used in this Annex means only Party B, (b) the term "Pledgor" as used in this Annex means only Party A, (c) only Party A makes the pledge and grant in Paragraph 2, the acknowledgment in the final sentence of Paragraph 8(a) and the representations in Paragraph 9 and (d) only Party A will be required to make Transfers of Eligible Credit Support hereunder. US_W EST:260042434.1 43124-2 MAC/MAC 6 108 • • IN WITNESS WHEREOF the parties have executed this Annex on the respective dates specified below with effect from the date specified on the first page of this document. [COUNTERPARTY] By: US_WEST:260042434.1 43124-2 MAC/MAC By: Name: Title: Date: RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Name: Title: Date: 109 TABLE I: PARTY A THRESHOLDS "Threshold" means with respect to Party A, the amount determined on the basis of the lower of the Long Term Debt Ratings in the Table set forth below; provided, however, that if (i) a party has no Long Term Debt Ratings or (ii) an Event of Default has occurred and is continuing with respect to such party, such party's Threshold shall be zero. "Minimum Transfer Amount" means with respect to Party A and Party B, the amount determined on the basis of the lower of the Long Term Debt Ratings in the Table set forth below; provided, however, that if an Event of Default has occurred and is continuing with respect to a party, the Minimum Transfer Amount with respect to such party shall be zero. S&P Moody's Threshold Minimum Transfer Amount AAA Aaa Infinite $1,000,000 AA+to AA- Aal to Aa3 $40,000,000 $1,000,000 A+to A- Al to A3 $15,000,000 $100,000 BBB- or below Baa3 or below $0 $100,000 As used above: "Long Term Debt Ratings" means the rating assigned by either S&P or Moody's to the counterparty risk or financial program of Party A. NYLIBS 866602.4 US_WEST:260042434.1 43124-2 MAC IAC 110 • Agreement No. 06-19-072-00 RIVERSIDE COUNTY TRANSPORTATION COMMISSION AGREEMENT FOR SWAP ADVISORY SERVICES WITH FIELDMAN, ROLAPP FINANCIAL SERVICES, LLC 1. PARTIES AND DATE. This Agreement is made and entered into this _ day of 2006, by and between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION ("the Commission") and Fieldman, Rolapp Financial Services, LLC ("Consultant"), a Corporation. 2. RECITALS. 2.1 Consultant desires to perform and assume responsibility for the provision of certain professional consulting services required by Commission on the terms and conditions set forth in this Agreement. Consultant represents that it is a professional consultant, experienced in providing swap advisory services to public clients, is licensed in the State of California, and is familiar with the plans of Commission. 2.2 Commission desires to engage Consultant to render certain consulting services for the Swap Advisory Services as set forth herein. 3. TERMS. 3.1 General Scope of Services. Consultant promises and agrees to furnish to Commission all labor materials, tools, equipment, services, and incidental and customary work necessary to fully and adequately provide professional consulting services and advice on various issues affecting the decisions of Commission regarding the Project and on other programs and matters affecting Commission, hereinafter referred to as "Services." The Services are more particularly described in Exhibit "A" attached hereto and incorporated herein by reference. All Services shall be subject to, and performed in accordance with, this Agreement, the exhibits attached hereto and incorporated herein by reference, and all applicable local, state, and federal laws, rules and regulations. 3.2 Term. The term of this Agreement shall be from June 1, 2006 until the completion of the Services (expected to be October 1, 2006) unless terminated by either party by not less than fifteen (15) days written notice to the 111 other party. Consultant shall complete the Services within the term of this Agreement and shall meet any other established schedules and deadlines. If this Agreement has not been delivered to the Commission at least 48 hours prior to the entering into of any oral or written contract for swap advisory services, then the Commission shall have the right to terminate this Agreement without penalty within five (5) business days after entering into this Agreement. 3.3 Schedule of Services. Consultant shall perform the Services expeditiously, within the term of this Agreement, and in accordance with the Scope of Services set ,forth in Exhibit "A" attached hereto and incorporated herein by reference. Consultant represents that it has the professional and technical personnel required to perform the Services in conformance with such conditions. In order to facilitate Consultant's conformance with the Schedule, the Commission .shall respond to Consultant's submittals in a timely manner. Upon request of the Commission, Consultant shall provide a more detailed schedule of anticipated performance to meet the Schedule of Services. 3.4 Independent Contractor; Control and Payment of Subordinates. The Services shall be performed by Consultant under its supervision. Consultant will determine the means, method, and details of performing the Services subject to the requirements of this Agreement. Commission retains Consultant on an independent contractor basis and Consultant is not an employee of Commission. Consultant retains the right to perform similar or different services for others during the term of this Agreement. Any additional personnel performing the Services under this Agreement on behalf of Consultant shall not be employees of . Commission and shall at all times be under Consultant's exclusive direction and control. Consultant shall pay all wages, salaries, and other amounts due such personnel in connection with their performance of Services under this Agreement and as required by law. Consultant shall be responsible for all reports and obligations respecting such additional personnel, including, but not limited to: social security taxes, income tax withholding, unemployment insurance, and workers' compensation insurance. 3.5 Conformance to Applicable Requirements. All work prepared by Consultant shall be subject to the approval of Commission. 3.6 Substitution of Key Personnel. Consultant has represented to Commission that certain key personnel will perform and coordinate the Services under this Agreement. Should one or more of such personnel become unavailable, Consultant may substitute other personnel of at least equal competence and experience upon written approval of Commission. In the event that Commission and Consultant cannot agree as to the substitution of key personnel, Commission shall be entitled to terminate this Agreement for cause, pursuant to provisions of Section 3.16 of this Agreement. The key personnel for performance of this Agreement are as follows: Mr. Daniel L. Wiles, Principal and General Counsel, and Mr. Robert Porr, Vice President. 112 • 3.7 Commission's Representative. Commission hereby designates the Executive Director, or his or her designee', to act as its representative for the performance of this Agreement ("Commission's Representative"). Commission's representative shall have the power to act on behalf of Commission for all purposes under this Agreement. Consultant shall not accept direction from any person other than Commission's Representative or his or her designee. 3.8 Consultant's Representative. Consultant hereby designates Mr. Daniel L. Wiles, or his designee, to act as its representative for the performance of this Agreement ("Consultant's Representative"). Consultant's Representative shall have full authority to represent and act on behalf of the Consultant for all purposes under this Agreement. The Consultant's Representative shall supervise and direct the Services, using his or her best skill and attention, and shall be responsible for all means, methods, techniques, sequences and procedures and for the satisfactory coordination of all portions of the Services under this Agreement. 3.9 Coordination of Services. Consultant agrees to work closely with Commission staff in the performance of Services and shall be available to Commission's staff, consultants, and other staff at all reasonable times. 3.10 Standard of Care; Licenses. Consultant shall perform the Services under this Agreement in a skillful and competent manner, consistent with the standard generally recognized as being employed by professionals in the same discipline in the State of California. Consultant represents and maintains that it is skilled in the professional calling necessary to perform the Services. Consultant warrants that all employees and j subcontractors shall have sufficient skill and experience to perform the Services assigned to them. Finally, Consultant represents that it, its employees and subcontractors have all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the Services and that such licenses and approvals shall be maintained throughout the term of this Agreement. Consultant shall perform, at its own cost and expense and without reimbursement from Commission, any Services necessary to correct errors or omissions which are caused by the Consultant's failure to comply with the standard of care provided for herein, and shall be fully responsible to the Commission for all damages and other liabilities provided for in the indemnification provisions of this Agreement arising from the Consultant's errors and omissions. 3.11 Laws and Regulations. Consultant shall keep itself fully informed of and in compliance with all local, state and federal laws, rules and regulations in any manner affecting the performance of the Project or the Services, including all Cal/OSHA requirements, and shall give all notices required by law. Consultant shall be liable for all violations of such laws and regulations in connection with Services. If the Consultant performs any work knowing it to be contrary to such laws, rules, and regulations and 113 without giving written notice to Commission, Consultant shall be solely responsible for all costs arising therefrom: Consultant shall defend, indemnify and hold Commission, its officials, directors, officers, employees and agents free and harmless, pursuant to the indemnification provisions of this Agreement, from any claim or liability arising out of any failure or alleged failure to comply with such laws, rules or regulations. 3.12 Insurance. 3.12.1 Time for Compliance. Consultant shall not commence work under this Agreement until it has provided evidence satisfactory to the Commission that it has secured all insurance required under this section. In addition, Consultant shall not allow any subcontractor to commence work on any subcontract until it has secured all insurance required under this section. 3.12.2 Minimum Requirements. Consultant shall, at its .expense, procure and maintain for the duration of the Agreement insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the Agreement by the Consultant, its agents, representatives, employees or subcontractors. Consultant shall also require all of its subcontractors to procure and maintain the same insurance for the duration of the Agreement. Such insurance shall meet at least the following minimum levels of coverage: (A) Minimum Scope of Insurance. Coverageshall be at least as broad as the latest version of the following: (1) General Liability: Insurance Services 'Office Commercial General Liability coverage (occurrence form CG 0001); (2) Automobile Liability: Insurance Services Office. Business Auto Coverage form number CA 0001, code 1 (any auto); and (3) Workers' Compensation and Employer's Liability: Workers' Compensation insurance as required by the State of California and Employer's Liability Insurance. (B) Minimum Limits of Insurance. Consultant shall maintain limits no less than (1) General Liability: $1,000,000 per occurrence for bodily injury, personal injury, and property damage. If Commercial General Liability Insurance or other form with general aggregate limit is used, either the general aggregate limit shall apply separately to this Agreement/location or the general aggregate limit shall be twice the required occurrence limit; (2) Automobile Liability: $1,000,000 per accident for bodily injury and property damage; and (3) if Consultant has employees, Workers' Compensation and Employer's Liability: Workers' Compensation limits as required by the Labor Code of the State of California. Employer's Practices Liability limits of $1,000,000 per accident. 3.12.3 Professional Liability. Consultant shall procure and maintain, and require its sub -consultants to procure and maintain, for a period of five (5) years • 114 • • • following completion of the Project, errors and omissions liability insurance appropriate to their profession. Such insurance shall be in an amount not less than $1,000,000 per claim, and shall be endorsed to include contractual liability. 3.12.4 Insurance Endorsements. The insurance policies shall contain the following provisions, or Consultant shall provide endorsements on forms approved by the Commission to add the following provisions to the insurance policies: (A) General Liability. The general liability policy shall be endorsed to state that: (1) the Commission, its directors, officials, officers, employees and agents shall be covered as additional insureds with respect to the Services or operations performed by or on behalf of the Consultant, including materials, parts or equipment furnished in connection with such work; and (2) the insurance coverage shall be primary insurance as respects the Commission, its directors, officials, officers, employees and agents, or if excess, shall stand in an unbroken chain of coverage excess of the Consultant's scheduled underlying coverage. Any insurance or self-insurance maintained by the Commission, its directors, officials, officers, employees, and agents shall be excess of the Consultant's insurance and shall not be called upon to contribute with it in any way. (B) Automobile Liability. The automobile liability policy shall be endorsed to state that: (1) the Commission, its directors, officials, officers, employees and agents shall be covered as additional insureds with respect to the ownership, operation, maintenance, use, loading or unloading of any auto owned, leased, hired or borrowed by the Consultant or for which the Consultant is responsible; and (2) the insurance coverage shall be primary insurance as respects the Commission, its directors, officials, officers, employees and agents, or if excess, shall stand in an unbroken chain of coverage excess of the Consultant's scheduled underlying coverage. Any insurance or self-insurance maintained by the Commission, its directors, officials, officers, employees, and agents shall be excess of the Consultant's insurance and shall not be called upon to contribute with it in any way. (C) Workers' Compensation and Employers Liability Coverage. The insurer shall agree to waive all rights of subrogation against the Commission, its directors, officials, officers, employees and agents for losses paid under the terms of the insurance policy which arise from work performed by the Consultant. (D) All Coverages. Each insurance policy required by this Agreement shall be endorsed to state that: (A) coverage shall not be suspended, voided or canceled except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to the Commission; and (B) any failure to comply with reporting or other provisions of the policies, including breaches of warranties, shall not affect coverage provided to the Commission, its directors, officials, officers, employees and agents. 115 3.12.5 Deductibles and Self -Insurance Retentions. Any deductibles or self -insured retentions must be declared to and approved by the, Commission. If the Commission does not approve the deductibles or self -insured retentions as presented, Consultant shall guarantee that, at the option of the Commission, either: (1) the insurer shall reduce or eliminate such deductibles or self -insured retentions as respects the Commission, its directors, officials, officers, employees and agents; or (2) the Consultant shall procure a bond guaranteeing payment of losses and related investigation costs, claims and administrative and defense expenses. 3.12.6 Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating no less than A:VIII, licensed to do business in California, and satisfactory to the Commission. 3.12.7 Verification of Coverage. Consultant shall furnish Commission with original certificates of insurance and endorsements effecting coverage required by this Agreement on forms satisfactory to the Commission. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf. All certificates and endorsements must be received and approved by the Commission before work commences. The Commission reserves the right to require complete, certified copies of all required insurance policies, at any time. 3.13 Safety. Consultant shall execute and maintain its work so as to avoid injury or damage to any person or property. In carrying out its Services; the Consultant shall at all times be in compliance with all applicable local, state and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the, work is to be performed. Safety precautions as applicable shall include, but shall not be limited to: (A) adequate life protection and life saving equipment and procedures; (B) instructions in accident prevention for all employees and subcontractors, such as safe walkways, scaffolds, fall protection ladders, bridges, gang planks, confined space procedures, trenching and shoring, equipment and other safety devices, equipment and wearing apparel as are necessary or lawfully required to prevent accidents or injuries; and (C) adequate facilities for the proper inspection and maintenance of all safety measures. 3.14 Fees and Payment. 3.14.1 Compensation. Consultant shall receive compensation, including authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit "B" attached hereto. Extra Work may be authorized, as described below, and if authorized, will be compensated at the rates and manner set forth in this • 116 • • • Agreement. 3.14.2 Payment of Compensation. Consultant shall receive its compensation on the date of, or around the date of, the execution of a swap transaction under the Project. The Parties agree that Consultant shall not be entitled to payment of any amount under this Agreement if the Commission decides not to execute a swap transaction. 3.14.3 Reimbursement for Expenses. Consultant shall not be reimbursed for any expenses unless authorized in writing by Commission. 3.14.4 Extra Work. At any time during the term of this Agreement, Commission may request that Consultant perform Extra Work. As used herein, "Extra Work" means any work which is determined by Commission to be necessary for the proper completion of the Project, but which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Consultant shall not perform, nor be compensated for, Extra Work without written authorization from Commission's Executive Director. 3.15 Accounting Records. Consultant shall maintain complete and accurate records with respect to all costs and expenses incurred and fees, charged under this Agreement. All such records shall be clearly identifiable. Consultant shall allow a representative of Commission during normal business hours to examine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement. Consultant shall allow inspection of all work, data, documents, proceedings, and activities related to the Agreement for a period of three (3) years from the date of final payment under this Agreement. 3.16 Termination of Agreement. 3.16.1 Grounds for Termination. Commission may, by written notice to Consultant, terminate the whole or any part of this Agreement at any time and without cause by giving written notice to Consultant of such termination, and specifying the effective date thereof. Upon termination, Consultant shall be compensated only for those services which have been fully and adequately rendered to Commission through the effective date of the termination, and Consultant shall be entitled to no further compensation. Consultant may not terminate this Agreement except for cause. 3.16.2 Effect of Termination. If this Agreement is terminated as provided herein, Commission may require Consultant to provide all finished or unfinished Documents and Data, as defined below, and other information of any kind prepared by Consultant in connection with the performance of Services under this Agreement. Consultant shall be required to provide such document and other information within fifteen (15) days of the request. 117 3.16.3 Additional Services. In the event this Agreement is terminated'' in whole or in part as provided herein, Commission may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated. 3.17 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective parties at the following address, or at such other address as the respective parties may provide in writing for this purpose: CONSULTANT: Fieldman, Rolapp & Assoc. 19900 MacArthur Boulevard Suite 1100 Irvine, CA 92612 Attn: Daniel L. Wiles, Principal and General Counsel COMMISSION: Riverside: County Transportation Commission P.O. Box 12008 Riverside, CA 92502-2208 Attn: Executive Director Such notice shall be deemed made when personally delivered or when mailed, forty-eight (48)`"hours after deposit in the U.S. Mail, first class postage prepaid and addressed to the party at its applicable address. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of' service. 3.18 Ownership of Materials/Confidentiality. 3.18.1 Documents & Data; Licensing of Intellectual Property. All plans, specifications, studies, drawings, estimates, materials, data and other documents or works of authorship fixed in any tangible medium of expression, including but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, prepared by or on behalf of Consultant under this Agreement ("Documents and Data"), shall become the property of Commission upon the completion of the term of this Agreement, except that Consultant shall have the 'right to retain copies of all such Documents and Data for its records. ShouldConsultant, either during or following termination of this. Agreement, desire to use any Documents and Data, it shall first obtain the written approval of Commission. This Agreement creates a non-exclusive and perpetual license for Commission to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodied in the Documents and Data which are prepared or .caused to be prepared by Consultant under this. Agreement ("Intellectual Property"). Consultant shall require all subcontractors to agree in writing that Commission is granted a non-exclusive and perpetual license for any Intellectual Property the subcontractor prepares under this Agreement. Consultant represents and warrants 118 • • • that Consultant has the legal right to license any and all Intellectual Property prepared or caused to be prepared by Consultant under this Agreement. Commission shall not be limited in any way in its use of the Intellectual Property at any time, provided that any such use not within the purposes intended by this Agreement shall be at Commission's sole risk. 3.18.2 Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, written information, and other Documents and Data either created by or provided to Consultant in connection with the performance of this Agreement shall be held confidential by Consultant. Such materials shall not, without the prior written consent of Commission, be used by Consultant for any purposes other than the performance of the Services. Nor shall such materials be disclosed to any person or entity not connected with the performance of the Services or the Project. Nothing furnished to Consultant which is otherwise known to Consultant or is generally known, or has become known, to the related industry shall be deemed confidential. Consultant shall not use Commission's name or insignia, photographs of the Project, or any publicity pertaining to the Services or the Project in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of Commission. 3.19 Cooperation; Further Acts. The Parties shall fully cooperate with one another, and shall take any additional acts or sign any additional documents as may be necessary, appropriate, or convenient to attain the purposes of this Agreement. 3.20 Attorney's Fees. If either party commences an action against the other party, either legal, administrative or otherwise, arising out of or in connection with this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the losing party reasonable attorney's fees and costs of such actions. 3.21 Indemnification. Consultant shall defend, indemnify and hold Commission, its directors, officials, officers, employees, consultants, agents and volunteers free and harmless from any and all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury, in law or equity, to property or persons, including wrongful death, in any manner arising out of or incident to any alleged negligent acts, omissions or willful misconduct of Consultant, its officials, officers, employees, agents, consultants and contractors arising out of or in connection with the performance of the Services, the Project or this Agreement, including without limitation the payment of all consequential damages and attorneys fees and other related costs and expenses. Consultant shall defend, at Consultant's own cost, expense and risk, any and all such aforesaid suits, actions or other legal proceedings of every kind that may be brought or instituted against Commission or its directors, officials, officers, employees, consultants, agents and volunteers. Consultant shall pay and satisfy any judgment, award or decree that may be rendered against Commission or its directors, officials, officers, employees, 119 consultants, agents and volunteers, in any such suit, action or other legal proceeding. Consultant shall reimburse Commission and its directors, officials, officers, employees, consultants, agents. and/or volunteers, for any and all legal expenses and costs incurred by each of them in connection therewith or in enforcing the indemnity herein provided. Consultant's obligation to indemnify shall not be restricted to insurance proceeds, if any, received by Commission or its directors, officials, officers, employees, consultants, agents and volunteers. 3.22 Entire Agreement. This Agreement contains the entire Agreement of the parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings, or agreements. This Agreement may only be modified by a writing signed by both parties. 3.23 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Riverside County. . 3.24 Time of Essence. Time is of the essence for each and every provision of this Agreement: 3.25 Commission's Right to Employ Other Consultants,. Commission reserves right to employ other consultants in connection with this Project. 3.26 Successors and Assigns. This Agreement shall be binding on the successors and assigns of the parties, and shall not be assigned by Consultant without the prior written consent of Commission. 3.27 Prohibited Interests. 3.27.1 Solicitation. Consultant maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Further, Consultant warrants that it has not paid ,nor has it agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, Commission shall have the right to rescind this Agreement without liability. 3.27.2 Conflict of Interest. For the term of this Agreement, no member, officer or employee of Commission, during the term of his or her service with Commission, shall have any direct interest in this Agreement, or obtain any present or anticipated materialbenefit arising therefrom. 3.28 Equal Opportunity. Consultant represents that it is an equal - • 120 • • opportunity employer and it shall not discriminate against any employee or applicant for employment because of race, religion, color, national origin, ancestry, sex, or age. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. Consultant shall also comply with all relevant provisions of Commission's Minority Business Enterprise program, Affirmative Action Plan or other related Commission programs or guidelines currently in effect or hereinafter enacted. 3.29 Subcontracting. Consultant shall not subcontract any portion of the work or Services required by this Agreement, except as expressly stated herein, without prior written approval of the Commission. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement. 3.30 Prevailing Wages. By its execution of this Agreement, Consultant certified that it is aware of the requirements of California Labor Code Sections 1720 et seq. and 1770 et seq., as well as California Code of Regulations, Title 8, Section 16000 et seq. ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on certain "public works" and "maintenance" projects. If the Services are being performed as part of an applicable "public works" or "maintenance" project, as defined by the Prevailing Wage Laws, and if the total compensation is $1,000 or more, Consultant agrees to fully comply with such Prevailing Wage Laws. The Commission shall provide Consultant with a copy of the prevailing rate of per diem wages in effect at the commencement of this Agreement. Consultant shall make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the Services available to interested parties upon request, and shall post copies at the Consultant's principal place of business and at the project site. Consultant shall defend, indemnify and hold the Commission, its elected officials, officers, employees and agents free and harmless from any claims, liabilities, costs, penalties or interest arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. 3.31 No Waiver. Failure of Commission to insist on any one occasion upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any rights or powers hereunder at any one time or more times be deemed a waiver or relinquishment of such other right or power at any other time or times. 3.32 Disclosures. The Consultant has disclosed to the Commission that it is an affiliate of Fieldman, Rolapp & Associates ("FRA). The Commission acknowledges by the execution of this Agreement that: 3.32.1 Independent selection. The Commission has independently selected the Consultant and is aware of the professional and financial relationship 121 between the Consultant and FRA. 3.32.2 Compensation. All compensation to be received by the Consultant has been fully disclosed in the attached Exhibit B and that no other outside fees will be paid to the Consultant with respect to the services identified in Exhibit A of this Agreement. 3.32.3 Receipt of Form ADV. The Commission has received Part II of Form ADV, a disclosure statement containing the equivalent information, or a disclosure statement containing at least the information required by Schedule H of Form ADV if the Commission is entering into a wrap fee program sponsored by the Consultant. If the. appropriate disclosure statement was not delivered to the Commission at least 48 hours prior to the Commission entering into any written or oral advisory agreement with the Consultant then the Commission has the right to terminate such agreement without penalty within five business days after entering into the agreement. For purposes of this provision, an agreement is considered to be entered into when all parties to the agreement have signed the agreement, or in the case of an oral agreement otherwise signified their acceptance, any other provisions of this Agreement notwithstanding. 122 • IN WITNESS WHEREOF, this Agreement was executed on the date first written above. RIVERSIDE COUNTY TRANSPORTATION COMMISSION CONSULTANT By: By: Marion Ashley, Chairman Signature Approved as to Form: Name By: Steve DeBaun, Best, Best & Krieger LLP Title Counsel to the Riverside County Transportation Commission Attest: By: Signature Name Title 123 EXHIBIT A TO RIVERSIDE COUNTY TRANSPORTATION COMMISSION AGREEMENT FOR SWAP ADVISORY SERVICES WITH FIELDMAN, ROLAPP FINANCIAL SERVICES, LLC SCOPE OF SERVICES: A. General Services. The Consultant shall perform all the duties and services specifically set forth herein and shall provide such other services as it deems necessary or advisable, or are reasonable and necessary to accomplish the intent of this Agreement in a manner consistent with the standards and practice of professional advisors. The Commission may, with the concurrence of Consultant, expand this Agreement to include any additional services not specifically identified within the terms of this Agreement. Any additional services may be described in an addendum to this Exhibit A and are subject to fees described in an addendum to Exhibit B to this Agreement. B. Specific Services to be Provided. Development of Interest Rate Swap Policies - the Consultant will draft potential policies for interest rate swaps for review by the Commission staff, will prepare presentation materials for the 'Budget & Implementation Committee and the Commission and support the work of staff in presenting the policies to the Commission for its consideration. Initial Analysis and Recommendation - the Consultant will analyze the Commission's potential financing options for its commercial paper program and propose terms of an Interest Rate Swap Arrangement(s) that will correspond to those options. Commission Control - the Commission may choose to follow or disregard any recommendations or advice furnished by the Consultant and may make such recommendations or advice available to others for the purpose of implementing such recommendations. Structuring the Request For Proposals for Interest Rate Swap Bids document - the Consultant will work with bond counsel in creating a structure and bid document(s) . which provide(s) the maximum flexibility while maintaining safe and sound 124 • practices. It is the policy of the Consultant to have the bid document reviewed by bond counsel prior to distribution to prospective bidders. The Consultant will prepare and distribute the bid packages and interface with all of the bidders to insure the greatest response to the bid request. Conducting the bid process - the Consultant will certify to the Commission and bond counsel the bids of each qualified provider. The Commission will know the exact results of each bid prior to the awarding of the Interest Rate Swap Arrangement(s). Coordinating the closing of the Interest Rate Swap Arrangements - the Consultant will work with the bond counsel in supporting the development of the completion and execution of revisions to the ISDA Master Agreement, the Municipal Schedule, the Credit Support Annex and the Confirmation. 125 EXHIBIT B TO RIVERSIDE COUNTY TRANSPORTATION COMMISSION AGREEMENT FOR SWAP ADVISORY SERVICES WITH FIELDMAN, ROLAPP FINANCIAL SERVICES, LLC COMPENSATION TO THE CONSULTANT: Advisory services performed pursuant to Section 1 of this Agreement, and as more fully described in the Scope of Services set forth in Exhibit A, will be compensated either by the Commission through direct payment to the Consultant or by payment of commissions from the providers of the investment products contemplated herein. THIS EXHIBIT IS INTENDED TO BE DISCLOSURE INFORMATION TO THE COMMISSION. IF COMPENSATION IS TO BE PAID BY PROVIDERS OF THE INTEREST RATE SWAP AGREEMENTS, THE FEES PAID TO THE CONSULTANT WILL ALSO BE REFLECTED IN THE BID DOCUMENT, WHICH WILL BE APPROVED BY THE. COMMISSION PRIOR TO BEING DISTRIBUTED TO PROSPECTIVE, QUALIFIED BIDDERS. INTEREST RATE SWAP ARRANGEMENTS APPROXIMATE NOTIONAL AMOUNT APPROXIMATE DOLLAR AMOUNT OF FEE Hedging arrangements relating to Commission's commercial paper program $185,000,000 $65,000 for no more than two (2) counterparties 126 • • Form ADV Part II Fieldman, Rolapp Financial Services, LLC 127 Revised 03/31/2006 128 •FORM ADV Uniform Application for Investment Adviser Registration Part II - Page 1 Name of Investment Adviser: Fieldman, Rolapp Financial Services, LLC Address: (Number and Street) (City) (State) (Zip Code) 19900 MacArthur Blvd., Suite 1100 Irvine CA 92612-2433 Area Code: Telephone Number: (949) 660- 7300 This part of Form ADV gives information about the investment adviser and its business for the use of clients. The information has not been approved or verified by any government authority. Table of Contents Item Number Item Page 1 Advisory Services and Fees 2 2 Types of Clients 2 3 Types of Investments 3 4 Methods of Analysis, Sources of Information and Investment Strategies 3 5 Education and Business Standards 4 6 Education and Business Background 4 7 Other Business Activities 4 8 Other Financial Industry Activities or Affiliations 4 9 Participation or Interest in Client Transactions 5 10 Conditions for Managing Accounts 5 11 Review of Accounts 5 12 Investment or Brokerage Discretion 6 13 Additional Compensation 6 14 Balance Sheet 6 Continuation Sheet Schedule F Balance Sheet, if required Schedule G (Schedules A, B, C, D, and E are included with Part I of this Form, for the use of regulatory bodies, and are not distributed to clients.) SEC 1701 (8/98) tO 2005 Beverly Hil& Regulatory Consultants Croup, Inc. 129 FORM ADV Part II - Page 2 Applicant: Fieldman, Rolapp Financial Services, LLC r SEC File Number: 801-N/A Date: 03/31/2006 Definitions for Part 11 Related person - Any officer, director or partner of applicant or any person directly or indirectly controlling, controlled by, or under common control with the applicant, including any non -clerical, non -ministerial employee. Investment Supervisory Services - Giving continuous investment advice to a client (or making investments for the client) based on the individual needs of the client. Individual needs include, for example, the nature of other client assets and the client's per- sonal and family obligations. I. A. Advisory Services and Fees. (check the applicable boxes) For each type of service provided, state the approximate total advisory billings from that service. Applicant: (See instruction below) ❑ (1) Provides investment supervisory services ■ (2) Manages investment advisory accounts not involving investment supervisory services (3) Furnishes investment advice through consultations not included in either service described above ■ (4) Issues periodicals about securities by subscription ■ (5) Issues special reports about securities not included in any service described above ❑ (6) Issues, not as part of any service described above, any charts, graphs, formulas, or other devices which clients may use to evaluate securities El (7) On more than an occasional basis, furnishes advice to clients on matters not involving securities ■ (8) Provides a timing service ❑ (9) Furnishes advice about securities in any manner not described above (Percentages should be based on applicant's last fiscal year. If applicant has not completed its first fiscal year, provide estimates of advisory billings for that year and state that the percentages are estimates.) % of % % 10 % % 06 90 % % % B. Does the applicant call any of the services it checked above financial planning or some similar term? Yes ® No ❑ C. Applicant offers investment advisory services for: (check all that apply): ❑ (1) A percentage. of assets under management ❑ (4) Subscription fees IA (2) Hourly charges ❑ (5) Commissions - • (3) Fixed fees (not including subscription fees) • (6) Other D. For each checked box in A above, describe on Schedule F: • the services provided, including the name of any publication or report issued by the adviser on a subscription basis or for a fee • applicant's basic fee schedule, how fees are charged and whether its fees are negotiable • when compensation is payable, and if compensation is payable before service is provided, how a client may get a refund or may terminate an investment advisory contract before its expiration date 2. Types of Clients - Applicant generally provides investment advice to: (check those that apply) • ■ A. Individuals r E. Trusts, estates, or charitable organizations , ■ B. Banks or thrift institutions ■ F. Corporations or business entities other than those listed above ■ C. Investment companies ® G. Other (describe on Schedule F) ■ D. Pension and profit sharing plans Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). BecerA l-le1G Regulatory Cnnenkana Gmiy15, lnu. 130 .FORM ADV Part II - Page 3 Applicant: Fieldman, Rolapp Financial Services, LLC SEC File Number: 801-N/A Date: 03/31/2006 3. Types of Investments. Applicant offers advice on the following: (check those that apply) A. Equity Securities .1 H. United States governmenfsecunties ■ (1) exchange -listed securities ■ (2) securities traded over-the-counter I. Options contracts on: ■ (3) foreign issues ❑ (1) securities ■ (2) commodities ■ B. Warrants J. Futures contracts on: ■ C. Corporate debt securities ■ (I) tangibles (other than commercial paper) ■ (2) intangibles ❑ D. Commercial paper K. Interests in partnerships investing in: ■ (1) real estate ■ E. Certificates of deposit ❑ (2) oil and gas interests ❑ (3) other (explain on Schedule F) ® F. Municipal securities 10 L. Other (explain on Schedule F) G. Investment company securities ■ (1) variable life insurance ■ (2) variable annuities ❑ (3) mutual fund shares 4. Methods of Analysis, Sources of Information, and Investment Strategies. A. Applicant's security analysis methods include: (check those that apply) (1) ❑ Charting (4) ■ Cyclical (2) ❑ Fundamental (5) ® Other (explain on Schedule F) (3) ❑ Technical B. The main sources of information applicant uses include: (check those that apply) (1) ® Financial newspapers and magazines (5) ■ Timing services (2) ❑ Inspections of corporate activities (6) ® Annual reports, prospectuses, filings with the Securities and Exchange Commission (3) 8 Research materials prepared by others (7) ❑ Company press releases (4) ® Corporate rating services (8) r Other (explain on Schedule F) C. The investment strategies used to implement any investment advice given to clients include: (check those that apply) (1) ® Long term purchases (5) ■ Margin transactions (securities held at least a year) (2) ® Short term purchases (securities sold within a year) (6) ❑ Option writing, including covered options, uncovered options or spreading strategies (3) ■ Trading (securities sold within 30 days) (7) ❑ Other (explain on Schedule F) (4) ■ Short sales Answer all items. Complete amended pages in full, circle amended items and file with execution page (page H. Bever# Hilo- Regulatory COIMIlilaNa Group, Iron. 131 FORM ADV Part II - Page4 Applicant: Fieldman, Rolapp Financial Services, LLC SEC File Number: 801-N/A Date: 03/31/2006 5. Education and Business Standards. Are there any general standards of education or business experience that applicant requires of those involved in Yes No determining or giving investment advice to clients? CO ❑ (If ycs, describe these standards on Schedule F.) .. ' 6. Education and Business Background. For: • each member of the investment committee or group that determines general investment advice to be given to clients, or • if the applicant has no investment committee or group; each individual who determines, general investment advice given to clients (if more than five, respond only for their supervisors) • each principal executive officer of applicant or each person with similar status or performing similar functions. On Schedule F, give the: • name • formal education after high school • year of birth • business background for the preceding five years 7. Other Business Activities. (check those that apply) A. Applicant is actively engaged in a business other than giving investment advice. B. Applicant sells products or services other than investment advice to clients. C. The principal business of applicant or its principal executive officers involves something other than providing investment advice. (For each checked box describe. the other activities, including the time spent on them, on Schedule F.) ■ ■ ■ 8. Other ❑ Financial Industry Activities or Affiliations. (check those that apply) A. Applicant is registered (or has an application pending) as a securities broker -dealer. B. Applicant is registered (or has an application pending) as a futures commission merchant, commodity pool operator or commodity trading adviser. C. Applicant has arrangements that are material to its advisory business or its clients with a related person who is a: ■ ❑ (1) broker -dealer ■ (7) accounting firm ■ (2) investment company ■ (8) law firm ❑ (3) other investment adviser ■ (9) insurance company or agency C (4) financial planning firm ■ (10) pension consultant (5) commodity pool operator, commodity trading ❑ (II) real estate broker or dealer adviser or futures commission merchant ■ ■ (12) entity that creates or packages limited partnerships ■ (6) banking or thrift institution (For each checked box in C, on Schedule F identify the related person and describe the relationship and the arrangements.) D. Is applicant or a related person a general partner in any partnership in which clients are solicited to Yes No invest? ❑ El - (If yes, describe on Schedule F the partnerships and what they invest in.) Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). BeterA Hilk Regulatory Consultants Group, Inc:. 132 •FORM ADV Part II - Page 5 Applicant: Fieldman,�Rolapp Financial Services, LLC SEC File Number: 801-N/A Date: 03/31/2006 9. Participation or Interest in Client Transactions. Applicant or a related person: (check those that apply) ❑ A. As principal, buys securities for itself from or sells securities it owns to any client. ❑ B. As broker or agent effects securities transactions for compensation for any client. ❑ C. As broker or agent for any person other than a client effects transactions in which client securities are sold to or bought from a brokerage customer. ® D. Recommends to clients that they buy or sell securities or investment products in which the applicant or a related person has some financial interest. ❑ E. Buys or sells for itself securities that it also recommends to clients. (For each box checked, describe on Schedule F when the applicant or a related person engages in these transactions and what restrictions, internal procedures, or disclosures arc used for conflicts of interest in those transactions.) 10. Conditions for Managing Accounts. Does the applicant provide investment supervisory services, manage investment advisory accounts or hold itself out as providing financial planning or some similarly termed services and impose a minimum dollar value of Yes No assets or other conditions for starting or maintaining an account? ❑ (If yes, describe on Schedule F.) 1 L Retiew of Accounts. If applicant provides investment supervisory services, manages investment advisory accounts, or holds itself out as providing financial planning or some similarly termed services: A. Describe below the reviews and reviewers of the accounts. For reviews, include their frequency, different levels, and triggering factors. For reviewers, include the number of reviewers, their titles and functions, instructions they receive from applicant on performing reviews, and number of accounts assigned each. Please see Item 11(A) on Schedula F for further details. B. Describe below the nature and frequency of regular reports to clients on their accounts. Please see Item 11(B) on Schedule F for further details_ Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). Beverly Itidy Regulatory Cbnm tame Gmnp, Ina. 133 FORM ADV Part II - Page 6 Applicant Fieldman, Rolapp Financial Services, LLC SEC File Number: 801-N/A Date: 03/04/2005 12. Investment or Brokerage Discretion. A. Does applicant or any related person have authority to determine, without obtaining specific client consent, the: (1) securities to be bought or sold? (2) amount of the securities to be bought or sold ? (3) broker or dealer to be used ? ' (4) commission rates paid? Yes No ■ @ Yes No ■ 0 Yes No ■ Yes No Al ■ B. Does applicant or a related person suggest brokers to clients? For each yes answer to A describe on Schedule F any limitations on the authority. For each yes to A(3), A(4) or B, describe on Schedule F the factors considered in selecting brokers and determining the reasonableness of their commis- sions. If the value of products, research and services given to the applicant or a related person is a factor, describe: • the products, research and services • whether clients may pay commissions higher than those obtainable from other brokers in return for those products' and services • whether research is used to service all of applicant's accounts or just those accounts paying for it; and • any procedures the applicant used during the last fiscal year to direct client transactions to a particular broker in return for products and research services received. Yes No ■ la 13. Additional Compensation. . Does the applicant or a related person have any arrangements, oral or in writing, where it: A. Is paid cash by or receives some economic benefit (including commissions, equipment or non -research services) from a non -client in connection with giving advice to clients? B. Directly or indirectly compensates any person for client referrals? (For each yes, describe the arrangements on Schedule F.) Yes ® Yes ❑ No ■ No El 14. Balance Sheet. Applicant must provide a balance sheet for the most recent fiscal year on Schedule G if applicant: • has custody of client funds or securities; or • requires prepayment of more than $500 in fees per client and 6 or more months in advance Has applicant provided a Schedule G balance sheet? Yes ❑ No Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). Beterrb, Hit& Regulatory Con.iuuhants Group, Inc. 134 • • Agreement No. 05-19-510-01 AMENDMENT NO. 1 TO AGREEMENT FOR BOND COUNSEL SERVICES 1. PARTIES AND DATE This Amendment No. 1 to the Agreement for Bond Counsel Services is made and entered into as of this day of , 2006, by and between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION ("Commission") and ORRICK, HERRINGTON & SUTCLIFFE LLP ("Consultant"), a LIMITED LIABILITY PARTNERSHIP. 2. RECITALS 2.1 The Commission and the Consultant have entered into an agreement dated April 5, 2005 for the purpose of providing bond counsel services (the "Master Agreement"). 2.2 The parties now desire to amend the Master Agreement in order to revise the Scope of Services and to provide additional compensation for the performance of bond counsel tasks related to an interest rate swap transaction in connection with the Commission's commercial paper notes under the 2009 Measure A, including a maximum of two (2) counterparty agreements. 3. TERMS 3.1 The Services, as that term is defined in the Master Agreement, shall be amended to include bond counsel tasks related to an interest rate swap transaction in connection with the Commission's commercial paper notes under the 2009 Measure A, including a maximum of two (2) counterparty agreements. 3.2 The maximum compensation for Services performed pursuant to this Amendment shall be $100,000, as further set forth in Exhibit "A-1" attached to this Amendment and incorporated herein by reference. 3.3 Except as amended by this Amendment, all provisions of the Master Agreement, including without limitation the indemnity and insurance provisions, shall remain in full force and effect and shall govern the actions of the parties under this Amendment. RVPUB\HSHANE\7I5465.1 135 RVPUB\HSHAN E\715465.1 [signatures on following page] 136 • • SIGNATURE PAGE TO AMENDMENT NO. 1 TO AGREEMENT FOR BOND COUNSEL SERVICES IN WITNESS WHEREOF, the parties hereto have executed the Agreement on the date first herein above written. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: By: Marion Ashley, Chairman APPROVED AS TO FORM: By: Steve DeBaun, Best, Best & Krieger LLP Counsel to the Riverside County Transportation Commission RVPUB\HSHANE\715465. I CONSULTANT ORRICK, HERRINGTON & SUTCLIFFE LLP 137 EXHIBIT "A-1 COMPENSATION Consultant shall receive compensation, including authorized reimbursements, for the Services rendered under this Amendment in an amount not to exceed $100,000. Compensation shall be provided as follows: The total compensation to be provided to Consultant if one (1) counterparty agreement is completed shall be $50,000. The total compensation to be provided to Consultant if two (2) counterparty agreements are completed shall be $100,000. RVPUMFI SIIANE\715465.1 A-1 138 NO. 06-015 RESOLUTION AUTHORIZING AN INTEREST RATE SWAP TRANSACTION IN CONNECTION WITH THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION COMMERCIAL PAPER NOTES, INCLUDING THE EXECUTION AND DELIVERY OF ISDA MASTER AGREEMENTS, SCHEDULES, CREDIT SUPPORT ANNEXES AND CONFIRMATIONS RELATING THERETO, AND AUTHORIZING THE TAKING OF ALL ACTIONS NECESSARY IN CONNECTION THEREWITH WHEREAS, the Riverside County Transportation Commission (the "Commission") is a county transportation commission duly organized and existing pursuant to the County Transportation Commissions Act, being Division 12 of the Public Utilities Code of the State of California (Section 130000 et seq.); WHEREAS, the Commission is authorized pursuant to the Riverside County Transportation Sales Tax Act, being Division 25 of the Public Utilities Code of the State of California (Section 240000 et seq.) (the "Act"), to, among other things, and with voter approval, levy a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the California Revenue and Taxation Code (the "Sales Tax Law") and to issue limited tax bonds payable from the proceeds of such tax; WHEREAS, the Commission adopted Ordinance No. 88-1, named the "Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance" (`Ordinance No. 88-1 "), on July 6, 1988, pursuant to the provisions of the Act, which Ordinance provided for the imposition of a retail transactions and use tax (the "1988 Sales Tax") applicable in the incorporated and unincorporated territory of the County of Riverside (the "County") in accordance with the Sales Tax Law at the rate of one-half of one percent (1/2%) for a period not to exceed twenty (20) years; US_WEST:260033446.4 43124-2 BA4/BA4 139 WHEREAS, by its terms, Ordinance No. 88-1 became effective at the close of the polls on November 8, 1988, the day of the election at which the proposition imposing the 1988 Sales Tax was approved by a majority vote of the electors voting on the measure, and the collection of the 1988 Sales Tax commenced on July 1, 1989; WHEREAS, the Commission adopted Ordinance No. 02-001, named the "Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance" (the "Ordinance") on May 8, 2002, pursuant to the provisions of the Act, which Ordinance provides for the imposition of a retail transactions and use tax (the "Sales" Tax") applicable in the incorporated and unincorporated territory of the County in accordance with the provisions of the Sales Tax Law at the rate of zero percent (0%) until the expiration of the 1988 Sales Tax on June 30, 2009, and thereafter at the rate of one-half of one percent (1/2%) for a period not to exceed thirty (30) years; WHEREAS, by its terms, the Ordinance became effective at the close of the polls on November 5, 2002, the day of the election at which the proposition imposing the Sales Tax was approved by more than two-thirds of the electors voting on the measure; WHEREAS, the Ordinance empowers the Commission to sell or issue, from time to time, on or before the collection of the Sales Tax, bonds, or other evidences of indebtedness, in the aggregate principal amount at any one time outstanding not to exceed $500 million for capital expenditures for various purposes, including to carry out the transportation projects described in the Riverside County Transportation Improvement Plan, adopted as part of the Ordinance, including any future amendments thereto (the `Expenditure Plan"); WHEREAS, the Commission is authorized by Section 240309 of the California Public Utilities Code to issue from time to time limited tax bonds (defined to include US_WEST:260033446.4 43124 2 BA4/BA4 2 140 • • indebtedness and securities of any kind or class, including commercial paper), secured and payable in whole or in part from revenues of the Sales Tax ("Sales Tax Revenues"); WHEREAS, the Commission has heretofore authorized the issuance of and issued the Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds), Series A (the "Series A Notes"), in an aggregate principal amount not to exceed one hundred twenty million dollars ($120,000,000) outstanding at any one time, and the Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds), Series B (the "Series B Notes," and, together with the Series A Notes, hereinafter collectively referred to as the "Notes"), in an aggregate principal amount not to exceed eighty million dollars ($80,000,000) outstanding at any one time, pursuant to an Indenture, dated as of March 1, 2005 (the "Indenture"), between the Commission and U.S. Bank Trust National Association, as trustee, and pursuant to the provisions of the Act and the Ordinance; WHEREAS, Section 5922 of the Government Code of the State of California (the "Government Code") provides that in connection with, or incidental to, the issuance or carrying of bonds, any public entity may enter into any contracts which the public entity determines to be appropriate to place the obligations represented by the bonds, in whole or in part, on the interest rate, cash flow or other basis desired by the public entity, including, without limitation, contracts commonly known as interest rate swap agreements, forward payment conversion agreements or contracts providing for payments based on levels of, or changes in, interest rates or stock or other indices, or contracts to exchange cash flows or a series of payments, in each case to hedge payment, rate, spread or similar exposure; WHEREAS, Section 5922 of the Government Code further provides that such agreements or contracts shall be entered into with the parties, selected by the means, and contain US_WEST260033446.4 43124-2 BA4BA4 3 141 the payment, security, default, remedy, and other terms and conditions determined by the public entity after giving due consideration for the creditworthiness of the counterparties to such agreements or contracts, including any rating by a nationally recognized rating agency; ,WHEREAS, in order to hedge against rising interest rates and thereby minimize debt service and maximize delivery of capital ,projects identified in the Ordinance, the Commission hereby determines that it is desirable to enter into forward swap agreements providing for a fixed swap rate in connection with all or a portion of the Notes or bonds issued to refund the Notes on a long-term basis (the "Bonds"); WHEREAS, the Commission has been presented with and has approved pursuant to Resolution No. 06-014 a proposed Interest Rate Swap Policy (the "Swap Policy") establishing guidelines.for the use and management of interest rate swap agreements and similar transactions; WHEREAS, the Commission hereby acknowledges that a payment may be due to each Counterparty (as defined below) in the event the Commission does not issue the Bonds, that the amount of any such payment will vary depending in large part on prevailing interest rates at the time such payment is calculated, and that under certain market conditions, the amount of such payments. could be substantial; WHEREAS,. the Commission proposes to enter into separate .forward swap agreements with one or more counterparties (each, a "Counterparty" and hereinafter collectively referred to as the "Counterparties") to be selected pursuant to a request for qualifications and limited bid process executed by the Executive Director; WHEREAS, the Commission has been presented with a proposed form of forward swap agreement to be entered into with each Counterparty, such proposed form of forward swap agreement being comprised of an ISDA Master Agreement (a "Master US_WEST:260033446.4 43124-2 BA4BA4 4 142 • • Agreement"), a Schedule to the Master Agreement (a "Schedule"), an ISDA Credit Support Annex (each, a "Credit Support Annex") and a Confirmation (a "Confirmation" and collectively with the Master Agreement, Schedule, Credit Support Annex and Confirmation, the "Swap Agreement"); WHEREAS, it is now necessary for the Commission to authorize the selection of one or more Counterparties and the execution and delivery of, and approve the forms of, the Swap Agreement, and to authorize the taking of various actions in connection therewith; WHEREAS, the Commission has been presented with the form of the Master Agreement, Schedule, Credit Support Annex, and Confirmation described herein and the Commission has examined and approved the form of each document and desires to authorize and direct the execution and delivery of such documents in substantially such form and such other documents as are necessary in connection with the transactions described herein; and WHEREAS, all acts, conditions and things required by the Act, the Sales Tax Law and the Constitution and laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the transactions authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the Commission is now duly authorized and empowered, pursuant to each and every requirement of law, to authorize the execution and delivery of the Swap Agreement, for the purposes, in the manner and upon the terms provided; US_WEST:260033446.4 43124-2 BA4BA4 5 143 NOW THEREFORE, THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION RESOLVES AS FOLLOWS: Section 1. recitals are true and correct. Section 2. Recitals. The Commission finds and determines that the foregoing Findings Pursuant to Government Code. Pursuant to Section 5922 of the Government Code, the Commission hereby finds and determines that each of the swap agreements described herein is being entered ,into in connection with, or incidental to, the issuance or carrying of the Notes or Bonds and are necessary and appropriate to place the Commission's obligations as represented by the Notes or Bonds on the fixed interest rate basis desired by the Commission, will reduce the amount and duration of interest rate risk with respect to the Notes or Bonds, and is designed to reduce the amount or duration of payment, rate, spread or similar risk or result in a lower cost of borrowing when used in combination with the Notes or Bonds. Section 3. Authorization of Swap Agreement. The Commission is hereby authorized to enter into a swap Agreement with one or more of the Counterparties at a fixed rate not to exceed 4.50% per annum against receipt of a floating rate of not less than 65% of one - month LIBOR or a comparable index, which forward swap agreement or agreements shall be in such aggregate notional amount which does not exceed $185,000,000. Section 4. Approval of the Swap Documents. The proposed form of Master Agreement, Schedule, Credit Support Annex and Confirmation, presented to the Commission, and the terms and conditions thereof, which are hereby incorporated by reference, are hereby US_WEST260033446.4 43124-2 BA4/BA4 6 • 144 • • approved. The Clerk of the Board of the Commission is directed to file a copy of the proposed form of each of said agreements with the minutes of this meeting, and the Executive Director of the Commission (the "Executive Director") is authorized and directed to execute and deliver each of said agreements in substantially the form of said agreement presented to this meeting, with such additions thereto or changes therein as the Executive Director may require or approve, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of said agreement. Pursuant to Section 5922 of the Government Code, the Commission hereby further finds and determines that it has given due consideration to the creditworthiness of each Counterparty, including the ratings of each Counterparty by nationally recognized rating agencies, in selecting each Counterparty and determining the payment, security, default, remedy, and other terms and conditions contained in the proposed form of Master Agreement, Schedule, Credit Support Annex, and Confirmation. Section 5. Delegation to Authorized Representative. All consents, amendments, approvals, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution, whether before or after the consummation of the swap transactions, which may be necessary or desirable in connection with any default under or amendment of such documents, settlements or revisions, may be taken or given by the Authorized Representative, without further authorization by this Board, and the Authorized Representative is hereby authorized and directed to give such consent, amendment, approval, notice, order or request and to take any such action which such officer may deem necessary or desirable to further the purposes of this resolution and the transactions contemplated hereby. US_WEST:260033446.4 43124-2 BA4/BA4 7 145 Section 6. Ratification of Actions; Completion of Financing. All actions heretofore taken by the officers and agents of the Commission with respect to the transactions contemplated hereby are hereby ratified, confirmed and approved. If at the time of execution of any of the documents authorized herein, the Executive Director is unavailable, such documents may be executed by the Deputy:Executive Director of the Commission in lieu of the Executive Director. The Clerk of the Board of the Commission is hereby authorized to attest to the execution by the Executive Director or the Deputy Executive Director of any of such documents as said officers deemappropriate. The proper officers and agents of the Commission are hereby authorized and directed, jointly and severally, for and in the name and on behalf of the Commission, to do any and all things and to take any and all actions and to execute and deliver any and all agreements, certificates and documents, including, without limitation, any tax certificates or agreements, any agreements for depository services, and any agreements for rebate compliance services, which they, or any of them, may deem necessary or advisable in order to carry out, give effect to and comply with the terms and intent of this Resolution and the documents approved hereby. US_ WEST:260033446.4 43124-2 BA4/13A4 $ 146 • • Section 7. Effective Date. This Resolution shall take effect immediately upon its adoption and approval. APPROVED AND ADOPTED by the Riverside County Transportation Commission at its meeting on July 12, 2006. ATTEST: By: Clerk of the Board of the Commission US_W EST:260033446.4 43124-2 BA4/BA4 9 By: Chairman, Board of Commissioners 147 CERTIFICATE OF THE CLERK OF THE BOARD OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION I, Jennifer Harmon, Clerk of the Board of the Riverside County Transportation Commission (the "Commission"), hereby certify that the foregoing is a full, true and correct copy of a resolution duly adopted at a meeting of the governing board of said Commission duly and regularly held in Riverside, California, on July 12, 2006, of which meeting all of the members of said Commission had due notice. I further certify that I have carefully compared the foregoing copy with the original minutes of said meeting on file and of record in my office; that said copy is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes; and that said resolution has not been amended, modified, rescinded or revoked in any manner since the date of its adoption, and the same is now in full force and effect. I further certify that an agenda of said meeting was posted at least 72 hours before said meeting at a location in Riverside, California, freely accessible to the public and a brief general description of the resolution to be adopted at said meeting appeared on said agenda. IN WITNESS WHEREOF, I have executed this certificate hereto as of this date, , 2006. US _WEST:260033446.4 43124-2 BA4BA4 By Clerk 10 • 148 Interest Rate Swaps Presentation to Riverside County Transportation Commission Mil Mom • Presented by: Theresia Trevino, Chief Financial Officer June 26, 2006 &l, RCTC Financing Program Status ❑ Evaluate financing opportunities to advance 2009 Measure A projects • Minimize debt service costs ❑ Established $185 million commercial paper program in 2005 • $30 million issued and outstanding ❑ Anticipate refinancing of commercial paper in 2008 or early 2009 • May include additional debt issuance for projects ❑ Seek increase in $500 million debt limitation wncr11..u•,r. June 26, 2006 • S. Page 1 Consideration of Interest Rate Swaps ❑ Insulate RCTC Financing Program against future interest rate volatility ❑ Manage exposure to changing market conditions in anticipation of bond issuance ❑ Capture current market economics for future debt issue ❑ Take advantage of market opportunities • Relatively low forward premium — flat yield curve • Low overall rate structure ❑ Use by other transportation agencies ❑ Consult with financial/swap advisor and bond counsel •m*r,ryr Coma June 26, 2006 Page 2 Current Market Yield Curve Opportunities • General interest rate levels are low Premium to capture future rates is low Market Yields as of May 30, 2006 6.00% 4,60% 4.00% 3.60% 3.00% 260% 2.00% 2007 2008 2008 2010 2011 2013 2016 Note: All -in swap curves include 25 bps for annual fees. 2018 2021 2026 a•irangm.. Cmki• June 26, 2006 •deu Page 3 I t Interest Rate Swap Basics ❑ Business decision, not speculation ❑ Contract between two parties to exchange cash flows • Contract may commence at a future date ❑ One party pays a fixed interest rate ❑ Other party pays a floating/variable interest rate ❑ Payments are based upon a notional amount • Principal amounts are not exchanged ❑ Cash flows are derived from reference to objective indices • London Interbank Offer Rate (LIBOR) • Bond Market Association Swap Index (BMA) June 26, 2006 soar Page 4 Illustration of Typical LIBOR Swap Liquidity/ Remarketing Fees Fixed Rate* RCTC Bond Holders • Floating Rate*` Linked to 67% of LIBOR Counter - party • For Illustration purposes, assume 4.25%, including fees **Relationship between rates could vary weekly IlmliAm011os taw June 26, 2006 Page ▪ 5 3 LIBOR Swap Analysis Example #1: RCTC Has Basis Cost ❑ RCTC receives 67% of LIBOR (floating) 3.41% ❑ RCTC pays BMA to bond holders (floating) 3.47% ❑ RCTC basis differential = (Cost) (0.06)% ❑ RCTC pays counterparty and liquidity provider/remarketing agent (fixed) (4.25)% ❑ RCTC net cost of funds for that week (4.31)% 1�"'ems e.s(mil te .wur June 26, 2006 Page 6 LIBOR Swap Analysis Example #2: RCTC Has Basis Gain ❑ RCTC receives 67% of LIBOR (floating) 2.37% ❑ RCTC pays BMA to bond holders (floating) 2.28% ❑ RCTC basis differential = Gain 0.09% ❑ RCTC pays counterparty and liquidity provider/remarketing agent (fixed) (4.25)% ❑ RCTC net cost of funds for that week (4.16)% rrmwImo. aim June 26, 2006 a Page ▪ 7 4 Putting It in Market Context ❑ Today's 20-year fixed rate is 4.39% ❑ RCTC's net under the first scenario is 4.31 ❑ RCTC's net under the second scenario is 4.16% �m June 26, 2006 m., Page 8 Swap Risks and Mitigation ❑ Basis • Mismatch between variable rates ❑ Counterparty • Failure of counterparty to perform and make required payments ❑ Termination • Need to terminate agreement before agreement termination date ❑ Tax • Potential tax events that could affect swap payments ❑ Liquidity • Inability to continue or renew liquidity facility ❑ Interest Rate • Occurrence of event modifying credit rating of issuer or counterparty ❑ Rollover • Mismatch between swap maturity and bond maturity r r•`aw...r.i.w• June 26,2006 wee Page 9 Overview of Swap Policy Establishes Guidelines for the use and management of all swap/derivative transactions: ❑ General guidelines • Do not prevent or direct RCTC to take specific actions or enter into agreements ❑ Applicable only to debt -related agreements • Derivatives for investment purposes expressly prohibited in investment policy ❑ Critical component of RCTC's asset/liability management strategy ❑ Annual review of policies/semi-annual valuation rr4.0imp* ua. June 26, 2006 Page 10 Swap Policy: Managing Risk Exposure ❑ Authority and oversight ❑ Rationale for swaps ❑ Identification and evaluation of risks ❑ Structuring and execution ❑ Counterparty credit exposure ❑ Swap management June 26, 2006 Page 11 Authority and Oversight ❑ RCTC's Board has oversight responsibility on the approval of each transaction ❑ Structure will be determined by staff and members of the financing team in accord with financing objectives and swap policies ❑ Executive Director or CFO has day-to-day responsibility for implementing and managing agreements ••ro.r•...+.a.e. June 26, 2006 Aweillee Page 12 Rationale for Swaps ❑ Reduce exposure to interest rate changes ❑ Reduce expected borrowing costs ❑ Improve flexibility to manage RCTC's balance sheet ❑ Prohibit derivative transactions that: • Contain exotic structures lacking adequate liquidity or price transparency to allow for reasonable valuation/termination; • Are speculative or create extraordinary leverage; • Create risks not germane to RCTC's operations ✓ Currency risk ✓ Sovereignty risk ✓ Commodity risk or ✓ Credit derivatives, unless directly linked to RCTC/ Counterparty's credit June 26, 2006 Page 1▪ 3 Identification and Evaluation of Risks ❑ Risk measured based on termination value, not notional amount (i.e., par value) • How changes in interest rates affect RCTC's exposure • Measure at least annually ❑ Maximum portfolio termination value risk limit • Measure termination payment risk on aggregate/portfolio basis • Use of acceptable probability -weighted interest rate methodology scenarios • Limit exposure to single counterparty ❑ Value of potential risk • Even though RCTC may not intend/need to unwind swap • Disclosure in financial statements June 26, 2006 Page 14 Structuring and Execution ❑ Eligible counterparties • Highly rated: "AA" category or "AAA" subsidiary • Highly capitalized: Minimum $500 million capital • Experienced • Direct relationship, not agent ❑ Choosing the counterparties ❑ Documentation • ISDA standard documents Mr* Igmli•a.ry a• June 26, 2006 Page 1▪ 5 8 Counterparty Credit Exposure ❑ Collateral requirements • Collateral pledged if ratings fall below threshold, based on termination payment due ❑ Termination provisions • Event of default • Credit downgrade June 26, 2006 Lolve Page 16 Swap Management ❑ Monitoring • Correct cash flows • Collateral posting • Termination events ❑ Reporting/policy compliance • Transaction behavior relative to expectations? • Risk evaluation and stress testing ❑ Accounting considerations 14.1.41.1mv.rur June 26, 2006 Page 17 9 Next Steps for a Swap Transaction ❑ Commission actions on July 12, 2006 • Adopt swap policy and debt management policy changes • Authorize proposed swap transaction for notional amount of $185 million • Approve swap advisor and bond counsel agreements ❑ Bidding process (July/August 2006) ❑ Swap execution with counterparties (August 2006) • Provide Commission with memo within 24 hours ❑ Commission presentation on swap transactions (September 2006) ❑ Discussion of swap policy with rating agencies (November 2006) ❑ Issuance of variable rate debt (2008 or early 2009) ❑ Exchange of swap cash flows (2008 or early 2009 and thereafter) 11•41•1•0,1sna•rW June 26, 2006 Lk, Page 18 Appendix Basis risN The mismatch between actual variable rate debt service and variable rate indices used to determine Swap payments. Defines the nak that the normal relationship between indices or pries might charge RCTC will review and consider Eased on the hisloried trading diffaerdials between the indices relevant to the Swap agreement. Counterparly risk Tice failure of the Countelparty to make required payments RCTC will monitor exposure levels, ratings thresholds. and mllalaralizallon requirements Termination risk The need to terminate Ind Agreement in a make) that dictates a lennlnation payment by the issuer. RCTC will compute its termination exposure for Al existing and proposed Swaps at market value and under a worsISAA Scenario. Tax risk The risk crevled by potential tax evens that could affect Swap payments RCTC will review the lax events in proposed -Agreements. RCTC will evaluate the impact of potential changes in the law of LIBOR indexed Swaps liquidity ri t The inability to continue or rerpew a lgudityfealty. RCTC will evaluate the expected availability of liquidity support for swapped and unhedged variable rate - debt. Interest Pate nsk The occurrence of an event modifying the ere& rating of the Issuer or its Counterparty. RCTC wil monitor the ratings W its Counterpanies and guaenors. Amortization Rsk This type of poetion Is typically a deliberate arbitrage play or to lake advantage of the shape of to yield curve. The risk created when swap payments are baud on indices that lie along different parts of the yield curve to g. T-eay rates vs. 30-year rates). RCTC will evaluate historical trading relationships, and make sure to have adequate reserves Or a hedging mechanism to offset unexpected movements. Rolllover/ Mismatch risk The mismatch of the maturity of the Swap and the mahxity of the undedying Bonds. RCTC will determine its wpacty to issue variable rate bonds that may be outstanding after the maturity of the Swap. June 26, 2006 a Page 19 ...kd.n•n..u+. 10 • AGENDA ITEM 11 • • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: June 26, 2006 TO: Budget and Implementation Committee FROM: Jerry Rivera, Program Manager THROUGH: Theresia Trevino, Chief Financial Officer SUBJECT: FY 2007-11 Measure A Five Year Capital Improvement Plans for Local Streets and Roads STAFF RECOMMENDATION: This item is for the Committee to: 1) Approve the FY 2007-1 1 Measure A Five Year Capital Improvement Plans for Local Streets and Roads as submitted; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: The Measure A Ordinance requires each recipient of streets and roads monies to annually provide to the Commission a five year plan on how those funds are to be expended in order to receive its Measure A disbursements. In addition, the cities in the Coachella Valley and the County (representing the unincorporated area of the Coachella Valley) must be participating in CVAG's Transportation Uniform Mitigation Fee program. The agencies are required to submit the annual certification of Maintenance of Effort along with documentation supporting the calculation. On April 10, 2006, RCTC staff provided the local agencies with Measure A revenue projections for local streets and roads to assist them in preparation of the required Five Year Capital Improvement Program (CIP). The agencies were asked to submit their CIP by June 12, 2006 for submission to the Budget and Implementation Committee at its June 26, 2006 meeting and to the Commission on July 12, 2006. To date, we have received the required CIP, MOE certification and supporting documentation from the following local agencies in the county: 149 Western County Coachella Valley Palo Verde Valley Corona Desert Hot Springs Blythe Hemet Indian Wells Riverside County Moreno Valley Indio Murrieta Palm Desert - Perris Palm Springs Riverside Riverside County Riverside County San Jacinto Temecula The nine (9) cities that have not submitted all of the required documents include: Banning, Beaumont, Calimesa, Cathedral City, Coachella, Lake Elsinore, Norco, and Rancho Mirage. Commission staff has informed city staff that no disbursement of Measure A funds for local streets and roads will be made until all of the required documents are received and approved by the, Commission. Canyon Lake is not required to submit a CIP because of a prior loan agreement with the Commission. The city of La Quinta does not receive Measure A funds because they do not participate in CVAG's TUMF program. The CIPs received are posted on the Budget and Implementation Committee agenda on the Commission's website and are on file at the Commission offices. • AGENDA ITEM 12 • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: June 26, 2006 TO: Budget and Implementation Committee FROM: Jerry Rivera, Program Manager THROUGH: Theresia Trevino, Chief Financial Officer SUBJECT: FY 2006/07 SB 821 Bicycle and Pedestrian Funding Recommendations Facilities Program STAFF RECOMMENDATION: This item is for the Committee to: 1) Approve the FY 2006/07 SB 821 Bicycle and Pedestrian Facilities Program recommended funding as shown on the attached schedule; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: In April, Commission staff notified the cities, the county and local school districts that an estimated $1,434,400 would be available for programming in FY 2006/07 through the SB 821 Bicycle and Pedestrian Facilities Program. This program is funded by an allocation of 2% of the total Local Transportation Funds apportioned to Riverside County by the State and funds carried over from prior years. Carryover funds available this year totaled $520,418 from higher estimated revenues and from previously approved projects which either did not expend their full allocations due to lower than estimated actual costs or were subsequently abandoned by the applicants for various reasons. Total available funds for FY 2006/07 are $1,954,798. The SB 821 proposals were due May 26, 2006. The Commission received 44 proposals 143 sidewalk projects, 1 ADA related retrofit project) from 14 agencies requesting a total of $3,499,040 (Attachment I). An evaluation committee comprised of three members from the Commission's Citizens Advisory Committee and three members from the Technical Advisory Committee reviewed the proposals on June 13, 2006. All of the applicants were invited to the meeting and requested to present their proposals to the committee and answer questions from the members. The proposals were evaluated and ranked based upon the Commission adopted scoring criteria (Attachment II). Thirty-three projects are recommended for funding as indicated on Attachment III. 150 Attachments: 1) SB 821 Program Submittals FY 2006/07 2) SB 821 Evaluation Criteria 3) SB 821 FY 2006/07 Recommended Funding 151 Attachment I RCTC SB 821 PROGRAM SUBMITTALS FY 2006-07 Total SB 821 Funds Local Agency / Project Cost Requested Match Banning (6) Banning High School, San Gorgonio Ave. $122,000 $61,000 $61,000 Williams St. Sidewalk, 14th St. to 4th St. 136,000 68,000 68,000 Susan B. Coombs Middle Sch., 8th St. & King St. 135,600 67,800 67,800 Morongo Ave. Sidewalk 73,000 36,500 36,500 Woodland Ave. Sidewalk 76,000 38,000 38,000 Christie St. Sidewalk 36.000 18,000 18,000 Total $578,600 $289,300 $289,300 Beaumont (1) Citywide Sidewalks & Access Ramps $141,110 $94,544 $46,566 Cathedral City (1) Whispering Palms Trail Sidewalk Project $161,187 $93,455 $67,732 Corona (1) Taber Road/State St. Sidewalk Improvements $433,209 $433,209 $0 Desert Hot Springs (2) Palm Drive Sidewalks $49,468 $34,628 $14,840 Residential Streets/Sidewalks 1,621,620 324,324 1.297,296 Total $1,671,088 $358,952 $1,312,136 Hemet Citywide Sidewalk & Access Ramp Project $261,375 $89,500 $171,875 Indio (2) Palm St. Sidewalk - Miles Ave./Indio Blvd. $220,000 $198,000 $22,000 Monroe St./Dr. Carreon Blvd. Sidewalk 44,000 39.600 4,400 Total $264,000 $237,600 $26,400 152 RCTC SB 821 PROGRAM SUBMITTALS FY 2006-07 Agency / Project Attachment I Total SB 821 Funds Local Cost Requested Match Lake Elsinore (8) Lindsay St. Sidewalk $34,000 $17,000 " $17,000 Sumner Avenue Sidewalk 17,000 8,500 8,500 Poe St. Sidewalk 35,000 17,500 17,500 Langstaff St. Sidewalk 19,500 9,750 9,750 Heald Ave. I Sidewalk 34,000 17,000 17,000 Heald Ave. II Sidewalk 44,000 22,000 22,000 Riverside Dr. Sidewalk 19,000 9,500 9,500 E. Prospect Sidewalk 7,200 3.600 3.600 Total $209,700 $104,850 $104,850 Moreno Valley (3) Perris Blvd. Sidewalk.- JFK/Filaree Ave. $105,130 $52,565 $52,565 Perris Blvd. Sidewalk - N. of Fir Ave. 58,000 29,000 29,000 Perris Blvd. & Christopher Lane Sidewalks 146,100 73.050 73;050" Total $309,230 $154,615 $154,615 Palm Springs Farrell Drive Sidewalk Project $85,700 $55,700 $30,000 Perris (2) Wilson Ave./Rider St. Sidewalks & Ramps $150,000 $75,000 $75,000 Ruby Drive Sidewalks & Ramps $100.000 $50.000 $50,000 Total $250,000 $125,000. $125,000 Riverside (6) Chicago Avenue Sidewalk $300,000 $100,000 $200,000 Orrenmaa School Footpath 154,800 , 77,400 77,400 Wayne Court Sidewalk 96,930 48,465 48,465 Peackock Lane Sidewalk 339,640 169,820 169,820 Sierra Vista Ave. Sidewalk & Ramps 158,860 79,430 79,430 Wheelchair Ramps, Norwood Ave./Golden Ave. 300.000 100,000 200,000 Total $1,350,230 $575,115 $775,115 153 • RCTC SB 821 PROGRAM SUBMITTALS FY 2006-07 Agency / Project Attachment I Total SB 821 Funds Local Cost Requested Match Riverside County (9) Bubbling Wells Road $105,300 $84,200 $21,100 Camino Campanero Street Sidewalk 75,500 45,000 30,500 Center Street Sidewalk 91,500 54,400 37,100 Clark St. Sidewalk 81,000 64,800 16,200 Claytone Ave./Canyon Pines PI. Sidewalk 86,300 68,100 18,200 Craig Street Sidewalk 291,300 106,600 184,700 Dartmouth St. Sidewalk 275,500 176,500 99,000 La Rue St. Sidewalk 111,500 85,600 25,900 Palomar St. Sidewalk 231,800 127,000 104,800 Total $1,349,700 $812,200 $537,500 I San Jacinto De Anza Dr. Sidewalk & Ramps $150,000 $75,000 $75,000 Grand Totals - 14 Agencies 44 Projects $7.215.129 11499.040 $3 716 089 JR: 5/30/06 Total SB 821 Funds Available $1,954,798 154 RIVERSIDE COUNTY TRANSPORTATION COMMISSION SB 821 EVALUATION CRITERIA FACTOR 1. USE The extent of potential use of a bicycle or pedestrian facility is the most important factor. Emphasis of this factor helps ensure the greatest benefits will be derived from the expenditure of SB 821 funds. Relative usage is to be derived from analysis of trip generators and attractors adjacent to the project. 2. SAFETY Points are awarded on the basis of a project's potential to correct current safety problems. 3. IMPORTANCE AS A TRANSPORTATION ALTERNATIVE Points are awarded on the basis of a project's potential to attract users who would otherwise use an automobile. 4. MISSING LINK, EXTENSION, OR CONNECTIVITY Points are awarded to projects that link, are extensions of, or potentially connect to existing facilities. 5. MATCHING FUNDS This factor is used to help ensure that there is local funding participation in the project not just an application for "free" money. One point would be awarded for each 5% of totalproject cost that is financed by the local agency. 6. POPULATION EQUITY The purpose of this factor is to help ensure that one agency does not receive all the funds. The applicant receives the maximum 10 points if the amount of funds requested does not exceed what the applicant would receive if the funds were allocated by population. Year to year totals are recorded so that an applicant could build up a "credit". (Calculated by RCTC) 7. PHYSICAL ACCESSIBILITY ENHANCEMENT The purpose of this factor is to enhance the physical accessibility of existing pedestrian projects. Applicant agencies may receive up to 10 "bonus" points for their project proposals which improve the physical access to existing facilities. RCTC: 04/12/1995 MAXIMUM POINTS 25 20 20 15 10 10 10 BONUS 155 • • Rank Agency 1 Moreno Valley 2 Banning 3 Riverside 4 Lake Elsinore 5 Lake Elsinore 6 Moreno Valley 7 Perris 8 Palm Springs 9 Desert Hot Springs 10 Lake Elsinore 11 Lake Elsinore 12 Riverside County 13 Riverside County 14 Banning 15 Lake Elsinore 16 Hemet 17 Lake Elsinore 18 Lake Elsinore 19 Riverside County 20 Banning 21 Riverside 22 Riverside County 23 Cathedral City 24 Riverside 25 Indio 26 Riverside County 27 Moreno Valley RIVERSIDE COUNTY -TRANSPORTATION COMMISSION SB 821 BICYCLE AND PEDESTRIAN FACILITIES PROGRAM FY 2006-07 RECOMMENDED FUNDING Project Description Perris Blvd. Sidewalk - JFK/Filaree Ave. Banning High School Sidewalk Wheelchair Ramps Lindsay St. Sidewalk Sumner Ave. Sidewalk Perris Blvd. Sidewalk - N. of Fir Ave. Ruby Drive Sidewalk & Ramps Farrell Dr. Sidewalk Palm Drive Sidewalk Poe St. Sidewalk Langstaff St. Sidewalk Craig St. Sidewalk Camino Campanero St. Sidewalk Williams St. Sidewalk Heald Ave. I Sidewalk Citywide Sidewalk & Access Ramps Riverside Dr. Sidewalk Heald Ave. II Sidewalk Center St. Sidewalk Susan B. Coombs Middle Sch. Sidewalk Chicago Ave. Sidewalk Bubbling Wells Road Sidewalk Whispering Palms Trail Sidewalk Sierra Vista Ave. Sidewalk & Ramps Monroe St. Sidewalk Clark St. Sidewalk Perris Blvd. & Christopher Lane S/W Attachment III Total SB 821 Funds Recommended Cummulative Average Costs Requested Allocation Funds Allocated Score $105,130 $52,565 $52.565 $52,565 93.6 122,000 61,000 61,000 113,565 93.4 300,000 100,000 100,000 213,565 92.2 34,000 17,000 17,000 230,565 90.1 17,000 8,500 8,500 239,065 88.7 58,000 29,000 29,000 268,065 87.4 100,000 50,000 50,000 318,065 87.2 85,700 55,700 55,700 373,765 85.2 49,468 34,628 34,628 408,393 84.6 35,000 17,500 17,500 425,893 83.3 19,500 9,750 9,750 435,643 82.3 291,300 106,600 106,600 542,243 82.2 75,500 45,000 45,000 587,243 81.7 136,000 68,000 68,000 655,243 81.6 34,000 17,000 17,000 672,243 81.3 261,375 89,500 89,500 761,743 80.2 19,000 9,500 9,500 771,243 78.9 44,000 22,000 22,000 793,243 78.7 91,500 54,400 54,400 847,643 78.3 135,600 67,800 67,800 915,443 78.2 300,000 100,000 100,000 1,015,443 78.0 105,300 84,200 84,200 1,099,643 77.5 161,187 93,455 93,455 1,193,098 77.2 158,860 79,430 79,430 1,272,528 74.6 44,000 39,600 39,600 1,312,128 74.5 81,000 64,800 64,800 1,376,928 74.5 146,100 73,050 73,050 1,449,978 74.4 Rank Agency 28 Riverside County 29 Banning 30 Riverside 31 San Jacinto 32 Riverside County 33 Riverside County 34 Riverside 35 Banning 36 Lake Elsinore 37 Riverside County 38 Perris 39 Riverside 40 Desert Hot Springs 41 Corona 42 Indio 43 Banning 44 Beaumont JR: 6/15/06 RIVERSIDE COUNTY TRANSPORTATION COMMISSION SB 821 BICYCLE AND PEDESTRIAN FACILITIES PROGRAM FY 2006-07 RECOMMENDED FUNDING Proiect-Description Palomar St. Sidewalk Morongo Ave. Sidewalk Wayne Court Sidewalk De Anza Dr. Sidewalk & Ramps Dartmouth St. Sidewalk Clayton Ave./Canyon Pines Place S/W Orrenmaa School Footpath Woodland Ave. Sidewalk E. Prospect Sidewalk La Rue St. Sidewalk Wilson Ave./Rider St. S/W & Ramps Peacock Lane Sidewalk Residential Streets Sidewalks Taber Road/State St. Sidewalk Palm St. Sidewalk Christie St. Sidewalk Citywide Sidewalk & Access Ramps Total SB 821 Funds Costs Requested 231,800 127,000 73,000 36,500 96,930 48,465 150,000 75,000 275,500 176,500 86,300 68,100 154,800 77,400 76,000 38,000 7,200 3,600 111,500 85,600 150,000 75,000 339,640 169,820 1,621,620 324,324 433,209 433,209 220,000 198,000 36,000 18,000 141,110 94,544 Recommended Allocation 127,000 36,500 48,465 75,000 176,500 41,355 0 0 0 0 0 0 0 0 0 0 0 Totals $7215,J29 $3,499.940 $1,954,798 Cummulative Funds Allocated 1,576,978 1,613,478 1,661,943 1,736,943 1,913,443 1,954,798 1,954,798 1,954,798 1,954,798 1,954,798 1,954,798 1,954,798 1,954,798 1,954,798 1,954,798 1,954,798 1,954,798 Attachment ITT Average Score 72.3 71.8 71.2 71.0 70.5 68.7 68.2 67.8 67.7 67.5 65.8 65.6 62.0 61.5 60.5 53.4 46.5 AGENDA ITEM 13 • RIVERS/DE COUNTY TRANSPORTATION COMMISSION DATE: June 26, 2006 TO: Budget and Implementation Committee FROM: John Standiford, Public Affairs Director THROUGH: Eric Haley, Executive Director SUBJECT: Award of State Legislative Advocacy Agreement STAFF RECOMMENDATION: This item is for the Committee to: 1) Approve Agreement No. 06-14-076-00 for State Legislative Advocacy Services to Smith, Watts & Company; 2) Authorize the Chairman, pursuant to legal counsel review, to execute the agreement on behalf of the Commission; and 3) Forward to the Commission for final action. BACKGROUND INFORMATION: Since 1998, the Riverside County Transportation Commission has shared a contract for state advocacy services with San Bernardino Associated Governments (SANBAG). During this shared era, the Commission has not only shared legislative advocacy contracts with SANBAG but previously employed a shared staff member who coordinated and led legislative affairs efforts. During the past three years, the Commission and SANBAG have begun to implement their own separate legislative efforts while still working in close cooperation regarding regional matters. Staff members are no longer shared between the two agencies and on September 30, 2006, the joint legislative advocacy contract will expire. The current contract is held by Smith, Watts & Company which has provided the Commission with the services of veteran lobbyists D.J. Smith and Mark Watts. Both are well -respected transportation experts with years of experience in Sacramento with leaders of both political parties and in a number of transportation responsibilities. Mr. Watts who serves as the lead consultant on the current contract has served as Chief of Staff for then -Assembly Speaker Curt Pringle and also as an Undersecretary for Transportation in the state's Business, Transportation and Housing Agency. He helped lead a statewide effort to fund Proposition 42 during the last two state budgets. 158 While the Commission has been served capably by Smith,_Watts for a number of years, staff issued a Request for Proposals (RFP) in May for state advocacy services. Doing so reflects the Commission's long standing commitment to encouraging open bidding and competition for outside contracts. The RFP was mailed to a number of lobbying firms and posted on the Commission's website. Staff also received a number of phone calls from firms who were interested in the opportunity; however, on the proposal due date of June 7, only two bids were received by the Commission. One was from Smith, Watts and the other was from TMG Government & Public Relations. An evaluation committee comprised of Commission staff reviewed the two proposals and unanimously recommended the selection of Smith, Watts for a new contract. The firm's experience, expertise in transportation matters, leadership position in statewide organizations such as Transportation California, references and cost bid were superior in every respect. State representation will be increasingly important in coming years assuming that the Governor's Strategic Growth plan, which includes $19.95 billion for transportation, is approved by voters in November. Smith, Watts' proposal complies with the Commission's RFP specifications which sought a four-year contract. Staff recommends the approval of a four-year agreement with a two-year option at a cost of $64,000 annually which would increase to $68,500 beginning in 2008. This represents an increase from the current annualized cost of $54,750 but recognizes additional consultant hours for the Commission. These hours will not be shared by the two agencies. It is also more than $40,000 less than the fee sought by the competing bidder and favorable when compared to similar agencies. Financial Information In Fiscal Year Budget: Y Year: FY 2007/08 Amount: $64,000 Source of Funds: Measure A, LTF, and other Budget Ad ustment: N GLA No.: 5-15-65506 Fiscal Procedures Approved: \14€4.4ei.e Date: 6/26/06 159 AGENDA ITEM 14 • • • RIVERS/DE COUNTY TRANSPORTATION COMMISSION DATE: June 26, 2006 TO: Budget and Implementation Committee FROM: John Standiford, Public Affairs Director THROUGH: Eric Haley, Executive Director SUBJECT: State and Federal Legislative Update STAFF RECOMMENDATION: This item is for the Committee to: 1) Adopt the following bill position: AB 1699 (Frommer, D-Glendale) — OPPOSE UNLESS AMENDED (Change in Position); 2) Receive and file as an information item; and 3) Forward to the Commission for final action. BACKGROUND INFORMATION: Federal Update: House Passes Transportation, Treasury, Housing and Urban Development (TTHUD) Appropriations Bill (HR 5576): In mid -June Congress approved a $67.8 billion TTHUD Appropriations bill which includes funding for transportation as well as a number of other items. Of the $67.8 billion total, the issue that has received considerable amount of attention and engendered controversy is the issue of earmarks which are funding for individual projects that are inserted into the bill by Members of Congress. This year, the amount of money set aside for earmarks is $895 million which is down from last year's total of $3 billion. Since these earmarks include the entire scope of the subjects covered by this appropriations bill, projects that have been identified for funding run the gamut from freeway widenings and airport improvements to community centers and swimming pools. Given the reduction of the overall amount that was earmarked, there are fewer Riverside County projects that received funding compared to last year's bill; however, the county and the Inland Empire fared much better than a number of neighboring areas including Orange and San Diego counties. 160 The Riverside County surface transportation projects that received funding in this bill include: 1-10/Ramon Road Bob Hope Interchange $ 500,000 State Route 60 Potrero Road Interchange $ 500,000 Grade Separations in Riverside $ 500,000 Riverside and Corona Transit Centers $1,250,000 Riverside Transit Agency Bus Stop Upgrades $ 250,000 SunLine Transit Agency Bus Replacement $ 500,000 In addition to the above surface transportation improvements, Palm Springs Airport is in line for a $2,000,000 earmark for improvements to the air control tower. All of these earmarks are contained in the House version of the appropriations bill, and it still has to make its way to the Senate which could result in more earmarks and potential changes in funding to earmarks in the House bill. That's a roundabout way of saying that there are still quite a few steps involved before a bill is finalized and sent to the President. Emergency Supplemental Appropriations Bill Signed by President On June 15, the President signed HR 4939, which is a $94.5. billion emergency supplemental appropriations bill authored by Committee Chairman Jerry Lewis. The primary focus of the bill is to provide funding for the War on Terror and for Disaster Relief. Included in the disaster relief, portion of the bill is $245 million to the state of California for the reimbursement of costs incurred for emergency work on California's roads and highways during the winter storms of December 2004. Riverside County is listed among seven others where this work took place. State Update CTC and Caltrans to Hold Workshop on Bond Program On June 27, Executive Director Eric Haley and two other staff members will travel to Sacramento to participate in a workshop regarding the bond proposals that will appear on the November ballot. Should the transportation bonds pass, the California Transportation Commission iCTC) will play an important role in establishing the criteria used to select projects for funding. The meeting on the 27`" is one of the first steps in the process that will take place to develop policies to be established after November's election. • 161 • • • AB 1699 — Bill Would Hamper Metrolink Operations AB 1699 by Assemblyman Dario Frommer (D-Glendale) attempts to address the issue of commuter rail safety. Since its inception, Metrolink has operated trains in a push-pull configuration which allows a locomotive to either pull the passenger cars or push the passenger cars with the locomotive in the back. The form of operation omits the need to turn the train around at the end of a run or to operate multiple locomotives. This type of operating system is used throughout the world by passenger train systems including Amtrak. Metrolink's darkest day occurred on January 26, 2005, when 11 people were killed in a crash which is about to be the subject of a murder trial since it appears to have been deliberately caused. One train that was involved in the incident was being pushed by a locomotive and was derailed in the impact. Some critics believe that the crash was much worse because the initial impact was borne by a light cab car rather than a locomotive. The crash took place in Assemblyman Frommer's district. Since the incident, he has been an outspoken critic of push-pull operations. As recently amended, AB 1699 would prohibit passengers from sitting in the first 10 rows of any cab car that is used in push configuration until 2010. Beginning January 1, 2010, operating a commuter train in push configuration would be prohibited. The wording in the bill is so absolute that a commuter rail system wouldn't even be able to run a train in push configuration with an entirely empty car in the front. Since the Glendale crash, Metrolink has taken a proactive approach regarding the push-pull controversy. In March, United States Transportation Secretary Norm Mineta appeared at a press conference with Metrolink's Executive Director David Solow to promote rail safety and to highlight the purchase of new cab cars that feature a design trait known referred to as "crash energy management" which is a system designed to distribute the impact of a crash throughout the train so passengers can avoid injuries. Crash tests of this new cab car have shown significant promise, and Metrolink has approved a $305 million contract to purchase new cab cars. Unfortunately the Frommer bill ignores this promising development and is so absolute that Metrolink operations would be severely undermined by a complete ban on push operations. RCTC staff suggests an OPPOSE UNLESS AMENDED position on AB 1699 with the hope of seeing amendments to the bill that wou►d encourage Metrolink's ongoing safety efforts. A ban on push operations would either require locomotives on both ends of passenger trains or the construction of 162 railroad infrastructure known as "wyes" that are expensive, require large portions of land to construct, and would allow trains to turn around. To further confuse this issue, RCTC previously took a SUPPORT position on AB 1699 when it concerned the issue of design build. On June 13, what was once a bill that would have allowed design bid contracting was gutted and amended into its current form. Attachment: Legislative Matrix 163 RIVERSIDE COUNTY TRANSPORTATION COMMISSION __ POSITIONS \ON STATE'AN0FEDERAL LEGISLATION —UPDATED June16'2006 A8 426 (Bogh) This bill would require Caltranu to convert all HOV lanes on state highways in Riverside County that currently operate on a 24~huur basis into part-time HOV lanes that operate as nnixad'f|ovv lanes except during peak periods, subject toany required approvals of the federal government. Bill iodead. SUPP]RT|W CONCEPT 4/13A35 A0 453 (Benoit) This bill would extend the time limit that is currently in p|oum under state law for state funding of railroad grade crossings. 9/32/O5—Signed by Governor. SUPPORT 4/13/05 A0 850 (Canuiami||u) This bill would authorize the Department of Transportation to enter into comprehensive development franchise agreements with public and private entities for specified types of transportation projects subject tocertain requirements and conditions. The bill would require a franchise agreement to allow the department to acquire b, condemnation or negotiation the financial value of a competing toll facility ifitopens a competitive state facility inthe sonna corridor. Bill is dead. SUPPORT WITH AMENDMENTS 4/13/05 A0 1266 (Nie||o) This bill would generally authorize the Department of Transportation to award contracts for projects using the design -sequencing contract method, if certain requirements are met. Bill iodead. SUPPORT 4/12/05 AB 1699 (Fronomer) As amended, this bill bans passenger seating in the first 10 rows of K8etrn|ink forward cab oero in the "push" mode by 2007, and bans a|tV0mthn, the ''push" mode beginning in 2010. The original bill stated the intent of the Legislature to authorize certain transportation authorities to use a design -build process for bidding on one highway construction project. 6/13/00. Passed by Assembly, amended, and referred to Senate Committee on Transportation & Housing OPPOSE UNLESS AMENDED (change in position from "3UPPDRT8V CONCEPT") Pending Commission Approval A0 1714 (P|eooia) This bill would require the construction of the more affordable skyway structure and would limit the use ofadditional toll revenue toseismic retrofit projects such an the Bay Bridge repair. The utata'u responsibility of$3OUmillion will befor the demolition ofthe old bridge. The rest of the money needed to complete the new bridge would have to be ruined frohn a combination of increased tu||o, local bond sales and existing state and federal highway appropriations. AB 1714reflects the Governor's position onthe Bridge issue. Bill is dead. SUPPORT 5/11/05 AB 2015 (Lieu) As amended, this bill would add one seat to the South Coast Air Quality Management District board for the South Bay cities in Lon Angeles County, The original bill added one seat to each of the counties in the SC/lKD region' however, the bill was amended to only allow one seat to be added to accommodate the coastal cities in L.A. county vvhoaa seat is perennially dominated by the City of Los 0/13/06. Puuuad by Assembly; inSanate y� ' referred to Committee onLocal Government OPPOSE 0/14/06 P uDeAou&.d*c eri 3 u, �'y i AB 2025 (Niello) This bill would authorize the department to contract using the design- build process, as defined, for the design and construction of transportation projects. 4/17/06 Hearing postponed by Assembly Transportation Committee SUPPORT AB 2028 (Huff) This bill would state the intent of the Legislature to provide an appropriation in the Budget Act of 2007 or in related legislation during the 2007-08 fiscal year to repay fully all funds which would have been transferred to the Transportation Investment Fund in previous fiscal years. 2/15/06 From Printer. No hearing date set. SUPPORT 4/12/06 AB 2630 (Benoit) Originally, this bill lifted a. ten-year moratorium on cities utilizing PUC funds for grade separation projects before they could again pull funding for another grade separation. The bill also allowed a local 10% match to substitute for the required 10% match by railroads for grade separation projects. The bill was amended to eliminate the local match option, keeping railroads responsible for a 10% match, and the ten-year restriction remains unless Caltrans deems that there are extra funds available to fund another grade separation in the city. The bill is sponsored by the City of Riverside. Passed Assembly floor, in Senate, referred to Committee on Transportation & Housing on 6/3/06 SUPPORT 1 /12/05 ACA 4 (Plescia) This measure would delete the provision authorizing the Governor and the Legislature to suspend the transfer of revenues from the General Fund to the Transportation Investment Fund for a fiscal year during a fiscal emergency, specific to Proposition 42. Approved by Assembly Transportation Committee on 1/10/06 and referred to Appropriations. SUPPORT 3/18/05 ACA 9 (Bogh) This measure would change the vote requirement to 4/5 of the membership of :each house of the Legislature in order to enact a statute suspending in whole or in part the transfer of motor vehicle tax revenue from the General Fund to the Transportation Investment Fund, specific to Proposition 42. Approved by Assembly Transportation Committee on 1/10/06 and referred to Appropriations. SUPPORT 3/18/05 ACA 11 (Oropeza) This measure would delete the provisions authorizing the transfer of revenues from the. General Fund to the Transportation Investment Fund to be suspended. The measure would authorize the Legislature to loan funds in the Transportation Investment Fund to the General Fund or any other.state fund or account, or to local agencies, under conditions that are similar to conditions applicable to loans of revenues under Article XIX of the California Constitution, and would require interest to be paid on a loan that is not repaid within the same fiscal year as it was made, specific to Proposition 42. Approyed by . Assembly • Transportation Committee on 1/10/06 and referred to Appropriations. SUPPORT 9/14/05 F Ausers\preprint\j s\l egmat. doc • • W 3 ik 3 f li ,l l $• �P 9 A 1 �I� i Z �1 ilA OM B 1 � �p - @ •.�f Lii— w ACA 22 (LaMalfal Proposed Constitutional Amendment would severely restrict the use of eminent domain. Bill is Dead. SEEK AMENDMENTS 4/13/05 ACA X 1 4 (Keene) This measure would, on and after July 1, 2006, prohibit the transfer of funds from a special fund to the General Fund as a loan, with specified exceptions. Any funds that were transferred prior to that date from a special fund for the purpose of making a loan to the General Fund and that have not been repaid would be required to be repaid over the next 15 years. In exchange, Proposition 42 would be permanently protected in the future. Amended. Re- referred to Committee on Budget Process 4/12/05. WATCH 5/11/05 SB 371 (Torlakson) This bill would allow state, regional, and local transportation -authorities to try design -build contracting under specific criteria and for these projects to be audited to determine the success or failure of use of design -build by these transportation entities. 1 /31 /06 In Assembly. Read first time. Held. SUPPORT IN CONCEPT 4/13/05 SB 427 (Hollingsworth) Originally, this bill would exempt from CEQA requirements the construction of any overpass, onramp, or offramp that is built on an existing State Department of Transportation (CALTRANS) right -of- way. It has now been amended to make changes to the environmental scoping process and additional amendments are likely. 2/16/06 To Committee on Natural Resources. SUPPORT 7/13/05 SB 561 (Runner & Torlakson) This bill would provide additional transportation options in allowing for toll facilities, but does so in a manner that eliminates the inherent unfairness to the public from the imposition of non -compete clauses. 1 /31 /06 Returned to Secretary of Senate. SUPPORT 4/13/05 SB 705 (Runner) This bill would authorize the Department of Transportation to contract using the design -build process for the design and construction of transportation projects. The bill would require the director of the department to establish a prequalification and selection process. 2/1/06 Returned to Secretary of Senate. SUPPORT 12/14/05 SB 1024 Torlakson & Perata) This bill would enact the Safe Facilities, Improved Mobility, and Clean Air Bond Act of 2005 to authorize $7,688,000,000 in state general obligation bonds for specified purposes, including the seismic retrofit of toll bridges, levee improvements, restoration of Proposition 42 transportation funds, port infrastructure and security projects, trade corridors of significance, emissions reduction projects, environmental enhancement projects, and transportation needs in cities, counties, and cities and counties that meet certain requirements relative to provisions of housing needs in their communities, subject to voter approval.- 1 /31 /06 In Assembly. Read first time. Held.' SUPPORT WITH AMENDMENTS 4/12/06 F Ausers\preprint\j s11 egm at. doc �� l el I il, , ti .. Ad©p# SB 1812 (Runner) This bill allows the State of California to waive its 11`h Amendment protection against lawsuits brought in federal court and assume responsibility for enforcing NEPA regulations under a pilot program included in SAFETEA-LU. The bill streamlines the 'environmental process and is sponsored by Caltrans, who is actively seeking to participate in the program. 5/25/06 held in Senate Appropriations Committee under submission SUPPORT 9/14/05 SCA 15 (McClintock) Proposed Constitutional Amendment would severely restrict the use of eminent domain. 8/30/05 Set first hearing. Failed passage in Committee 3-2. Reconsideration granted. SEEK AMENDMENTS 9/14/05 FEDERAL LEGISLATION H.R. 3 (Young) The U.S. House of Representatives approved H.R. 3 authored by Alaska Republican Don Young which provides a six -year renewal of the Federal Transportation Act. Known as SAFETEA-LU (Transportation Equity Act: A Legacy for Users), H.R. 3 authorizes the expenditure of $284 billion over six years on federal transportation programs and also sets a number of federal - transportation policies. Signed by the President on Aug. 10 SUPPORT 4/13/05 H.R. 5329 (Miller) Co -Sponsored by Rep. Ken Calvert (R-Corona), this bill priveds $390 million in federal funding for a series of improvements on SR-91 in Riverside and Orange Counties, consistent with RCTC and OCTA's official priorities :for the corridor. 5/10/06. Referred to House Subcommittee on Highways, Transit, and Pipelines SUPPORT 6/14/06 F:\users\pre rint\js\legmat.doc