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05 May 14, 2008 Commission84018 RECORDS • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION MEETING AGENDA TIME: 9:30 a.m. DATE: Wednesday, May 14, 2008 LOCATION: BOARD ROOM County of Riverside Administrative Center 4080 Lemon Street, First Floor, Riverside Commissioners Chair: Jeff Stone 1S1 Vice Chair: Bob Magee 2nd Vice Chair: Bob Buster Bob Buster, County of Riverside John F. Tavaglione, County of Riverside Jeff Stone, County of Riverside Roy Wilson, County of Riverside Marion Ashley, County of Riverside Bob Botts / Brenda Salas, City of Banning Roger Berg / Jeff Fox, City of Beaumont Joseph DeConinck / Robert Crain, City of Blythe John Chlebnik / Ray Quinto, City of Calimesa Mary Craton / John Zaitz, City of Canyon Lake Gregory S. Pettis / Kathleen DeRosa, City of Cathedral City Eduardo Garcia / Steven Hernandez, City of Coachella Jeff Miller / Eugene Montanez, City of Corona Yvonne Parks / Scott Matas, City of Desert Hot Springs Robin Lowe / Eric McBride, City of Hemet Patrick J. Mullany / Larry Spicer, City of Indian Wells Michael H. Wilson / Melanie Fesmire, City of Indio Terry Henderson / Don Adolph, City of La Quinta Bob Magee / Robert L. Schiffner, City of Lake Elsinore Frank West / Charles White, City of Moreno Valley Rick Gibbs / Kelly Bennett, City of Murrieta Frank Hall / Malcolm Miller, City of Norco Dick Kelly / Cindy Finerty, City of Palm Desert Ginny Foat / Steve Pougnet, City of Palm Springs Daryl Busch / Mark Yarbrough, City of Perris Gordon Moller / Alan Seman, City of Rancho Mirage Steve Adams / Andy Melendrez, City of Riverside Chris Carlson / Jim Ayres, City of San Jacinto Ron Roberts / Jeff Comerchero, City of Temecula Mike Perovich, Governor's Appointee Anne Mayer, Executive Director John Standiford, Deputy Executive Director Comments are welcomed by the Commission. if you wish to provide comments to the Commission, please complete and submit a Speaker Card to the Clerk of the Board. 11.36.00 • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION www.rctc.org AGENDA* *Actions may be taken on any item listed on the agenda 9:30 a.m. Wednesday, May 14, 2008 BOARD ROOM County of Riverside Administrative Center 4080 Lemon Street, First Floor, Riverside In compliance with the Americans with Disabilities Act and Government Code Section 54954.2, if special assistance is needed to participate in a Commission 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. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. PUBLIC COMMENTS - Each individual speaker is limited to speak three (3) continuous minutes or less. The Commission may, either at the direction of the Chair or by majority vote of the Commission, waive this three minute time limitation. Depending oh the number of (items on the Agenda and the number of speakers, the Chair may, at his/her discretion, reduce the time of each speaker to two (2) continuous minutes. In addition, the maximum time for public comment for any individual item or topic is thirty (30) minutes. Also, the Commission may terminate public comments if such comments become repetitious. Speakers may not yield their time to others without the consent of the Chair. Any written documents to be distributed or presented to the Commission shall be submitted to the Clerk of the Board. This policy applies to Public Comments and comments on Agenda Items. Under the Brown Act, the Board should not take action on or discuss matters raised during public comment portion of the agenda which are not listed on the agenda. Board members may refer such matters to staff for factual information or to be placed on the subsequent agenda for consideration. 5. APPROVAL OF MINUTES - APRIL 9, 2008 Riverside County Transportation Commission Agenda May 14, 2008 Page 2 6.. PUBLIC HEARING — PROPOSED BUDGET FISCAL YEAR 2008/09 Overview This item is for the Commission to: 1) Discuss, review and provide guidance on the proposed Budget for FY 2008/09; and 2) Open the public hearing in order to receive input and comments on the proposed FY 2008/09 Budget on May 14, 2008, and on June 11, 2008, and close the public hearing. Page 1 7. ADDITIONS/REVISIONS — The Commission 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 Commission subsequent to the posting of the agenda. An action adding an item to the agenda requires 2/3 vote of the Commission. If there -are less than 2/3 of the Commission 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. 8. 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. 8A. QUARTERLY INVESTMENT REPORT Page 21 Overview This item is for the Commission to receive and file the Quarterly Investment Report for the quarter ended March 31, 2008. 8B. INTERFUND LOAN ACTIVITY REPORT Overview This item is for the Commission to receive and file the lnterfund Loan Activity Report. Page 34 • • • Riverside County Transportation Commission Agenda May 14, 2008 Page 3 8C. NEED FOR ADDITIONAL FUNDING FOR THE STATE ROUTE 91 HIGH OCCUPANCY VEHICLE LANE PROJECT Overview This item is for the Commission to: Page 36 1) Approve funding up to $51 million for the SR-91 high occupancy vehicle (HOV) right-of-way phase to be funded by a combination of federal funds and a Traffic Congestion Relief Program (TCRP) letter of no prejudice (LONP) reimbursement by Caltrans; 2) Approve up to $3.8 million of 1989 Measure A Highway funds as a loan to match the federal funds for cash flow purposes until the TCRP LONP funds are available to pay back any Measure A funds used; and 3) Authorize the Executive Director, pursuant to legal counsel review, to execute the Cooperative Agreement Amendment No. 08-31-002-01 and Corridor Mobility Improvement Account (CMIA) baseline certification amendment on behalf of the Commission. 8D. ALAMEDA CORRIDOR EAST SAFE, ACCOUNTABLE, FLEXIBLE, EFFICIENT TRANSPORTATION EQUITY ACT: A LEGACY FOR USERS EARMARK UPDATE Overview This item is for the Commission to: Page 39 1) Allocate $4.05 million of the Commission's Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) Alameda Corridor East (ACE) earmark funds to the city of Riverside for the Iowa Avenue grade separation; 2) Deobligate $4.05 million of Surface Transportation Program (STP) funds that were previously allocated to the city of Riverside for the Iowa Avenue grade separation; 3) Approve the reprogramming of $600,000 in SAFETEA-LU funds from the McKinley Street grade separation to Auto Center Drive grade separation; and 4) Approve the Riverside County ACE corridor updated financial plan for submission to the Federal Highway Administration (FHWA). Riverside County Transportation Commission Agenda May 14, 2008 Page 4 8E. AMENDMENT NO. 2 WITH BRE PROPERTIES FOR TRANSIT ORIENTED DEVELOPMENT AT THE LA SIERRA METROLINK STATION Overview This item is for the Commission to: Page 43 1) Approve Agreement No. 07-67-004-02, Amendment No. 2 to Agreement No. 07-67-004-00, with BRE Properties for transit oriented development (TOD) at the La Sierra Metrolink station; and 2) Authorize the Chair, pursuant to legal counsel review to execute the agreement on behalf of the Commission. 8F. PROPERTY EASEMENT AMENDMENTS TO ACCOMMODATE TRANSIT ORIENTED DEVELOPMENT PLANS WITH BRE PROPERTIES ADJACENT TO THE RIVERSIDE DOWNTOWN METROLINK STATION Overview This item is for the Commission to: Page 45 1) Amend property easement nos. 73060 and 313756 to accommodate transit oriented development (TOD) plans with BRE Properties adjacent to the Riverside Downtown Metrolink station; and 2) Authorize the Chair, pursuant to legal counsel review, to execute the agreement on behalf of the Commission. 8G. COMMUTER RAIL PROGRAM UPDATE Overview Page 48 This item is for the Commission to receive and file an update on the Commuter Rail Program. 8H. RIVERSIDE TRANSIT AGENCY'S FISCAL YEAR 2007/08 SHORT RANGE TRANSIT PLAN Overview Page 58 This item is for the Commission to approve Amendment No. 4 to Riverside Transit Agency's (RTA) FY 2007/08 Short Range Transit Plan (SRTP) to reflect an additional $135,000 in Commuter Rail Local Transportation Fund (LTF) funds to provide shuttle services to the leased satellite parking lot during construction of the North Main Corona parking structure. Riverside County Transportation Commission Agenda May 14, 2008 Page 5 81. WESTERN RIVERSIDE MEASURE A SPECIALIZED TRANSIT PROGRAM FUNDS ALLOCATION TO THE INDEPENDENT LIVING PARTNERSHIP Page 60 Overview This item is for the Commission to: 1) Allocate $32,000 in Western Riverside Measure A Specialized Transit funds to Independent Living Partnership to accommodate additional program participation; and 2) Approve a budget adjustment for a $32,000 increase to Measure A Specialized Transit expenditures in FY 2007/08. 8J. AGREEMENTS WITH EPIC LAND SOLUTIONS, INC., REAL ESTATE CONSULTING & SERVICES, INC., AND OVERLAND PACIFIC & CUTLER, INC. TO PROVIDE ON -CALL PROPERTY MANAGEMENT SERVICES Page 62 Overview This item is for the Commission to: 1) Approve Agreement No. 07-33-151-01, Amendment No. 1 to Agreement No. 07-33-151-00, with Epic Land Solutions, Inc.; 2) Approve Agreement No. 07-33-153-05, Amendment No. 2 to Agreement No. 07-33-153-00, with Real Estate Consulting & Services, Inc; 3) Approve Agreement No. 07-33-152-01, Amendment No. 1 to Agreement No. 07-33-152-00, with Overland Pacific & Cutler, Inc., to provide on -call right-of-way property management services in the amount of $750,000 each, plus a pool contingency of $1 million, for a total services amount of $3.87 million; and 4) Authorize the Chair, pursuant to legal counsel review, to execute the agreements on behalf of the Commission. • Riverside County Transportation Commission Agenda May 14, 2008 Page 6 8K. AGREEMENTS WITH BRYAN A. STIRRAT & ASSOCIATES, LEIGHTON CONSULTING, INC., NINYO & MOORE GEOTECHNICAL, BUREAU VERITAS NA, INC., AND TETRA TECH FOR ON -CALL RIGHT-OF-WAY PHASE 1 AND PHASE II ENVIRONMENTAL SOIL ASSESSMENT SERVICES Page 64 Overview This item is for the Commission to: 1) Approve Agreement No. 07-31-146-03, Amendment No. 1 to Agreement No. 07-31-146-00, with Bryan A. Stirrat & Associates; 2) Approve Agreement No. 07-31-147-06, Amendment No. 2 to Agreement No. 07-31-147-00, with Leighton Consulting, Inc.; 3) Approve Agreement No. 07-31-148-01, Amendment No. 1 to Agreement No. 07-31-148-00, with Ninyo & Moore Geotechnical; 4) Approve Agreement No. 07-31-149-02, Amendment No. 1 to Agreement No. 07-31-149-00, with Bureau Veritas NA, Inc.; 5) Approve Agreement No. 07-31-150-02, Amendment No. 1 to Agreement No. 07-31-150-00, with Tetra Tech to perform on -call right-of-way phase I and phase II environmental assessment services in the amount of $350,000 each, plus a pool contingency of $1 million, for a total services amount of $3.138 million; and 6) Authorize the Chair, pursuant to legal counsel review, to execute the agreements on behalf of the Commission. 8L. AGREEMENT WITH VOLT EDGE SERVICES TO PROVIDE MINOR GENERAL, ELECTRICAL, MAINTENANCE, AND .REPAIR SERVICES FOR THE COMMISSION -OWNED METROLINK STATIONS Overview This item is for the Commission to: Page 66 1) Approve Agreement No. 08-24-087-00 with Volt Edge Services to provide minor general, electrical maintenance, and repair services for the five Commission -owned Metrolink stations in the amount of $150,000; and 2) Authorize the Chair, pursuant to legal counsel review, to execute the agreement son behalf of the Commission. Riverside County Transportation Commission Agenda May 14, 2008 Page 7 8M. STATE AND FEDERAL LEGISLATIVE UPDATE Overview This item is for the Commission to: Page 68 1) Receive and file an update on state and federal legislation; and 2) Approve positions on the following state bills and proposition: a) AB 3021 (Nava) — Support; b) AB 1854 (Duvall) — Work with author; c) Proposition 98 — Oppose. 9. AUTHORIZATION FOR ISSUANCE OF SALES TAX REVENUE BONDS Overview This item is for the Commission to: Page 72 1) Receive and file the overview presentation regarding the issuance of the 2008 Series A Sales Tax Revenue Bonds; 2) Adopt Resolution No. 08-010, "Resolution Authorizing the Issuance and Sale of Not to Exceed $130,000,000 Aggregate Principal Amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax. Bonds), Series 2008, the Execution and Delivery of an Indenture, Supplemental Indenture, Purchase Contract, Official Statement and Continuing Disclosure Agreement and the Taking of All Other Actions Necessary in Connection Therewith;" 3) Approve the draft Preliminary Official Statement for the issuance of $130,000,000 in 2008 Series A Sales Tax Revenue Bonds and authorize the Executive Director to approve and execute the issuance of the final Official Statement; 4) Approve the draft Indenture between the Riverside County Transportation Commission and U.S. Bank National Association, as Trustee, and authorize the Executive Director to approve and execute the final indenture; 5) Approve the draft First Supplemental Indenture between the Riverside County Transportation Commission and U.S. Bank National Association, as Trustee, and authorize the Executive Director to approve and execute the final first supplemental indenture; and 6) Approve the draft Bond Purchase Agreement between the Riverside County Transportation Commission and Lehman Brothers, as Underwriter Representative acting on behalf of itself and Banc of America Securities LLC, and authorize the Executive Director to approve and execute the final bond purchase agreement. Riverside County Transportation Commission Agenda May 14, 2008 Page 8 10. TRADE CORRIDORS IMPROVEMENT FUND PROGRAM OF PROJECTS AND NEXT STEPS REPORT Overview Page 294 This item is for the Commission to receive an update on the Trade Corridors Improvement Fund (TCIF) approved program of projects and Next Steps report. 11. PERRIS VALLEY LINE FREIGHT STUDY Overview Page 300 This item is for the Commission to receive and file a presentation on the findings of the draft Perris Valley Line (PVL) Freight Study. 12. ITEM(S) PULLED FROM CONSENT CALENDAR AGENDA 13. COMMISSIONERS / EXECUTIVE DIRECTOR REPORT Overview • This item provides the opportunity for the Commissioners and the41111 Executive Director to report on attended meetings/conferences and any other items related to Commission activities. 14. CLOSED SESSION 14A. CONFERENCE WITH LEGAL COUNSEL: ANTICIPATED LITIGATION Pursuant to Subdivision (b) of Government Code Section 54956.9 (b). One Case 15. ADJOURNMENT The next Commission meeting is scheduled to be held at 9:30 a.m., Wednesday, June 11, 2008, Board Room, County of Riverside Administrative Center, 4080 Lemon Street, First Floor, Riverside. • RIVERSIDE COUNTY TRANSPORTATION COMMISSION MEETING COMMISSIONER SIGN -IN SHEET MAY 14, 2008 NAME AGENC E Am_ AD/PRESS t-- f 7/fJri %/7s6�l & Lifre-r �i94vWe.- s�:�� /%1d EAiD VA rlie---y .��iShc1/Acei[�C�•(1 -flshatl1945®aol.e-eiq �.P.4N,._ 7444L[_ Nacca C6 k6S 14tir(IA// /ic)-- .� / �0-1 E. Cv c� t / L/� I////^// V 1 I a -Li, �nr� .--e �m „ 0, �4 Mt ilei / / ��� �4,L.��� C�� � - 47---i d,r ��,3 el v G 4 " t Yt,s.v>4-6' 0 4 wcY _ 10 / id Gu G EB/%f/� C/elLf /''/Es -Al-, Cad, /'z,,�4f mo i-C.Bg, nff-0 /�/t t 42-46vi4c--' �iEGO /M-e7. - W i L� P) /pi 6- Lt7 �d o 1-\ (-3 ) l sou` R \v Cc t 27A--(q,e/.< ("/g.,z1-,aC7 i 4.7,/Id r(LS Nt a 247 e ,�,� <1e/�. //� c— �T, 41eerr Deeas_. GAzT4ec ,e..4Z C/�% " vo,✓A � Ks 4.E5 � T S' //,(/� s ,,` \)41-3-sz)._� 0� A-j N. i RIVERSIDE COUNTY TRANSPORTATION COMMISSION ROLL CALL MAY 14, 2008 Presen Absent County of Riverside,, D'strict,I CI County of Riverside, District II County of Riverside, District III County of Riverside, District IV County of Riverside, District V City of Banning City of Beaumont City of Blythe City of Calimesa'_ City of Canyon Lake City :of Cathedral City City of Coachella City of Corona City of Desert Hot Springs City of Hemet City of Indian Wells City of Indio City of La Quinta City of Lake Elsinore City of Moreno Valley City of Murrieta City of Norco City of Palm Desert City of Palm Springs City of Perris City of Rancho Mirage City of Riverside; City of San Jacinto City, of, Temecula Governor's Appointee, Caltrans District Riverside County Transportation Commission TO: FROM: DATE: Riverside County Transportation Commission Jennifer Harmon, Clerk of the Board May 5, 2008 SUBJECT: Possible Conflicts of Interest Issues —Riverside County Transportation Commission Agenda of May 14, 2008 The May 14, 2008 Riverside County Transportation Commission agenda includes items which may raise possible conflicts of interest. A Commission member may not participate in any discussion or action concerning a contract or amendment if a campaign contribution of more than $250 is received in the past 12 months from any entity or individual listed. Agenda Item No. 8J — Agreements with Epic Land Solutions, Inc., Real Estate Consulting and Services, Inc., and Overland Pacific and Cutler, Inc., to Provide On -Call Property Management Services Consultant(s): Epic Land Solutions, Inc. Holly Rockwell 601 Airport Drive, Suite 115 Torrance, CA 90505 Real Estate Consulting and Services, Inc. Paul Strader 635 E. First Street Suite 418 Tustin, CA 92780 Overland, Pacific and Cutler, Inc. John M. Cutler 100 W. Broadway, Suite 500 Long Beach, CA 90802 Agenda Item No. 8K - Agreements with Bryan A. Stirrat & Associates, Leighton Consulting, Inc., Ninyo and Moore Geotechnical, Bureau Veritas NA., Inc., and Tetra Tech for On -Call Right -of -Way Phase I and Phase ll Environmental Soil Assessment Services Consultant(s): Bryan A. Stirrat and Associates Greg Acosta 13670 Valley Vista Drive Diamond Bar, CA 91765 Ninyo and Moore Kurt Yoshii 475 Goddard, Suite 200 Irvine, CA 92618 Tetra Tech, Inc. Javier Weckmann 348 W. Hospitality lane San Bernardino, CA 92408-3214 Leighton Consulting, Inc. Kris R. Lutton 41715 Enterprise Circle N. Suite 103 Temecula, CA 92590-5661 Bureau Veritas NA., Inc. Ed Stewart 1565 MacArthur Boulevard Costa Mesa, CA 92626 Riverside County Transportation Commission TO: FROM: DATE: Riverside County Transportation Commission Jennifer Harmon, Clerk of the Board May 5, 2008 SUBJECT: Possible Conflicts of Interest Issues -Riverside County Transportation Commission Agenda of May 14, 2008 The May 14, 2008 Riverside County Transportation Commission agenda includes items which may raise possible conflicts of interest. A Commission member may not participate in any discussion or action concerning a contract or amendment if a campaign contribution of more than $250 is received in the past 12 months from any entity or individual listed. Agenda Item No. 8J - Agreements with Epic Land Solutions, Inc., Real Estate Consulting and Services, Inc., and Overland Pacific and Cutler, Inc., to Provide On -Call Property Management Services Consultant(s): Epic Land Solutions, Inc. Holly Rockwell 601 Airport Drive, Suite 115 Torrance, CA 90505 Real Estate Consulting and Services, Inc. Paul Strader 635 E. First Street Suite 418 Tustin, CA 92780 Overland, Pacific and Cutler, Inc. John M. Cutler 100 W. Broadway, Suite 500 Long Beach, CA 90802 Agenda Item No. 8K - Agreements with Bryan A. Stirrat & Associates, Leighton Consulting, Inc., Ninyo and Moore Geotechnical, Bureau Veritas NA., Inc., and Tetra Tech for On -Call Right -of -Way Phase I and Phase II Environmental Soil Assessment Services Consultant(s): Bryan A. Stirrat and Associates Greg Acosta 13670 Valley Vista Drive Diamond Bar, CA 91765 Ninyo and Moore Kurt Yoshii 475 Goddard, Suite 200 Irvine, CA 92618 Tetra Tech, Inc. Javier Weckmann 348 W. Hospitality Lane San Bernardino, CA 92408-3214 Leighton Consulting, Inc. Kris R. Lutton 41715 Enterprise Circle N. Suite 103 Temecula, CA 92590-5661 Bureau Veritas NA., Inc. Ed Stewart 1565 MacArthur Boulevard Costa Mesa, CA 92626 DETACH AND SUBMIT TO THE CLERK OF THE BOARD DATE: 5 - o g P CHECK IFSUBJECTOF e rS �, C'Doi�,vfir p �Ou►�'-' PUBLIC COMMENTS: I� PUBLLIC C COMMENTS: I ►"/ a ,Q � _ AGENDA .}- ITEM NO.: �� SUBJECT OF ( CUY��LS IAS LISTED ON THE AGENDA) AGENDA ITEM: NAME: ��1-Y\\ S W • Gd ADDRESS: PHONE NO.: ! p% 1 034 6 p l 970 GzAfiew st 14_\lhyrov2, clk 923I3 STREET CITY % ZIP CODE REPRESENTING: NAME OF AGENCY / ORGANIZATION / GROUP BUSINESS ADDRESS: PHONE NO.: STREET CITY ZIP CODE Aauseuivaddegeno.6461wwwggam (1130) WOO, aauunapeo4)sMauanoa6g614 i!ew-j (xVd) tneaV ,fravn o (ewoH) Vtite#680NO/b la801 f� 8499-99Z-1.96 89Z1-£89-1.96 4664-£89-496 iN 9�9 Q N.y-, .L. N-b-D-H A =9 a s3 N D-Li 899Z112-6 —7) vd-v •any elpAwied pue • S Supds uaannlaq pew mau pasodwd aun uaaig as aun Re spJad au!! paa as dSNEI s! aui� a�dand en u.ent/..,all,Auiletl `. MUM! mau Tut ;s Bupds 1Q r 'Ow 4 V! OeHuni c 7 m .. • Seinl 9T SaJDV 61 oulpaeu.aag lies oa Sal!w L ap!sian!?l oa sal!►u S'£ I Metr_olink route headed to I-14 grove! After 6 'h years of trying to con- you that we were not instrumental in wince someone to purchase the vacant influencing the decision to change the 35acres near Highgrovesothis loci- route recommendation tollghgrovejust tioncan beUsed for transportation uses, ,2dayabefore,thecommissionersmeet- onApril 9, 2008 the Riverside County, . m& } `. . Transportation Commiss'ionreversedits Everybody. knows about the 6_,'/s decision and voted 24 to 0 to revise year old resolutions ofsupportfor.the their previous Preferred routeoverthe 1-IighgroveIyletrolinklocahonfrointhe ,? UnionPacificRRtrackatMarlborough 1-lighgroveCSA126,CityofGranOTer. Ave. and ins -aA studyusingthesame race, CityofLomaLinda, and the Uni- vacant35 acres we have been recom versityNeighborhoodAssociation near a mending for many years This location VCR who oppose 2 stations close to---1 is bordered by Citrus St. on the south, getherin.their neighborhood. - Villa St. on the north, the Perris Valley • So what? happened to make j Line RR track on the east and the RCTC'change therrminds? 1. BNSF RR tracks on the west and sur ` In'a letter to RCTC:dated Dec •13 { rounded by1-lghgroveorr3sides. This -2007, from the Federal -Transit i route would include a curved track be-: Administration's Regional Administra :.;! tween the Perris Valley Line track and .tor, Leslie Rogers, part of the letter_ a possible new 4th main track parallel ' ; to the present BNSF tracks or con- Finally, FTA is concerned about nectingtothe #3main line near Citrus _ the capitol cost'estiniates and the St. that would handle trains between . projicti cost-effectiveness Although Penis and Riverside. the project currently warrants a On Monday April 7; 2008, Denis "medium."rating for cost-effective ness,' any increase in the .projects cost could result in the project re- { ceiving a `medium -low" cost_effec- j tiveness rating. Thus.FTA encour- I, ages you to undertake cost -contain -I meet measures and value engineer- j Cont. on page 8 Kidd and I met with RCTC's Stephanie Wiggins, John Standiford and.Eliza Echevarria two days prior to the commission's decision. Our meeting with them was to learn what the staff recommendations would betothe com- mission on the.following Wednesday: After 6'h years of trying, I can assure t OER„OVIE HAPPEN GS Metrolink Continued from page 1 ing to identify further reductions in the projects capitol cost esti- mate': - Cost estimates from RCTC Staff to the commissioners on April 9th , in- dicated there would be a $4.61 mil- lion dollars savings to come to High - grove instead of going over the Union Pacific track at Marlborough Avenue. Also, in an article that appeared, in the Press Enterprise on the morning ofApril 9, 2008, just before the com- mission voted, John Standiford was quoted as saying: "We are doing this as a result of the input we received from the community" and "The public does make a difference" Whatever the reasons -are for this change in the position about the Perris Valley Line route, the first step is that this 35 acre vacant property should be purchased for transportation uses. We have stated this for many years. This property is becoming a very popular location with the new 48" water pipe line that is being put through it,.(.see photo on right) and the new IowaAve. overpass that is planned near the south west corner, and the possibility of commuter trains going through it. But during these planning stages there also needs to be a new road constructed through it to handle future growth. On April 9, 2008, during the pub- lic comments, Denis and I supported the RCTC decision because the prop- erty needs to be purchased before any road or a track can be put through it! • • AGENDA ITEM 5 MINUTES • RIVERSIDE COUNTY TRANSPORTATION COMMISSION MINUTES Wednesday, April 9, 2008 1. CALL TO ORDER The Riverside County Transportation Commission was called to order by Vice Chair Bob Magee at 9:32 a.m., in the Board Room at the County of Riverside Administrative Center, 4080 Lemon Street, Riverside, California, 92501. 2. PLEDGE OF ALLEGIANCE At this time, Commissioner Bob Buster led the Commission in a flag salute. 3. ROLL CALL Commissioners/Alternates Present Commissioners Absent Steve Adams Marion Ashley Roger Berg Bob Botts Daryl Busch Bob Buster Chris Carlson John Chlebnik Mary Craton Joseph DeConinck Jamal Elsaleh Ginny Foat Eduardo Garcia Frank Hall Terry Henderson Robin Lowe 4. PUBLIC COMMENTS Bob Magee Eugene Montanez Patrick J. Mullany Yvonne Parks Gregory Pettis Ron Roberts John F. Tavaglione Frank West Michael H. Wilson Roy Wilson There were no requests from the public to speak. Rick Gibbs Dick Kelly Gordon Moller Jeff Stone Riverside County Transportation Commission Minutes April 9, 2008 Page 2 5. APPROVAL OF MINUTES - MARCH 12, 2008 M/S/C (Lowe/Carlson) to approve the minutes of March 12, 2008, as submitted. Abstain: Craton and M. Wilson 6. ADDITIONS/REVISIONS There were no additions or revisions to the agenda. 7. CONSENT CALENDAR Commissioner Roger Berg expressed support for Agenda Item 7G, "Green RCTC Commuter Rail Station Rehabilitation and Maintenance Plan", however, expressed concern that Metrolink stations do not have restroom facilities and requested consideration of such facilities, stating that during a recent trip at a Metrolink station, a number of commuters expressed this concern. John Standiford, Deputy Executive Director, replied that restroom facilities at the Metrolink stations pose concerns such as cost, maintenance, and vandalism issues. Each Metrolink train has restroom facilities and most Metrolink commuters are not waiting for a long period of time. He explained that the Commission has not elected to have these facilities in the past, and could consider in future designs. He stated that Commission staff will discuss the concern and provide a response to the Commission. John Standiford highlighted Agenda Item 7K, "Fiscal Year 2007/08 Mid -Year Status of Productivity improvement Program-, noting that all eight operators have .either met or exceeded their productivity targets in the FY 2007/08 Productivity Improvement Program. M/S/C (Adams/Lowe► to approve the following Consent Calendar items: 7A. ANNUAL INVESTMENT POLICY REVIEW Adopt the annual Investment Policy. • • • Riverside County Transportation Commission Minutes April 9, 2008 Page 3 7B. POLICY REGARDING INDIRECT COST REIMBURSEMENTS 1) Approve the policy regarding the disposition of indirect cost reimbursements; and 2) Adopt Resolution No. 08-011, "Resolution of the Riverside County Transportation Commission Authorizing the Disposition of Indirect Cost Reimbursements". 7C. FISCAL YEAR 2007/08 MEASURE A CAPITAL IMPROVEMENT PLAN AMENDMENT FOR LOCAL STREETS AND ROADS FOR THE CITY OF PALM SPRINGS Approve the amendment to the FY 2007/08 Measure A Capital Improvement Plan (CIP) for local streets and roads for the city of Palm Springs (Palm Springs) as submitted. 7D. FISCAL YEAR 2008-12 MEASURE A FIVE-YEAR CAPITAL IMPROVEMENT PLAN FOR LOCAL STREETS AND ROADS FOR THE CITY OF DESERT HOT SPRINGS Approve the FY 2008-12 Measure A Five -Year Capital Improvement Plans (CIP) for local streets and roads for the city of Desert Hot Springs (Desert Hot Springs) as submitted. 7E. INTERSTATE 15 INTERREGIONAL PARTNERSHIP — PHASE III 1) Approve Memorandum of Understanding (MOU) No. 08-67-096-00 with the Western Riverside Council of Governments (WRCOG) for the 1-15 Interregional Partnership — Phase III activities; and 2) Authorize the Chair, pursuant to legal counsel review, to execute the agreement on behalf of the Commission. Riverside County Transportation Commission Minutes April 9, 2008 Page 4 7F. EXCLUSIVE NEGOTIATING AGREEMENT WITH THE ALAN MRUVKA COMPANY DBA BLUE SQUARE DEVELOPMENT GROUP FOR JOINT DEVELOPMENT AT THE RIVERSIDE -DOWNTOWN METROLINK STATION 1) Approve Agreement No. 07-67-154-01, Amendment No. 1 to Agreement No. 07-67-154-00, with The Alan Mruvka Company (TAMC) for a six-month extension for joint development at the Riverside -Downtown Metrolink station; and 2) Authorize the Chair, pursuant to legal counsel review, to execute the agreement on behalf of the Commission. 7G. "GREEN" RCTC COMMUTER RAIL STATION REHABILITATION AND MAINTENANCE PLAN 1► Approve the "Green" RCTC Commuter Rail Station Rehabilitation and Maintenance Plan (Plan) and direct staff to implement the recommendations needed to make improvements that increase energy efficiency, while increasing the life of the assets at the five Riverside County commuter rail stations; 2) Allocate Public Transportation Modernization, Improvement, and Service Enhancement Account (PTMISEA) funds in the amount of $2,477,714 to the Commission's Commuter Rail Program; and 3) Approve amendments to the Commission's Commuter Rail Program FY 2007/08 Short Range Transit Plan (SRTP) and provide a budget adjustment to reflect an increase in capital expenditures in the amount of $2,477,714 for the Plan. 7H. NORTH MAIN CORONA SHUTTLE AGREEMENT WITH RIVERSIDE TRANSIT AGENCY 1) Approve Agreement No. 08-25-095-00 with the Riverside Transit Agency (RTA) to provide for additional shuttle services to the leased satellite parking lot during construction of the North Main Corona Metrolink parking structure; and 2) Authorize the Chair, pursuant to legal counsel review, to execute the agreement on behalf of the Commission. 71. COMMUTER RAIL PROGRAM UPDATE Receive and file an update on the Commuter Rail Program. Riverside County Transportation Commission Minutes April 9, 2008 Page 5 7J. COORDINATED PUBLIC TRANSIT -HUMAN SERVICES TRANSPORTATION PLAN Approve the Coordinated Public Transit -Human Services Transportation Plan. 7K. FISCAL YEAR 2007/08 MID -YEAR STATUS OF PRODUCTIVITY IMPROVEMENT PROGRAM Receive and file the second quarter report indicating that all eight transit operators either met or exceeded productivity targets in the FY 2007/08 Productivity Improvement Program (PIP). 7L. AGREEMENTS RELATED TO THE CONSTRUCTION OF THE STATE ROUTE 74 WIDENING AND REALIGNMENT PROJECT BETWEEN DEXTER AVENUE IN THE CITY OF LAKE ELSINORE AND 7TH STREET IN THE CITY OF PERRIS 1) Approve Agreement No. 99-31-302-07, Amendment No. 7 to Agreement No. RO-9954, with SC Engineering for additional engineering design and survey services for State Route 74 widening project between Dexter Avenue in the city of Lake Elsinore (Lake Elsinore) and T" Street in the city of Perris (Perris), for a base amount of $354,636 and a contingency amount of $45,364 for a total amendment not to exceed amount of $400,000; 2) Approve Agreement No. 08-31-092-00 to Southern California Edison (SCE) with a revised not to exceed Commission cost of $701,260 and a revised cost share, for the cost to relocate the SCE facilities, between the Commission (51 %) and SCE (49%), which was required to allow for construction of the SR-74 widening and realignment project; 3) Approve Agreement No. 04-51-030-04, Amendment No. 4 to Agreement No. 04-51-030, with Epic Land Solutions (Epic) for property management support services for Commission -owned parcels for a not to exceed amount of $70,000 and contingency amount of $10,000 for a total amendment not to exceed amount of $80,000; and 4) Authorize the Chair, pursuant to legal counsel review, to execute the agreements on behalf of the Commission. • Riverside County Transportation Commission Minutes April 9, 2008 Page 6 7M. STATE AND FEDERAL LEGISLATIVE UPDATE 1) Receive and file an update on the State and Federal Legislation Update; and 2) Adopt a SUPPORT position on AB 2650 (Carter). 8. PRESENTATION - SOUTHERN CALIFORNIA ASSOCIATION OF GOVERNMENTS Gary Ovitt, Southern California Association of Governments (SCAG) President, provided a presentation on resolving regional challenges and discussed the following areas: • SCAG is the largest of nearly 700 councils of governments in the U.S., metropolitan planning organization of 187 cities; Region is experiencing explosive growth - 18 million people now and 24 million by 2035; • Most congested region in the U.S. for the past two decades, freight related emissions are causing a health crisis; • Growth will put further demands on open space, affordable housing, waste management, water supply, energy supply, and transportation system; • How to accommodate growth while maintaining or improving mobility, economic prosperity, quality of life and sustainability with a vision for growth, plans with measurable goals and objectives, and plans that attract financial support; • Three interrelated plans - 2008 Regional Comprehensive Plan (RCP), 2008 Regional Transportation Plan (RTP), and the Compass Blueprint Projects; • Achievement goals - results in mobility and air quality improvements; • SCAG's current accomplishments - Release of Regional Transportation and Comprehensive Plans and environmental impact reports, completion of Regional Housing Needs Assessment, consensus trips to Washington, D.C. and Sacramento, and Housing Transit and Earthquake Preparedness conferences; • SCAG established a group called Force for Change Committee - Bylaw amendments to improve efficiency; • Focused priorities - achieve approval of RTP, implement RCP, become a regional advocacy force and prepare new business plan; and • Internal restructuring, increased visibility, and powerful voice and vision for the region both in Sacramento and Washington, D.C. • • Riverside County Transportation Commission Minutes April 9, 2008 Page 7 Commissioner Robin Lowe thanked and commended Gary Ovitt for his outstanding work as President of SCAG. She explained that Mr. Ovitt has brought the voice and force of change to SCAG, understanding the concerns of elected official about the direction and lack of representation of the Inland Empire. Gary Ovitt thanked Commissioner Lowe for her comments and expressed his appreciation for her efforts as a member of SCAG. He stated that SCAG is trying to become more regionalized and explained the importance of keeping Riverside County highly involved and in leadership positions. Commissioner Marion Ashley expressed his appreciation for the positive changes that have been initiated at SCAG under Mr. Ovitt's leadership, noting the future possibility of an Inland Empire metropolitan planning organization. Gary Ovitt thanked Commissioner Ashley for his comments and stated that there have been discussions about creating a SCAG East office in order to discuss common issues with Riverside, San Bernardino, and Imperial Counties. Commissioner Ginny Foat expressed support for the creation of SCAG East and requested that maps used in future presentations include the Coachella Valley cities in Riverside County. Commissioner Steve Adams requested SCAG reinstate the video teleconferencing capabilities. Gary Ovitt concurred with Commissioner Adams request and stated that SCAG is presently working on offering additional video teleconferencing capabilities so all the regions can participate in SCAG meetings. 9. PROPOSED DEBT ISSUANCE Theresia Trevino, Chief Financial Officer, provided an overview on the use of the commercial paper program and the proposed plan of finance, and discussed the following areas: • 2008 RCTC plan of finance — commercial paper program, activity, uses, and availability; • Plan of finance — 2008 Sales tax revenue bonds; • Interim financing program; • 2008 financing overview; Riverside County Transportation Commission Minutes April 9, 2008 Page 8 • 2009 Measure A debt service coverage and stress scenarios; • Swap -related financing alternatives; • Summary of issuance documents; • Current credit markets situation; and • Timeline. Commissioner Adams thanked Theresia Trevino and the team of financial consultants for their efforts and expressed support for the staff recommendation. Commissioner Ashley concurred with Commissioner Adams' comments. M/S/C (Adams/Lowe) to continue efforts to develop a plan to refinance the outstanding commercial paper. 10. REVISED LOCALLY PREFERRED TRANSIT ALTERNATIVE FOR THE PERRIS VALLEY LINE SMALL STARTS PROJECT Edda Rosso, Capital Projects Program Manager, provided an overview on the locally preferred transit alternative revision for the Perris Valley Line .(PVL) Small Starts project and she highlighted the following areas: • Locally preferred alternative (LPA) revision for the PVL; • San Jacinto Branch Line / 1-215 Corridor Study Alternative Analysis 1999-2004; • Proposed transportation alternatives; • Viable alternatives D and E; • Previous actions; • Recommendation — LPA Change alternative E to D; • Basis for change to LPA; and • Next steps. Barney Barnett, Highgrove area resident, read from a handout dated April 9, 2008, in which he expressed support for the staff recommendation for the revised alternative and recommended the purchase of the 35-acre property located in Highgrove for future transportation uses. The handout was entered into the record and sent electronically to the Commissioners. Commissioner Adams expressed support for the staff recommendation and motioned to approve. Commissioner Lowe seconded the motion. • Riverside County Transportation Commission Minutes April 9, 2008 Page 9 Commissioner Ashley expressed support for the staff recommendation and appreciation to Barney Barnett's for his persistence for a Highgrove Metrolink station. He suggested the Commission look into acquiring the 35-acre property in Highgrove that Mr. Barnett recommended in order to provide options for the Commission in the future. Commissioner Buster expressed support for the revised alternative. He recommended as part of the motion to include exploring options for quiet zones at Mt. Vernon Avenue and Blaine and Spruce Streets and for elementary schools located near the railroad tracks. Commissioners Adams and Lowe concurred to include Commissioner Buster's recommendation in the motion. John Standiford thanked the Commissioners that serve on the San Jacinto Branch Line Ad Hoc Committee. The ad hoc committee will continue to meet regularly and the agenda items will be forwarded to the Commission as part of the educational process. M/S/C (Adams/Lowe) to: 1) Revise the Locally Preferred Alternative (LPA► for the Perris Valley Line Small Starts project from Alternative E: Commuter Rail with New Connection to Union Pacific (UP) at Rustin Avenue to Alternative D: Commuter Rail with New Connection to Burlington Northern Santa Fe IBNSF) at Citrus Avenue; and 2) Authorize staff to explore the option of quite zones. 11. ITEM(S) PULLED FROM CONSENT CALENDAR FOR DISCUSSION There were no agenda items pulled from the Consent Calendar. 12. COMMISSIONERS/EXECUTIVE DIRECTOR'S REPORT 12A. Vice Chair Magee announced Chair Jeff Stone's appointments to the Federal Authorization Legislative Ad Hoc Committee as follows: Steve Adams Bob Botts Bob Buster Mary Craton Terry Henderson Robin Lowe Bob Magee Jeff Stone John Tavaglione Michael Wilson Riverside County Transportation Commission Minutes April 9, 2008 Page 10 12B. John Standiford: • Introduced Alexandra Rackerby, Administrative Support Specialist, new employee to the Clerk of the Board staff and Martha Durbin, new Intern to the Commuter Rail Program; • Provided an update on the California Transportation Commission testimony and hearing being held for the allocation of the Transportation Corridor Infrastructure Funds (TCIF) for grade separation projects and the testimony for the authorization of the 1-15 high occupancy toll lanes; • Announced the permit has been obtained from the U.S. Forest Service for geotechnical boring in the Cleveland National Forest; and • Announced the Ribbon Cutting/Grand Opening Event for the Box Springs Road and Truck Bypass Lane at SR-60/I-215 being held on Friday, April 11 at 10:00 a.m. 13. ADJOURNMENT There being no further business for consideration by the Riverside County Transportation Commission, the meeting adjourned at 10:48 a.m. The next Commission meeting is scheduled to be held at 9:30 a.m., Wednesday, May 14, 2008, in the Board Room at the County of Riverside Administrative Center, 4080 Lemon Street, Riverside, California, 92501. Respectfully submitted, 01-)1"4"401-4— Jennifer Harmon Clerk of the Board AGENDA ITEM 6 PUBLIC HEARING • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Budget and Implementation Committee Michele Cisneros, Accounting and Human Resources Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Proposed Budget for Fiscal Year 2008/09 BUDGET AND IMPLEMENTATION COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to: 1) Discuss, review and provide guidance on the proposed Budget for FY 2008/09; and 2) Open the public hearing in order to receive input and comments on the proposed FY 2008/09 Budget on May 14, 2008, and on June 11, 2008, and close the public hearing. BACKGROUND INFORMATION: Staff has completed the initial budget preparation process, and attached is an executive summary for the proposed Budget for FY 2008/09. The goals and objectives approved by the Commission on March 12, 2008, were the basis of this budget. The goals and objectives considered during the preparation of the budget relate to mobility initiatives, goods movement, improved system efficiencies, environmental stewardship, economic development, intermodalism and accessibility, and public and agency communications. Staff will present highlights of significant items included in the budget and is seeking review of and input on the proposed Budget for FY 2008/09. Based on input received from Commissioners, staff will update the document, as necessary, and present the proposed budget for public hearing and for the Commission's review on May 14, 2008. As a result of input received from the public and the Commission, staff will make any necessary changes to the budget document for final review, close of the public hearing, and adoption at the June 11, 2008 Commission meeting. The executive summary document contains a summary of all departmental budgets and summarizes the information for the entire Commission. The department budgets present the goals and objectives, the resources needed to accomplish the Agenda Item 6 1 goals, and the appropriations required to accomplish the tasks. Staff has also included the fund budgets that provide the budgeted revenues and expenditures from a fund perspective. At the June 11, 2008 Commission meeting, staff will present the entire budget with detailed narratives. A summary of the proposed Budget for FY 2008/09 is as follows: FY 2008/09 Budget Revenues and other financing sources: Sales taxes -Measure A and Local Transportation Funds $ 215,579,000. Reimbursements (federal, state, and other) 75,950,400 Transportation Uniform Mitigation Funds 7,730,000 State Transit Assistance 22,992,600 Other revenues 1,927,200 Interest on investments 8,217,000 Commercial paper proceeds 110,000,000 Transfers in 76,600,200 Total revenues and other financing sources 518,996,400 Expenditures and other financing uses: Personnel salary and fringe benefits 6,743,000 Professional services 6,854,300 Support services 4,843,500 Projects and operations 530,874,300 Capital outlay 890,000 Debt service (principal, interest and costs of issuance) 45,590,100 Transfers out 76,600,200 Total expenditures and other financing uses Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Beginning fund balance Ending fund balance 672,395,400 (153,399,000) 489,006, 600 335, 607, 600 Attachment: FY 2008/09 Proposed Budget Executive Summary Agenda Item 6 2 • • Executive Summary Introduction The budget for Fiscal Year (FY) 2008/09 is presented to the Board of Commissioners !(Board) and the citizens of Riverside County. The budget outlines the projects the Commission plans to undertake during the year and appropriates expenditures to accomplish these tasks. The budget also shows the funding sources and fund balances ;that will be used for these projects. This document will serve as the Commission's monetary guideline. To provide the reader a better understanding of the projects, staff has 'included descriptive information regarding each department and major projects. The discussion in each department includes a review of major initiatives and key assumptions. Staff used the goals and objectives approved at the Commission meeting on March 12, 2008, to prepare this budget. In addition to the Commission's long-term goals and strategic plan, the short-term factors listed below were used to guide the development of the budget: !Operational • Complete projects and programs included in the 1989 Measure A and determine use for unexpended revenues. • Aggressively implement the environmental process on key components of the 2009 i Measure A 10-Year Western Riverside County Highway Delivery Plan (10-Year Western County Highway Delivery Plan). • Develop the toll program consistent with the 10-Year Western County Highway Delivery Plan including obtaining toll authority for select projects. • Work closely with local jurisdictions to implement the FY 2007-2009 Transportation Uniform Mitigation Fee (TUMF) Regional Arterial Program and facilitate the delivery of arterial improvements in westem Riverside County (Western County). • Circulate the project level environmental documents for the Mid County Parkway and the SR-79 realignment project. • Continue to work with the Regional Conservation Authority (RCA) to implement the Multi -Species Habitat Conservation Plan (MSHCP) and assist in the assembly of the reserve system. • Continue cooperation with the Federal Transit Administration (FTA) regarding the Small Starts process to support project development activities for the Penis Valley Line Metrolink extension project (Penis Valley Line). • Improve utilization and increase efficiency of commuter rail lines serving the County. • Support innovative programs which provide transit assistance in hard to serve rural areas or for riders with special transit needs. • Promote program efficiency and harmony between transit operators. • Maintain effective partnerships among commuters, employers, and government to increase the efficiency of our transportation system by encouraging and promoting transportation alternatives. • Continue to provide a motorist aid system that ensures safety and convenience to freeway motorists. • Maintain close communication with Commissioners and educate policy makers on all issues of importance to the Commission. 3 Financial • Maintain administrative program delivery costs below the policy threshold of 4% of Measure A revenues. The current Management Services budget is 2.84% of Measure A revenues. • Maintain administrative salaries and benefits at less than 1 % of Measure A revenues. The current administrative salaries and benefrts is .99% of Measure A revenues. • Continue to maintain prudent cash reserves to provide some level of insulation for unplanned expenditures. • Maintain current positive bond ratings with rating agencies. • Move forward on Measure A projects for highways and regional arterials using sales tax revenues, TUMF revenues, and state and federal funding as well as financing alternatives such as commercial paper, sales tax revenue bonds, and innovative financing strategies. • Look for opportunities, funding sources, and innovative approaches to address transportation needs that extend beyond Measure A. • Leverage and protect past Measure A investments in rail with state and federal funding for additional rail improvements, including the Perris Valley Line. ;Budget Overview !Chart 1 — Revenues: Major Categories Other Revenue 1% TUMF Revenue 2% Measure A Sales Tax 41% Investment IMMO 29: Intergovernmental 30% I.TF "•ales Tax 24% Total revenues are budgeted at $332,396,200 which is an increase of 24.0% over FY .2007/08 projected revenues and a 6.0% increase over the FY 2007/08 budget. The projected fund balance at June 30, 2008 available for expenditures (excluding reserves for 'debt service of $32,475,500 and loans receivable of $11,273,100) is $445,258,000. Total funding sources available for the FY 2008/09 budget, including commercial paper proceeds of $110,000,000, amount to $887,654,200.. • 4 • • • Chart 2 - Commission Revenue Trend $400,000,000 SSS0,000,000 $300,000,000 5250,000,000 S200,000,000 $100,000,000 $100,000,000 S50.000.000 FY 06/07 FY 07/08 FISCAL YEARS FY nem ® Investment Income ■ Other Revenue ONW Revenue O lnlerm0vemmental ■ LTF Sales Tax ® Measure A Sales Tax 'The State Board of Equalization has provided cities and other agencies its projections for statewide taxable sales over the next fiscal year to increase 3.8%; however, the local economy has been significantly impacted by the housing crisis. As a result population and job growth have slowed down, and Measure A and LTF sales tax revenues and TUMF fees have declined. The outlook for 2009 is mixed when compared to the economic difficulties being experienced in 2008_ This economic slowdown was not anticipated in the 2006 UCLA Anderson Forecast of {taxable sales revenues for Riverside County through the 2009 Measure A; accordingly, the Commission has revised the long run forecast to include the current decline in sales tax revenues. After taking these economic factors and the state of the local economy into consideration, staff has projected that Measure A sales tax revenues will be comparable to the FY 2007/08 revised budget. ;On behalf of the County, the Commission administers the LTF for public transportation !needs, local streets and roads, and bicycle and pedestrian facilities. The majority of LTF funding received by the County and available for allocation is distributed to all transit operators in the. County, and the Commission receives allocations for administration, !planning, and programming in addition to funding for rail operations included in the commuter rail Short Range Transit Plan (SRTP). The LTF sales tax revenue received from the state is budgeted based on the LTF sales tax revenue projections, which are projected to remain flat with the FY 2007/08 revised estimate as a result of the state of the local economy. The 9.9% decrease in LTF funding is related primarily to an FY 2007/08 allocation for grade separation jump start funding awards. Intergovernmental revenues include STA transit allocations and federal, state, and local reimbursement revenues. STA funds are generated from the statewide sales tax on motor vehicle fuel and are allocated by formula by the State Controller to the Commission for allocations to the 5 County's public transit operators. The STA transit allocation budgeted for FY 2008/09 reflects a 135.2% increase over FY 2007/08. Reimbursement revenues are expected to increase 55.4% compared to the prior year budget; however, only 35.7% of the prior year budget amount is projected to be realized as revenue in FY 2007/08 as a result of specific capital project activities. The decrease in FY 2007/08 projected revenues is primarily related to federal reimbursements for project development of certain capital projects that have been rebudgeted in FY 2008/09. For FY 2008/09, federal and state sources; will partially fund rail capital projects including the Perris Valley Line, Perris multimodal facility, North Main Corona station parking structure, and 'station rehabilitation as well as highway capital projects including the. State Route (SR) 60 East Junction to Interstate (I) 215 high occupancy vehicle (HOV) lanes connector, SR-79 realignment, SR-91/SR-71 connectors, SR-91 HOV lanes/Adams Street to SR-60/,SR-91/I- 215 interchange, and 1-215 projects. Additionally, federal funds are supporting the geotechnical studies related to the Irvine -Corona Expressway, a Community Environmental Transportation Acceptability Process (CETAP) corridor. State funds will also reimburse [planning and programming activities and Motorist Assistance services. Federal and state reimbursements also pertain to various Commuter Assistance programs. As a result of a Memorandum of Understanding (MOU) with the Western Riverside Council ;of Governments (WRCOG), the Commission will receive approximately 48% of TUMF through June 30, 2009, and, in accordance with the 2009 Measure A, thereafter at 100%, after deduction of an administrative fee, up to an aggregate of $400 million. TUMF represents fees assessed on new residential and commercial development in Western County. FY 2008/09 TUMF fees are expected to decrease to $5,000,000 based. on a weakened housingmarket in the Inland Empire. Other revenue consists of miscellaneous revenues and is projected .to decrease 34.6% from the prior year's budget primarily as a result of the decrease in the TUMF regional transit facilities contribution for the Perris multimodal facility. Investment income is anticipated to decrease 51.9%d in FY 2008/09 as a result of declining interest rates as well as declining cash balances. Staff continues to actively manage its resources and make appropriate investments to maximize the return to the Commission without sacrificing security and affecting short-term cash requirements. (Table 1 — Revenues FY 2007-2009 FY 06107 FY 07/08 Actual Revised Budget Measure A Sales Tax LTF Sales Tax Intergovernmental TUMF Revenue Other Revenue Investment Income TOTAL Revenues $ 154,539,800 $ 85,293,200 26,1346,700 40,757,200 6,415,500 23.897.400 135.000,000 $ 89,388.600 59.149,800 10,000,000 2.947,900 17 096 700 336.949.600 5 313,583 000 FY 07108 Projected 135,000,000 3 78,153,700 28,339,800 10,305,700 2,002.100 14 175 700 $ 267.97Z000 FY 08/09 Budget 135,000.000 $ 80,579,000 98,943,000 7,730.000 1,927,200 8.217 000 Dollar Change (8,809.600) 39,793,200 (2,270,000) (1,020,700) (8 879.7001 Percent Change 0.0% -9.9% 67.3% -22.7% -34.6% h1.9% 3 332 396 21212 ,j„_, t 8 811 2(t0 6.0% 6 • • • Chart 3 — Expenditures: Major Categories Regional Issues 0% Management Services 1% Debt Service 8% Regional Arterials - Coachella VaNey 1% Local Streets and Roads 8% Planning and - Programming 1% Capital Highway, Regional Arterial, and Rail 61% Rail 2% Right of Way Management 0% Specialized Transit 1% Transit 15% Commuter Assistance 1% Motorist Assistance 1% Total expenditures are budgeted at $595,795,200, an increase of 1.5% from the prior year ;budget amount of $587,043,300. Program expenditures totaling $544,597,100 represent 191.4% of total budgeted expenditures in FY 2008/09. Program costs have increased slightly j by 1.0% from $539,182,100 in FY 2007/08. Significant highway projects include SR-91 High Occupancy Toll (HOT) and mixed flow lanes, SR-91/SR-71 connectors, 1-15 corridor and HOT lanes project, and 1-215 projects engineering; SR-91Nan Buren and SR-91/La Sierra interchange improvements construction; SR-60 East Junction to 1-215 HOV lanes connector, SR-79 realignment, and !Mid County Parkway right of way acquisition and engineering; SR-91 HOV lanes/Adams !Street to SR-60/SR-91/1-215 interchange right of way acquisition and construction; and SR- 111 and SR-86 city projects engineering and construction. Additionally, as a result of the commercial paper program, advance funding for projects included in the 2009 Measure A include land acquisition for the MSHCP in Western County and Coachella Valley. Approved !regional arterial projects will be in various phases of engineering, construction, and right of way. Right of way acquisition and preliminary engineering for the Perris Valley Line as well as the construction of the North Main Corona station parking structure and Perris multimodal facility will be significant rail capital projects in FY 2008/09. Debt Service of $45,590,100 has increased slightly as a result of the issuance of the 2008 sales tax revenue bonds to refinance the outstanding commercial paper in FY 2007/08 combined with new issuances of commercial paper. Management Services expenditures of $5,608,000 have decreased 0.5% compared to the FY 2007/08 budget. 7 Table 2 - Program Expenditures FY 2007-2009 . FY 06/07 FY 07/08 FY 07g8 FY 08109 Dollar Percent Actual - Revised Budget-Pm)ected Budget Charge Change Management Services $ 4,792,400 $ 5,635,300 $ 4563.460 $ 5,608,000 $ (27,300) -0.5% -Regional Issues 380.500 893,100 79020D. 915.600 27,300 2.5% Planning and Programming 3.439.900 8,977,500 1,741,800 6,168,000 (2,809,500) -31.3% Rail 7,897,300 9.034,100 8,601.600 9,122,t00 88,000 7.0% Right of Way Management 632,000 1,162,500 6193300 1,212,000 49,50D 4.3% Specialized Transit 6,358,200 6,323$00 5257,100 7,955,400 t,631.900 25:8% Transit 74,370.100 96,0132013 91.459.200 89.004.500 '(7.006.70D) -7.3% Commuter Assistance 3.107.500 6,450,300 3,146,400 6.487,500 37,200 0.6% Motorist Assistance Z408,600 5.184,100 4204.400 3,320„500 (1,963,600) -35.9% Capital Highway, Regional AHedal,and Rail 81,706,100 34?,54d,700 142,322,100 361,544,900 19,OD020D 5S% Local Streets and Roads 59,196,800 50,087,500 50.087.500 50.085300 (2200) 0.0% Regional Arterials- Coachella Valley 9,738,500 12511,600 13,215,600 8,701,300 (3,730,300) -29.8% Debt Service 36790500 42 225 900 150.723.300 45.590.100 3.364200 =O. TOTAL $ NO 21 a 411LI S SA7 04A AM $ 477 13/ WA S 595745 9m1 $ 8 751 90Q L51 Note: Management Services include Executive Management, Administration, Legislative Affairs and Communications, and Finance. Commission Personnel The Commission's salary and fringe benefits total $6,743,000 for FY 2008/09. This represents a decrease of 11.2% or $846,400 over the FY 2007/08 budget of $7,589,400. The Commission has set aside a pool of 3% for salary increases in FY 2008/09. The Full Time Equivalent (FTE) of 45.0 FTE positions is comparable to the FY 2007/08 level. The decrease in salary and fringe benefits is related to the prefunding of the postretirement health benefits accrued liability in FY 2007/08 as well as decreases in the CaIPERS employer contribution rate and the worker's compensation premiums. Table 3 - Staff summary by Department FY 2007-2009 FY 06/07 FY 07/08 FY 08/09 FTE FTE FTE I Executive Management 1.6 1.5 0.7 I Administration 4.7 4.9 4.6 , Legislative Affairs and Communications 2.4 2.7 2.6 Finance 6.1 6.3 6.6 Regional Issues 1.2 2.2 2.0 Planning and Programming 5.3 4.9 3.8 Rail 2.8 2.4 2,9 Right of Way Management 2.0 1.1 1.4 I Specialized Transit OA 0.8 1.0 Transit 2.0 1.8 1.7 Commuter Assistance 1.5 1.4 1.8 Motorist Assistance 0.7 1.4 1.7 Capital Project Development and Delivery 443 12.6 14.2 TOTAL 35.0 44.0 45.0 Department Initiatives The preparation of each department's budget was based on key assumptions, accomplishments in FY 2007/08, major initiatives for FY 2008/09, and department goals and related objectives. Following are the key initiatives and summary of expenditures for each department. Executive Management • Continue project development and delivery as the key Measure A priority. 8 • • • Explore creative financing opportunities due to the impact of the State's general fund and budgetary issues on transportation funding. • Maintain regional cooperation and collaboration as a significant effort consistent with the philosophy and mission of the Commission. • Enhance extemal communications with media, business, civic groups and the community. • Maintain and improve administrative efficiency and fiscally sound practices. • Continue to be competitive in the employment market and provide staff training and development opportunities to enhance skills, productivity, and value. Table 4 — Executive Management Program FY 06/07 FY 07/08 FY 07/08 FY 08/09 Costs Actual Revised Budget Projected Budget Personnel Professional Support TOTAL lAdministration I. • $ 269,700 $ 47,600 44,800 $ 362.100 $ 263,700 $ 270,800 $131,800 80,000 67,000 75,000 32,600 34,000 38,700 376,300 $ 371,800 $ 245,500 Dollar Change $ (131,900) (5,000) 6,100 $ (130,800) Percent Change -50.0% -6.3% 18.7% -34.8% Provide high quality support to the Commission and to internal and external customers. Continue to strengthen the electronic records management system to improve the Commission's recordkeeping capabilities. Continue efforts to support staff regarding the Disadvantaged Business Enterprise (DBE) program for federally funded capital construction projects. Continue to provide timely communications to Commissioners with continued emphasis on the utilization of electronic mail. Continue to update technology to streamline processes and provide easier access to Commission records. • Support and develop a motivated workforce with a framework of activities and practices that are in compliance with employment laws and regulations. ;Table 5 —Administration _Program FY 06/07 l Costs Actual FY 07/08 FY 07/08 FY 08/09 Revised Budget Projected Budget Dollar Percent Change Change 'Personnel $ 356,700 $ 464,700 $ 364.900 $ 444,000 $ (10,700) -2.4% i Professional 79,900 97,200 92,100 86,000 (11,200) -11.5% Support 1,071,200 1,375,200 1,418,100 1,471,400 96,200 7.0% I Capital Outlay 9,000 322,000 12,300 350,000 28,000 8.7% Debt Service 26,100 - - - N/A TOTAL $1-5,42,900 ,$ 2.249.100 11.487A00 5 2.351 401I $ 102399 4.5cYQ Legislative Affairs and Communications • Continue efforts to seek greater state and federal investment in transportation infrastructure. • Advocate positions in the State Legislature and Congress that advance the County's transportation interests, especially those related to the implementation of HOT lanes on SR-91 and 1-15 as well as the Perris Valley Line. • Continue to develop a broad public information program regarding the Commission's responsibilities and accomplishments through a variety of media formats. 9 • Continue to place an emphasis on providing communications support related to major project development efforts. • Provide new Commissioner orientation meetings and other continuing education opportunities for Commissioners. Table 6 — Legislative Affairs and Communications Program FY 06/07 FY 07/08 Costs Actual Revised Budget FY 07/08 FY 08/09 Dollar Percent . . Projected Budget Change Change ' Personnel $ 298,800 $ 372,800 $ 327,100 $ 390,000 $ 17,200 4.6% Professional 224,300 383,300 393,100 506,300 123,000 32.1% Support 151,400 172.700 149,300 188,700. 16,000 9.3% TOTAL $ 674.500 $ 928,600 $ 869.500 $ 1.085.000 $ .11 200 mils ;Finance • Continue appropriate uses of commercial paper to advance 2009 Measure A projects of. the Commission, Coachella Valley Association of Governments (CVAG), and local jurisdictions. • Apply the sales tax revenue forecast update to develop a financing plan to support the 10-Year Westem County Highway Delivery Plan, including consideration for a recommended increase in the $500 million 2009 Measure A bonding cap. Develop and approve internal audit projects related to the organizational accountability program. • Continue to keep abreast of GASB technical activities affecting the Commission's accounting and financial reporting activities. �• Implement a centralized procurements process in order to strengthen controls to ensure consistency in the application of procurement policies and procedures and adherence to applicable laws and regulations. • Table 7 — Finance Program Costs Personnel Professional Support TOTAL !Regional Issues FY 06/07 FY 07/08 Actual Revised Budget $1,117,200 1,081,100 40,700 $ 239,00Q FY 07/08 FY 08/09 Projected Budget Dollar Percent Change Change $ 696,200 $ 729,500 $ 699,000 $ 2,800 0.4% 1,319,000 1,049,600 1,165,000 (154,000) -11.7% 65,900 55.600 62,100 (3.800) -5.8% $ 2,081.100 $ 1.834.700 S 1.926.100 1. f155.0001 -7.451) • Focus on interregional concems and maintain effective working relationships involving various bi-county transportation issues, including goods movement. Continue to address airport issues including the March Air Reserve Base (March ARB) plans to develop air freight services. Monitor the Port of Los Angeles and Port of Long Beach's projects for impacts on Riverside County. • • • 10 • Table 8 — Regional Issues Program Costs FY 06/07 Actual Personnel $157,700 Professional 205,200 Support 12,600 Projects and Operations 5,000 TOTAL $380.500 Planning and Programming • ; I• • • 1• FY 07/08 Revised Budget $ 407,700 467,000 18,400 FY 07/08 FY 08/09 Dollar Percent Projected Budget Change Change $ 360,700 $ 358,100 416,100 535,000 13,400 22,500 $ 893.100 $ 790.200 1915.600 $ 22 500 $ (49,600) -12.2% 68,000 14.6% 4,100 22.3% N/A Z5% Monitor increased funding authority and responsibility related to the State Transportation Improvement Program (STIP) and impacts on the STIP caused by the state budget issues. Ensure STIP and Proposition 1 B funded projects are administered and implemented consistent with California Transportation Commission (CTC) and California Department of Transportation (Ca!trans) policies. Continue to strategically program projects and obligate funds in an expeditious manner for the maximum use of all available funding, including monitoring the use of such funding to prevent funds from lapsing. Monitor and track the TUMF regional arterial projects. Continue development of innovative financing strategies. Work cooperatively with member agencies to continue the work efforts on the new CETAP corridors. Continue the Congestion Management Program (CMP), update and traffic monitoring along urban and rural highway systems. Administer the SB 821 Bicycle and Pedestrian Facilities Program. Continue the development of a web -based project management database for the monitoring of project schedules and funding as well as providing access to local agencies. Table 9 — Planning and Program Costs Personnel Professional I Support , Projects and Operations TOTAL ;Rail Programming FY 06/07 FY 07/08 Actual Revised Budget $ 871,900 $ 1,462,200 27,600 1,078,200 1,300,300 1,906,500 43,700 5,727,000 $ 3 439,90Q S ELUL== FY 07/08 Projected FY 08/09 Budget Dollar Percent Change Change $ 826,300 $ 567,800 $ (732,500) 230,200 270,300 (1,636,200) 16,300 31,100 (12,600) 669.000 5,298.800 (428,200) $1.741.800 $ 6.16ami $ (2.809.5001 - 56.3% -85.8% -26.8% -7.5% - 31.3%y Continue capital improvements at the commuter rail stations, including parking facilities, in Riverside County. • Continue project development and right of way acquisition activities related to the FTA Small Starts Perris Valley Line project • Complete construction of Phase I of the Perris multimodal facility. • Work with the Orange County Transportation Authority (OCTA) and the San Bernardino Associated Governments (SANBAG) to advance additional Inland Empire -Orange County (IEOC) and 91 Line train service by 2010. Oversee commuter rail station operation and maintenance. 11 Table 10 - Rail Program Costs Personnel Professional Support Projects and Operations Special Studies Capital Outlay TOTAL FY 06/07 FY 07108 FY 07/08 FY 08109 Dollar Actual Revised Budget Projected Budget Change $ 391,800 $ 334,500 $ 393,700 $ 427,900 $ 93,400 133,700 295,500 152,900 410,500 115,000 734,700 825,500 .119,600 145,100 (680,400) • 6,532,400 7,548,600 7,912,400 7,938,600 390,000 83,700 30,000 23,000 200,000 170,000 21.000 - - - - $ 7.897.30Q $ 9.034.100 $ 8.601.600 $ 9.122.100 $ 88.000 Right of Way Management • i• i. • Percent Change 27.9% 38.9% -82A% 5.2% 566.7% N/A lost Develop a right of way acquisition program in support of capital projects. Develop a commuter rail station rehabilitation and strategic plan for the long-term maintenance of the Metrolink stations. Establish a right of way acquisition schedule and budget control measures. Maintain the order, safety, and security of Commission -owned properties. Continue development of the property inventory database in order to maintain accurate records of all Commission -owned properties, properties in acquisition process, and income generating properties. ;Table 11 - Right of Way Management Program FY 06/07 FY 07/08 j Costs Actual Revised Budget IPersonnel $ 281,400 $ 138,000 Professional 218,900 720,000 Support 69,200 249,500 Projects and Operations 62,500 55,000 TOTAL $ 632,11(4 $ 1.162.500 Specialized Transit FY 07/08 FY 08/09 Projected Budget 119,200 $ 360,300 121,300 18.200 Dollar Percent Change Change 155,000. $ 17,000 12.3% 692,000 (28,000) -3.9% 285,000 35,500 14.2% 80,000 25.000 45.5% 619.000 $ 1.212.000 $ 49.500 4 3Zst • Support innovative programs which provide transit assistance in hard to serve rural areas or for riders having very special transit needs and monitor funding of these programs. i• Initiate a call for projects covering FY 2008/09 and FY 2009/10 for the Westem County Specialized Transit program. • Provide availability for local matching funds to Westem County applicants seeking FTA Section 5310 federal capital grants. !Table 12 -Specialized Transit Program FY 06107 Costs Actual I Personnel Professional Support Projects and Operations Transfers Out TOTAL FY 07/08 FY 07/08 FY 08/09 Dollar Percent Revised Budget Projected Budget Change Change $ 58,600 $ 97,300 $ 76,900 $ 129,500 $ 32,200 33.1% 8,200 55,000 400 62,500 7,500 13.6% 4,000 8,700 4,900 9,000 300 3.4% 6,287,400 6,162,500 5,174,900 7,754,400 1,591,900 25,8% 2,500 - - - N/A $ 6 360.70Q $ 6 323-50Q $ 5.257.10Q $ 7.955A00 $ 1.631.90Q • 12 • Transit • Review transit operator performance and annual progress reports through TransTrack and the SRTPs. • Monitor the implementation and performance of specialized transit projects as identified in the Coordinated Public Transit -Human Services Transportation Plan. Table 13 = Transit Program FY 06/07 FY 07/08 FY 07/08 FY 08/09 Dollar Percent Costs Actual Revised Budget Projected Budget Change Change Personnel $ 220,200 $ 208,600 $ 170,100 $ 235.700 $ 27,100 13.0% Professional 184,400 157,000 40,700 122,400 (34,600) -22.0% , Support 9,200 10,400 13,300 13,800 3,400 32.7% Projects and Operations 73,956.300 95,637,200 91.235,100 88.632.600 (7.004,600) -7.3% TOTAL $ 74 370 10Q ; 96.013.200 $ 91.459.20) $ 8 004500 $ (7.008 700) -7.3% 1 Commuter Assistance Continue rideshare incentives and support services in partnership with commuters, employers, and other govemments. • Undertake a variety of programmatic changes to ensure the provision of cost-effective and efficient services. • Continue to utilize the Program Tracking and Performance Measurement Tool (Program Measurement Tool) to more efficiently implement the Commuter Assistance program. • Continue efforts for cross marketing of transit and rail services with the development of a new 140-space park and ride facility located in the city of Perris at the future Perris Valley Line Metrolink station. I• Continue to maintain and operate a five -county ridematching database system with partner agencies. I• Continue to provide a Guaranteed Ride Home (GRH) Program to serve Inland Empire I employers. i• Continue leadership role in regional discussions relating to the implementation of 511 and the dissemination of traffic and traveler information services. Provide funding to Ca!trans for the installation of 75 radar detection stations on the 1-15 and 1-215 corridors to the San Diego County line. Table 14 - Commuter Assistance , Program FY 06/07 FY 07/08 FY 07/08 FY 08/09 Dollar Percent Costs Actual Revised Budget Projected Budget Change Change Personnel $ 249,000 $ 185,900 $ 190,800 $ 255,500 $ 69,600 37.4% Professional 446,200 546,100 403,300 467,500 (78,600) -14.4% Support 411,100 645,400 508,600 512,300 (133,100) -20.6% Projects and Operations 1,991,300 4,952,900 1,976,700 5,212,200 259,300 5.2% Capital Outlay 9030 120,000 67,000 40,000 (80,000) -66.7% Transfers Out 1,000.000 - 1,027,800 27,800 2.8% TOTAL $ 3.107.500 $ 6.450.30Q $ 3.146.40Q $ 7 515.84Q $ 1 dj65.00n b.eM Motorist Assistance • Continue implementation of the recommendations included in the 5-Year Strategic and Financial Plan (5-Year Plan) for the call box program, including the modification of approximately 670 call box sites. 13 • Complete the implementation of the Automatic Vehicle Locator (AVL) system for tow trucks. Table 15 — Motorist Assistance Program FY 06107 Costs Actual Personnel Professional Support Projects and Operations Transfers Out TOTAL FY 07/08 FY 07/08 FY 08/09 Dollar Percent Revised Budget Projected Budget Change Change $ 81,300 $ 187,200 $ 93,500 $ 250,300 $ ' 63,100 33.7°% 89,900 39,400 26,000 34,500 (4,900) -12A % 29,500 40,200 39,200 43,000 2,800 7.0% 2,207,900 4,917,300 4,045,700 2,992,700 (1,924,600) -39.1% 388,200 490,000 490,000 - (490.000)-100.0% $ 7.796.110Q $ 5 674 100 $ 4 694 400 $ 3.320.500 $ (2.353.600)-41,5°IQ Capital Project Development and Delivery • Complete construction of the Perris multimodal facility phase I and the North Main Corona commuter rail parking structure. Complete environmental clearance and continue preliminary engineering and right of way acquisition for the FTA Small Starts Perris Valley Line. Continue the environmental and preliminary engineering services for the SR-79 realignment project as well as acquire right of way. Continue development of a project report and environmental document for the Mid County Parkway project as well as acquire right of way. Acquire land as mitigation for the cumulative and direct impacts associated with construction of future Western County highway and regional arterial projects. Complete final design and right of way acquisition for the SR-60 East Junction to 1-215 HOV lanes connector. • Complete project close-out activities related to the SR-74/1-15 to 7th Street project. • Complete preliminary engineering and initiate final design and right of way activities related to interchange improvements at SR-74/G Street to 1-215. • Continue final design, right of way acquisitions, and construction related to the SR-91 HOV lanes/Adams Street to SR-60/SR-91/1-215 interchange. Continue preliminary engineering and environmental studies for the SR-91/SR-71 connectors, SR-91 HOT and mixed flow lanes, 1-15 Corridor and HOT lanes, and 1-215 mobility improvement projects. Continue preliminary engineering and environmental documentation for the 1-215 mobility improvement projects. Provide funding and support to local agencies for SR-91 interchange improvements at Green River, Van Buren, and La Sierra. • Provide Measure A funding and support to Coachella Valley local jurisdictions for construction of operational improvements along SR-86 and SR-111. • Continue environmental and preliminary design for the bi-county 1-215 project. • Provide Western County TUMF funding and support to local jurisdictions for regional arterial project engineering, construction, and right of way acquisition. • Provide advance funding and support of 2009 Measure A regional arterial projects and for the acquisition for land as mitigation in the Coachella Valley. • 14 • Table 16 — Capital Project Program Costs Personnel Professional Support Projects and Operations Capital Outlay Debt Service Transfers Out TOTAL Table 17—Projected Fund Reserved: CETAP $ _ $ - $ - $ Commuter Assistance 13,669,300 Debt Service Highway 65,163,500 9,700 - Loans Receivable 10,775,600 Local Streets and Roads 164,100 85,800 67,900 Planning and Programming Rail 68,876,200 Regional Arterials - Coachella Valley 1,158,700 Regional Arterials - Westem County Right of Way Management Specialized Transit 7,967,500 283,400 - Translt Unreserved, designated: Motorist Assistance I Unreserved, undesignated TOTAL Fund Balance 'Chart 4 — Projected Fund Balances by Governmental Fund Type and Program at June 30, 2009 Development and Delivery FY 06/07 FY 07/08 Actual Revised Budget $ 1,171.700 5 2,942,500 1,219.100 2,408,600 33,000 116.500 147,496.200 399,176,200 121,400 500,000 36,764,400 42,225.900 34,354,300 76.450.60Q $ 221.160.100 $ 523 am inn FY 07/08 FY 08/09 Projected Budget $ 1,136,800 933,800 180,700 203,155,500 215,800 150,723,300 75,105.700 $ 431.453.60Q Dollar Percent Change Change $ 2,698,400 $ (244,100) -8.3% 2,427,300 18,700 0.8% 2,020,800 1,904,300 -1634.6% 412.765,000 13,588,800 3A% 500,000 - 0.0% 35,540.100 (6,685,800) -15.8% 75.572.400 (878,200)-1.19(1 $ 531.524.000 $ 7 703 700 l a% Balances by Program and Geographic Area at June 30, 2009 Measure A Western County Coachella valley Palo Verde Other Total 526,000 $ 526,000 13,669,300 33.683,600 33,683,600 1,238,300 66,411,500 10,775,600 -- 317,800 1,570,400 1570,400 2,648,200 71,524,400 1,158,700 21,872,600 21,872,600 1,830,500 1,830,500 8,250,900 96,434,200 96,434,200 4,936,200 4,936,200 _ 2.645.900 2.645 900 1166.611= 3 1.537.600 $ 67 90Q $ 167 385 90Q 5 335 607 firm �loralSYeek and (loads $164,100 —718K127,390,600 - ,—Speciaized Trans07,967,50o aria$ 039.e76.200 rachwae Valey$1,537,600 - 80,667$9,700 - Saeek aet Roads 165.800 dArlerk s81,158.700 ,---6oeristea rraa;a $283,400 �•Palo Verde Vagey Local &reels and Rods $67,900 *brit Assistance $1,936.200 ••••••" Sbie TarsrtAssislacae $33A66,900 lorallrarsoortati n Fund$62.967,300 15 TABLE 18- BUDGET COMPARATIVE BY SUMMARIZED LINE REM FY 2007 - 2o55 REVENUES MeasureA Sales Fan ; 154,539,500 5 135,000,000 $ 135,006000 5 135,010,000 i - 0.0% OF Sales Tax 65293,200 89,388,030 78,163,700 80,579600 (8009,500) STA Transit Allocation 18087,000 9.774,100 9.774.100 22,992.600 13218,500 135.2% Vehiile RegistrationFees 1.681.100 1,460.000 1,470,000 1.496.000 35000 24% Reimbmrsermf4 5498,500 47,915,700 17,095,700 74.455.400 26539,700 55.4% Otter Revenue 6455,500 2,947,900 2002.100 1.927200 (1,020,700) -34,6% TUMF Revenue 40,757,200 10,000,000 10,305,700 7,730,000 (2,270,000) -22.7% Investment Income 23997.400 17.09670Q 14175J0Q 8217.030 16679700) 51941 TOTAL Revenues - 336949,800 313,58300D 267,977,000 332,3962M 18013200 6.0% FY 0607 FY 07/08 FY D7106 FY 08/09 - Dollar Percent Actual Revised Budget Projected Budgel Change Change EXPENDITURES Personal Salary and Benefits 5.526,000 7,589.400 5,062.300 6,743,000 (848,400) -11.2% Professonal and Support General Legal Services 1.464200 1,577,900 1,078,300 16313,500 360,800 22.6% Financial Advisory 123,000 1,850,000 50000 90,000 (1,560,000) -94.5% Audit Services 1024000 523,000 471,900 548,00D 25,000 49% Professional Services• Otter 2108.700 472370Q 2565.300 4 277 800 1445.900) -0A% TOTAL Professional Costs 5,400,700 8,474,800 4,165,500 6,864,300 (1,620,300) - -19.1% SuppOrt Casts 2 636 008 3 604 700 2 874 300 4643.500 1235.00Q Ititit TOTAL Professlcnal and Suppod Costs 9,039,700 12,076300 6,8390011 11,697,800 (301,500) -32% Projects and Operations: Projeds.General 3,371200 4419,000 2,308,700 6,681300 2,241,500 50.7% Rail• 1,019,800 1.052000 1,572,800 1,959,000 877,000 81.1% Motorlat Assistance 2207600 4,912.300 4.045700 2092,700 (1,919,600) -39.1% Cpcmxder Assistance 1,940,200 2,562,000 1934,900 2,722200 156300 6.2% Engineering 16,638,200 88,903500 31,684,500 78784000 3,820.500 5.7% Construction 21,002,700 99,370,000 34,872,600 89078,600 (9,491,430) •9.6% Right of Way and Land 37.720.400 156,501.100 76907,100 186705000 32,203,900 20.8% SORRA Confbdion 5,524,100 17,919,300 6,339,600 5.979.600 (11,939.700) -66.6% Spada)Studies 645,60i) 4765400 896,1300 4028,300 102,900 3.4% , Special TransDDllatan(ftanslt 8277,000 5.122500 5,111,000 - 7,714,400 1,591,900 26.0% Lire! Streets and Roads 59,196,800 60,087,500 50,087,500 50985.300 (2,200) 0.0% Regional Arterials- Coachella Valley 9,136500 12,511.600 13215,000 8.781.300 (3.730,300) 45.5% LTF Disbursements 71,507.400 67,749,100 78218,500 80.748,70D (7000,400) -8.0% STA isbursements 3.423.190 9239700 13 016 600 8933900 t305 own -3.3% TOTAL Project and Operating Costs 239,700,900 524,208,700 314210,500. 536874300 8067,500 13% Debt Service Princlpal Payments 30,225.600 32,012.100 142612,1M 33,630,000 1,617,900 5.1% Interest Payments 8,564.900 9,933,900 7,861,200 11.110.100 1.176,300 11.8% Costof%manna - 280000 650000 150,0(1 570,000 MAN TOTAL Debt Service 38,790,500 4222_5900 150,723,300 45596100 3,384,20d 8.0% Cannel Outlay 161.300 942.000 295100 89000Q 152.0001 - 5../ TOTAL Expenditures 290 218 40Q 917 cat 103 477.131.000 595795200 8.751 900 1521 Excess (Deficiency) of Revenues Over (Under) Expenditures 46.731,400 (273,460,300) (209.154600) (266399600) V1061,300 -3.7% ONo;Fnancing Sources (Uses) Transfers In 34,745000 77.940.600 75.56570D 76000.200 (1,34D,400) -1.7% Transfers Out (34,7450001 (77,940,000 (75585,7001 (76000200) 1,340,400 17% Debt Proceeds 50 WO 000 67 000 000 14800000D 110 000 000 23,000000 -26.4% Excess (deficiency) of Revenues over (under) Expenditures and Ogler Financing Sources (Uses) 96.731.400 086.460,303) (61,154,000) (153-399,000) 33,061,300 17.7% Beginning Fund Balance ENDING FUND BALANCE 453,42,200 550,160,600 550 160 600 489006.600 (61,154.000) -11,1% ; mimosa; ; 363700300 s 489006. 4 ; 3t.5 sal 55a ; (28 r192700) • 16 i • Table 19 — Operating and Capital Budget FY 2008/09 F112008339 FY 2008/09 FY 08M9 Operating Bu090 Capital Budget Total Budget REVENUES Measure A Sales Tax 8 11.5691100 $ 123,431,000 $ 136000000 LTF Sales Tax 79.260.000 1.314000 130,579000 STA Transit Alloemon 22.907_600 - 22962600 Vehicle Registration Fees - 1.495900 - 1095.090 Reimbursement 9.552.400 64.003,900 71.455.400 Outer Revenue 497.000 1.430,200 1027.200 -WRAF Revenue - 273%000 723%000 Imieslment income 2498900 5218100 8.217.000 TOTAL Revenues - 127.864.900 204051.300 332.39%200 E%PENOITURES Perionnel Salary and Benatas 4.044.600 2,698.400 6243000 Professional and Support General Legal Services 528,500 1,410.000 1.938.500 Financial AdNaory 40.000 60,000 00,000 Audi Services - 510.000 38000 548.060 Professional Services - Other 2848,500 1029,300 4277.800 TOTAL Professional Costs 3,927,000 2.427,300 6.854,300 Support Costs 2822.700 2020.800 4.843.500 TOTAL Professional and Support Costs 8,749,700 4.908,100 11.697.800 Protects and Operations: Pr%acts-General 308.000 0,3E0,303 6091.300 Rag 1.969.000 1.959000 *Wrist Asa:dance 2.992.700 2992700 Commuler Assistance 2.722200 2722200 EdgineemB 10,000 70,774,000 70284,090 Cdrrstruclion 2300.000 87,578000 09.878.600 R6111 of Way and Lard 20.000 1511085,000 188.705.008 SCRRA Contribution 5.979.600 5.979.600 Social Studies 4,420,800 807,500 4.928.300 Special Transportation/Transit 7,714.400 - 7.714.430 Laval Streets and Reads _ 5%085.300 50.085.300 Reg -anal Arterals - Coachella Valley - 8,781,300 8.7131300 LTF Disbursements ' 60,748700 80248.700 STA Disbursements. 8,933.900 8033.900 TOTAL Prefect and Operating Costs 118,10%300 412786,000 530.874.300 Debt Sen4ce Prinepal Payments 33.630,000 33.630.000 Interest Payments - 11,110,100 11,110,100 Cost of Issuance - 850,000 850.000 TOTAL Debt SeMce - 45.590100 45,5110,100 Capibl Outlay 390,00D 500,000 843000 TOTAL EmendNres 129.293603 446.501 EDO 605295200 Excess IDefiae,cy) ul Revenues Over (Under) Expendihnen (1,428,700) 1281.970300) (263399,0001 Other F1naneng Souses (Uses) Transfers In 264.380 76,335000 76.600200 Transfers Out (1,027,800) (7%5724001 (78800400) Debt Proceeds - 110.000 .004 /10.000.000 Excess (delicienry)of Revenues over (under) Expenditures and and Outer Financing Sources (Uses) m.1922003 (151,206000) 1153.399.000) Beginning Fund Balance 166,882089 322.343,511 489.006000 ENDING FUNO BALANCE f 13T9aa (a9s S 203622000 f 335607.600 17 Personnel Salary and Benefits Table 20 — Budget Expenditures and Other Uses Summarized by Governmental Fund Type FY 2008/09 TOTAL BUDGET EXPENDITURES AND OTHER USES SUMMARIZED DY FUND TYPE General Fund Special Revenue Capital Projects Debt Service Total $ 3.328,900 $ 3,414,100 $ - $ - $ 6,743,000 Professional and Support Expenditures General Legal Services 486,600 1,445,900 6,000 1,938,500 Financial Advisory 38,100 1,900 50,000 90,000 Audit Services 485,900 62,200 - - 548,100 Professional Services - Other 2,287.200 1.540,500 450.000 4.277.70g TOTAL Professional Services 3,297,800 3,050.500 506,000 6,654,300 Support Casts 2.173.400 2,670 100 - 4 843 500 TOTAL Professional and Support Services 5,471,200 5,720.600 506,000 11,697,800 Project and Operations Expenditures Program Management 6,238,300 6,238,300 Projects - General - 118,000 305.000 423,000 Rail 1,959.000 1,959,000 Motorist Assistance 2,992,700 2,992,700 Commuter Assistance - 2,722.200 - 2,722,200 Engineering 10,000 70,089,000 685,000 70,784,000 Construction - 84,179,600 5,699,000 89,878,600 . Right of Way and Land 20,000 122,660,000 66,025,000 188,705,000 1 SCRRA Contribution 5,979,600 5,979,600 1 Special Studies 4,380.800 547,500 4,928.300 Special Transportation/Transit 7,714,400 7,714,400 Local Streets and Roads 50,085,300 50,085,300 Regional Arterials - Coachella Valley - 8,781,300 - 8,781,31)0 LTF Disbursements 1,050,000 79,698,700 - 80,748,700 . STA Disbursements - 8 933 900 - 8 933.900 TOTAL Project and Operations Expenditures 13,517,400 444,947,900 72,409,000 - 530.874,300 Capital Ouday 333,100 556,900 890,000 Debt Service Principal and Interest 9,200,000 35,540,100 44,740,100 Cost of Issuance 850.000 850.000 TOTAL Debt Service 10,050,000 35,540,100 45,590,100 Other Financing Uses: Transfers Out 36 804 400 39,795 800 76,600,200 . TOTAL Expenditures and Other Financing Uses $--22-651Rr10 $ A91443.90Q a 122 80.800 S 35.540.10D $ 572 305 400 • 18 Table 21 - Highway, Regional Artertal, and Rail Programs FY 2008/09 Description (details presented /n _aeCJlon 7.3, exempt as Intl/cater& Projects General Bechtel Program Management and Contract Administration $ 5,434,300 SCRRA Program Management 804000 TOTAL PROJECTS GENERAL 5 8,238,100 Highway Engineering SR-60 East Junction to 1-215 HOV Lanes Con ertor $ 2.000600 SR-74/G Street to 1-215 1.970.000 SR-748-15 to 7th Street 100600 SR-91 HOT and Meted FlOW Lanes 9600.000 SR-91/SR-71 Connectors 3,700,000 1-10 Truck Climbing Lane 300600 1-15 Corridor and HOT Lanes - 11,600.000 1-215A-15 to Scott Road Meted Flow Lanes 2600,000 1-215/Sccll Road to Nuevo Road Mixed Flow Lanes 3456 000 1-215/Nuevo Road to Box Springs Road HOV Lanes - 1,100.000 1-15/Cajatro Interchange 0, 1-215 Br -County 750,00D D SR-79 Reafignment 3600600 SR-111 City Projects (Cathedral Cry. Indio, La Onirda, and Rancho homage) 4,030,000 Mid County Pakway 3000 SUBTOTAL HIGHWAY ENGINEERING 47106000 Regional Arterial Engineering Various Western County TUMF Regional Arterial Projects 11698000 SUBTOTAL REGIONAL ARTERIAL ENGINEERING- 11,648 000 Raft Engineering Perils Valley line 12,03000 SUBTOTAL RAIL ENGINEERING t2,IXm600 TOTAL HIGHWAY, REGIONAL ARTERIAL, AND RAIL ENGINEERING $ 76784,000 Highway Construction SR-60 HOV Lanesil-15 to Redlands Boulevard $ 10,000 SR-74/1-15 to 7th Street 867,000 SR-91Nan Buren Interchange 7600.000 SR-91/La Siena Interchange 17,000600 SR-91/Green River Road Interchange 2,500 000 SR-91/Adams Street to SR-00/SR-91/1-215 Interchange 20,000.000 SR-111 and SR-86 Cry Projects (Cathedral Cry, Indio, La puunta, and Rancho Mirage) 9537 s00 -151-215 TratUc Flow Detection Project Wads presented R Seclion 7.2, CommuferAss/stance) 2,300,000 SUBTOTAL HIGHWAY CONSTRUCTION Regional Arterial Construction Various Western County TUMF Regional Arterial Projects SUBTOTAL REGIONAL ARTERIAL CONSTRUCTION Rad Construction Perris Multbnodal Facility North Main Corona Station Parking Structure SUBTOTAL RA0. CONSTRUCTION TOTAL HIGHWAY, REGIONAL ARTERIAL, AND RAIL CONSTRUCTION $ 89676600 Highway Right of Way and Land SRbO East Junction to I-215 HOV Lanes Contactor SR-60 HOV Lanes/I-15 to Redlands Boulevard SR-74 1-15 to 7th Street SR-74/G Street to 1-215 SR-79 Realignment SR-91/Adams Street to SR-60/SR-9111-215 Interchange SR-91 HOT and Mixed Flow Lanes SR-91/SR-71 Connectors Mid Corny Parkway I-15 Corridor and HOT Lanes SUBTOTAL HIGHWAY RIGHT OF WAY AND LAND Regional Arterial Right of Way and land MSHCP Lard Acquisition In Western County and Coachella Valley 85,025 U00 Various Western County TUMF Regional Arterial Projects 14,440,000 SUBTOTAL REGIONAL ARTERIAL RIGHT OF WAY AND LAND 79,465000 59,814,600 10,464,000 10,464,000 5,450,000 14,150,000 19,600600 $ 4,100,000 10600 1,570.600 3300000 10,050,000 17,200.000 10,000 10600 61,500,000 10,000 97,660.000 Rai Right of Way and Land Pens Valley file 11,450.000 Paris Multincdal Facility 110.000 General right of way support services 20000 SUBTOTAL RAIL RIGHT OF WAY AR AND 11,5.90.000 TOTAL HIGHWAY, REGIONAL ARTERIAL, AND RAIL RIGHT OF WAY AND LAND $ 169705/000 GRAND TOTAL HIGHWAY, REGIONAL ARTERIAL, AND RAIL PROGRAMS $ 355605,900 19 OZ 00060056C t 0009006K 9 000094'099 9 000'669'CC $ 001 git 9C $ 000'SR96 t '0069129'1 $ DOG '196'C9 9 OM 909'92 6 001096'196 9 001E29'961 9 009'4100K9 000699'9 9 OOl'CIi6 9 0006165 $ Dowered aN0d ONIONS 0094042091 009'009'06S 002'6E14621 0019026 000'➢9Z'49 00L'691'09 001196'21 009'90692 009'991'91 00Y669194 009•LPO'D91 C09'640101 0012116 DOZ'916'6 Kt OCL6 9669160 PPP 6404909 f000'6ects0 1000b91•L01 UOYL tees °propel oovotLI 009'946 40010524111 (000/181.4) 90061091 (19009900/1) 4601110LP 00016191 10061140'97 4001'9994 001'94L 96096P 03 OSPu0 me een9e916 /e 91e9116leP) meal 00199C'919 9 002922 LS6 9 00199619C $ 009016K 9 ME Urn $ 006'/LYOC $ 001.090941 9 D09'/SC't94 $ NZ4629'CC $ 900Ett'Kt 6 MC'SIG KC 9 00E'LCc on OO6'Os9'22 s OOt'994'B1 9 000'I19191 $ 1o1/1Mp4ue4d11PPIMS 16101 002'009'69 002 C96'SL00021.11C 006'099 00040911 00 L'OIL'It 0119119'61,1 000'064'0E 000'0139 009'662 000999 0044916.09 ODS'912'et DOt'LOC'1L D06'1 Bee 060'912'9/ 0094991'9 009'990'09 009'L90'14 009461'6C 001'266'9 00944041 000029'6 001111'4 00.2411'9 0002[09 000'996'0 000969 000619 090666'9 0091609 0014009 000106'099 K44609'04 001'091'12 000968'69 ODB'LL2'16 0°6'690'99 00099006 0051991E 00090'91 000222'Z 6001101 OOLBSIE 0064966E ocesrO'9 cotrooL9 000656'9 00949654 0006109 0004909 006'10C'L 0001104E 0000/01, 0001602 02/09009 000'669'9 005599'1 004.004'5 000299L'9 $ 00949M S 0009209 9 009'96646C 006'09669 000'096 000'066 001'0e9'90 Oat 9.11'99 006'sL1'62 2619'006'6 000'OOY'tll 9 • 00062049 906'019'SC 000'969'6 4009'06E'21 000990 002'LE • • 000'905 OOCb l9 t - S - S 004'96912 0060604E D011009C 069'too 'es OCO'SK'r9 • 6401194611911 . 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S ODo'oDYc s o00'00>'c s 000'005t t 14 OCI9S Ad 1991090461 IeROtl 6•02.011 6 1 9101d M0119 MOM P1194943 IeryOY /60419 Pe19 2921 111/499 199419 p9P9101d 1enge VDU Ad 10010 Ad 60290 Ad 00LK Ad LAND Ad MAO AL 9DNO Ad L0190 Ai 90190 AA (0210 Ad 60,90 Ai 60N0 Ad 90210AS LONOAd 0001 PP/ 999499 spun M9104 I06160 sponA enu96941 ome$ peed mom) 4009n9$ le10u914d pelulm3 9Y101 4 eNpuell ameezed MeO 00metl dWnl moree Paum9W 9We 4611690911619149A oMXWtl MOO 921e0099.9evea Y1S elueul99,0014021Je40 qulumilrquem impel 6wVWDEONW19n ORM re10010S ill 091IMOS Yume919 s304ll10s lY10NYNld seen pue seDmoS leloueuld PeleWIIS3lo ketu4un S UM • 100Z Ad ZZ 81921 60/900z aeaA ieDsH Budget Process • Resource estimation and allocation • Commission policy goals and objectives • Department goals and objectives - Determine key assumptions - Assess current year accomplishments - Identify next year's initiatives • Department budget development • Compilation of Commission budget • Review and adoption of budget Guiding Policies • Mobility Initiatives • Goods Movement • Improved System Efficiency • Environmental Stewardship • Economic Development • Intermodalism and Accessibility • Public and Agency Communications • Financial and Administration FY 2008/09 Budget Challenges • Decrease in sales tax revenues due to slow down in economy - Effect on availability of Measure A funds for Western County and Coachella Valley highway projects as 1989 Measure A Plan nears completion - Use of TDA reserves to fund transit operations - Impact on Measure A administrative salaries and benefits limitation • Significant decline in TUMF revenues due to housing market issues - Effect on ability to program other phases of approved regional arterial projects - Use of TUMF fund balances for project expenditures • Available capacity of Commercial Paper for existing commitments and needs - Plan of finance to issue sales tax revenue bonds to restore commercial paper to $185 million capacity Comparison To Other Governments • RCTC is project driven - "Super" self-help county with Measure A to fund and develop projects - Flexibility to change scope and timing of projects - Administrator of transit funding, not an operator - Transportation focus - Small staff with heavy use of consultants • Most other governments are service driven - Annual operations to provide services such as police/fire, utilities, education, health, social services, and other - Dependent on state funding, user fees, and taxes for working capital purposes - Larger staff to provide variety of services Budget Summary Beginning Fund Balance Revenues Commercial Paper Proceeds Transfers In Total Estimated Sources 332,396,200 110, 000, 000 76,600,200 Expenditures 595,795,200 Transfers Out 76,600,200 Total Estimated Uses $ 489,006,600 518,996,400 672,395,400 Uses Over Sources (153,399,000) (Offset by beginning fund balance) Ending Fund Balance $ 335,607,600 Revenue Trends $400,000,000 $350,000,000 $300,000,000 $250, 000, 000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 FY 05/06 FY 06/07 FISCAL YEARS FY 07/08 FY 08/09 o Investment Income it Other Revenue o TUMF Revenue ❑ Intergovernmental o LTF Sales Tax o Measure A Sales Tax TUMF Revenue 2% Intergovernmental 30% Other Revenue 1% LTF Sales Tax 24 % Investment Income 2% Measure A Sales Tax 41% Revenue Breakdown Measure A Sales Tax LTF Sales Tax Intergovernmental TUMF Revenue Other Revenue Investment Income TOTAL Revenues FY 07/08 Revised Budget $ 135,000,000 89,388,600 59,149,800 10,000,000 2,947,900 17, 096, 700 $ 313,583,000 FY 07/08 Projected $ 135, 000, 000 78,153,700 28, 339, 800 10, 305, 700 2,002,100 14,175, 700 $ 267,977,000 FY 08/09 Budget $ 135,000,000 80,579,000 98,943,000 7,730,000 1,927,200 8,217,000 $ 332,396,200 Expenditures Management Services 1% Transit 15% Local Streets and Roads 8% Debt Service 8% Other Programs 6% Capital Highway, Regional Arterial, and Rail 62% Expenditures Breakdown by Department Management Services Regional Issues Planning and Programming Rail Operations Right of Way Management Specialized Transit Transit Commuter Assistance Motorist Assistance Capital Highway, Rail and Regional Arterial Local Streets and Roads Debt Service TOTAL FY 07/08 Revised Budget $ 5,635,300 893,100 8,977,500 9,034,100 1,162,500 6,323,500 96,013,200 6,450,300 5,184,100 355,056,300 50,087,500 42,225,900 $ 587,043,300 FY 07/08 Projected $ 4,963,400 790,200 1,741,800 8,601,600 619,000 5,257,100 91,459,200 3,146,400 4,204,400 155,537,100 50,087,500 150,723,300 $ 477,131, 000 FY 08/09 Budget $ 5,608,000 915,600 6,168, 000 9,122,100 1,212,000 7,955,400 89,004,500 6,487,500 3,320,500 370,326,200 50, 085, 300 45,590,100 $ 595,795,200 Department Expenditure Highlights • Program expenditures represent 910/0 of expenditures - 10/0 increase from FY 2007/08 budget • Highway, Rail, and Regional Arterial Projects - SR-91 HOV lanes ROW and engineering - SR-79 realignment ROW and engineering - Mid County Parkway ROW and engineering - North Main Corona Station Parking Structure - SR-91, I-15, and I-215 Corridor engineering - Perris Valley Line ROW and preliminary engineering - Land acquisition for WC/CV MSHCP total Expenditures Breakdown by Function Personnel Professional Support Projects & Operations Debt Service & Cost of Issuance Capital Outlay FY 07/08 FY 07/08 Revised Budget Projected $ 7,589,400 8,474, 600 3,604,700 524,206,700 42,225, 900 942,000 $ 5,062,300 4,165, 500 2,674,300 314,210,500 150, 723, 300 295,100 FY 08/09 Budget $ 6,743,000 6,854,300 4,843,500 530, 874, 300 45,590,100 890,000 TOTAL Expenditures $ 587, 043, 300 $ 477,131, 000 $ 595, 795, 200 Expenditures Breakdown Capital Outlay 0% Debt Service and Costs of Issuances 8% Personnel 1% Professional 1% Support 1% Projects and Operations 89% Functional Expenditure Highlights • Personnel based on 45 FTE - 3% salary increase pool • Professional costs have decreased 190/0 • Support costs have increased 340/0 • Capital outlay relates to an improved database management system and Rail property improvements Personnel Cost Trends $8,000,000 $7,000,000 $6, 000, 000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 a 1 hRb t E 3 r x F �. _ Ih 1 S Tab d 4 0 Budget ® Actual Measure A Administration CO c Projected 0 n Actual 0 0.00% 0.50% 1.00% LI Salaries and Benefits % O Administrative Costs % 1.50% 2.00% 2.50% 3.00% 3.50% • Measure A limits administrative salaries and benefits to 10/0 of Measure A sales tax revenues • Commission policy for total administration costs not to exceed 40/0 of Measure A sales tax revenues New Steps • Continued vigilance - Sales tax revenue trends o Measure A administrative salaries and benefits o Funding needs for transit operators - TUMF revenue activity - Timeliness of federal and state reimbursements • Receive input for the proposed budget today and continue the public hearing to the June 11 2008 Commission meeting • Review the final budget draft and close the public hearing at the June 111 2008 Commission meeting • Adopt the final budget at June 11, 2008 Commission meeting i AGENDA ITEM 8A • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: May; 14, 2008 TO: Riverside County Transportation Commission FROM: Budget and Implementation Committee Anne Hallberg, Accounting Supervisor Theresia Trevino, Chief Financial Officer THROUGH: Anne Mayer, Executive Director SUBJECT: Quarterly Investment Report BUDGET AND IMPLEMENTATION COMMITTEE AND STAFF RECOMMENDATION: i This item is for the Commission to receive and file the Quarterly Investment Report for the quarter ended March 31, 2008. BACKGROUND INFORMATION: Attached are the quarterly investment and cash flow reports as required by state law and Commission, policy. The county of Riverside's Investment Report for the month ended March 31, 2008, is also attached for review. i Attachments: 1) Quarterly Investment Report for the Quarter ended March 31, 2008 2) County of Riverside Investment Report for the Month ended March 31, 2008 Agenda Item 8A 21 • • Statement of Compliance All of the above investments and any investment decisions made for the quarter ended March 31, 2008 were in full compliance with the Commission's investment policy as adopted on April 9, 2008. The Commission has adequate cash flows for six months of operations. Signed by: Chief Financial Officer 22 'sesodrtld 6ulpoder Ieloueu0 rry emeNepW ueOl a se peuoder @ sew tam wawisenul (l) SEE 'SS4'SES s 1V101 016'l60 SL 99L'0E1'SS 926'66L'LZ 891.'286'SE Slueweegv lueugsenul spund Ienem lelol-gn9 puns uoue6N0 lvewuenOp ueouewy mid Isrul -ound suo0e6a) lunseau ueopewy Isr1d :spund IenlnW 022'91.9'E dly1 980'986'09r food Alunoo MT!. ewes 3dA11N3W1S3ANl a32laYWWnS 90/61.E0 iepeLl3 IND - spund lenlnW IeVevi Aeuoyy %OL£'S 80/S1.20 000'000'0 a0 elgelloeeN NNYgOSYa %008'9 80/9020 000'000'3 eleelleoueu-sleN TINA u a�a Plea A1PnleLN NpnleLN Is enleANed :SelemPlW WON :sessgomd sHZ'LS Ono/ mug mom) inn ml tuonnesuul No ultonul SSC'SSe'SES S quaultenul pue goeO fly lV101 9L C8Z9'LL onusog IgaOppPuns IPo(old puog moms WN LuYyyryeV 9LPZOL'LZ Purld uollee11g0 lueunueno0 ueoueuflsrld 0£09� 6 026 268 $ 000'9ZB SL %STD 802Z/S0 SONZ/SO 0009ZB Sl %000'9 YIN OLB'tse'SL spouowny luemsenul WN WYYy/eeY 891'196'CE puns suoge61Ig0 A+nsosry uoopotuv nos 3Aa3S3a 1g30/SONnA LOSPOSd PNOS NOIS81W1700 %S E s - S S s 680308'02 WN L+NWynaW-seY 6es'e06bt puns uoseyodouely moon :puns luounsenul polood knunseoly AlunoO 1sOg1 NI 0131-1 sONnd isrul ul PIoLl oPund IelolOn8 E£9'Inc '68£ spund OugeudO pnoLons WN WN Peleli leN 9L1'91.9'6 (dlyl) puns luauleenul Aoue6Y meal %06•E YIN 1-+NWW1.gWleey 89Z'8130'98£ ;fund lueupsenul piqued oA61nse611 Alunoo WN WN +6061/E1/ 1.69'£1. sllsodea suee IsuoneN 410 SCINild ONLLY213d0 SSOI NIV9 3MVA 1S03 naun1yW 31y0 31Y0 3MVA 311,21 d9S NOlIdISAODOW 0rrIVA alYd a3ZIlY3gM1 i3NayW 3SYN3and Os al31A AlPinIYW 3SYHOand gVd NO6l100 ONIIYN 900Z'LE LIMN :pepu3 poped yodea a!lOpOd luaulsenul uoissluu00 uolleNodsuery A{uno0 eplsreniu • • • • 1E4,areaPzni 26-Mar Durable Goods Orders (-1.7% actual vs. 0.7 % survey) 25-Mar Consumer Confidence (64.5 actual vs.73 survey) UnemploymentSltuatIon Rate(5.1% 04-Apr actual vs. 5% survey) Payroll change(- 80000 actual vs.-50000 survey) • "The Fed is on the March" In a bold move reminiscent of General Patton's 100 mile dash through Europe with his r Army to save the encircled 101" Airborne at Bas- togne during the battle of the Bulge, Bernanke and his cohorts at the FED sprung to action In order to rescue our besieged financial sys- tem. Since September of last year, the FED has now lowered the funds rate 300 bps, for a total of six cuts, one of which was Inter -meeting. The FED has also slashed the discount rate 375 bps. since August of last year. One now has to question, what more can the FED do before It starts running out of ammo to help fight off this economic slowdown? On the other hand, by flooding the sys- tem with liquidity via drastically lower rates, cheap cash can lead to Inflation, which creates another enemy the FED must contend with. It's like fighting a battle and being surrounded on all sides; Just as the 101"Airborne at Bastogne had to hold off the enemy while failing to gain any ground. So what are the policy makers to do7 Be innova- tive, and like Patton, charge in for the rescue. The FED has extended a new lending program for the embattled broker dealers. They are basically marching to the heart of the prob- lem by exchanging mortgage -backed bonds, which in many cases are Illiquid or trading at huge discounts, and swapping them for Treasury bonds. This move is a new tactic and a big departure from the traditional remedies of the past. Flashback to last years' March edition; we wrote of our pending, new and improved. Interactive Voice Response (IVR) phone system 8 Interactive Web Response (IWR) web - site. We are happy to report that along with a newly Integrated front counter, they are both In place and are expediting the collection process better than ever before, We will continue to look for new ways to make strides In better serving the taxpay- ers of Riverside County. Paul McDonnell Treasurer -Tax Collector A oath L.ncl Value nth I[:nd l3©iik Japer Gain or - Paper Gain or13oolt. Value ••Lass ($) Loss (90 1'ir id rs.) t11fi�d Duration March 5,539,808,337.78 5,518,060,400.16 21,747,937.62 0.39% 3.95 1.04 0.97 r January 5,426,226,441.66 5,400,694,361.87 25,532,079.79 0.47% 4.57 0.88 0.82 November 5,016,644,039.96 5, 003, 676, 304.83 12,967,735.13 0.26% 4.99 0.90 0.84 *Market values do not include accrued interest 24 The federal funds rate was cut by 75 basis points to 2.25% in March. The next Fed meeting is scheduled for April 30. The 2 year T-Note was yielding 1.62% (down 3bps,) while the 10 year T-Note was yielding 3.45% (down 8bps.) For March the Pool had a decrease of 47bps, in the average monthly yield, 3 M b US. Treaauly 136; ;'(a:47) 6MoUS Treasury Bill 151 (0.32) 2 Yr US Treasury, Note ... 5 Yr US Treasury Note 2.46 (D.04) 1DYr US Treasury Note;' 335'' (6.0$). FED Fund Rate 2.25 (0.75) 162.. (6.03) D•ud9,011 (barrei) 1015.5 (0,26) Gold (Ounce) 934.93 (36.72) 1 S&kP 5500 12214,40 . 1.322.70 *0(6 (7.93) Pagel • Maturity Distribution 30% 25% 20% 15% 10% 5% 0% 30 days or 30 - 90 90 Days - 1 1 - 2 Years 2 - 3 Years Less Days Year Over 3 Years Sector breakdown Cash Equivalent aMMF 620,000,000 0.08 2.68 Negotiable CDs 234,000,000 0,15 3.41 M unlolpal Bonds 112,853,839 1.3 4.34 5,539,806,338 1.04 3.67 /1- 1 / P-1 or betle 19111.2. Feder al Agoncy . 62 02 ,3 Cash nows2 7'36b616 o< iQr�p: en.�.1 .1cie.:e9 83e3- Maturitic , x.av 04/2008 72.7 +u 09/2008 655.7 832.5 (I76.8) 104.6 11/2008 894.6 706.4 188.2 188.2 45.2 1/2009 626.7 1,316.8 (690.1) 93.6 3/2009 710.8 856,6 (145.7), ' 25.0 1 1.279 o (1 312.3 101 3 3,_;{'.3 r/.111,n9 25 • 1 Treasurer's Institutional Money Market Index (TIMMIJ is compiled and reported by the Riverside County Treas- urer's Capital Markets division, It is a composite index derived from the average of three multi -billion dollar AAA rated Prime (funds that invest in a diversified portfolio of U.S. dollar denominated money market instruments including U.S. Treasuries, government agencies, bankers' acceptances, commercial paper, certificates of deposits, repurchase agreements, etc) portfolios that the Treasurer tracks. Further details available upon request. s The Pooled Investment Fund cash flow requirements are based upon a 12 month historical cash flow model. Based upon projected cash receipts and maturing investments, there are. sufficient funds to meet future cash flow disbursements over the neat 12 months. • Bra 1L'0 9C'9 000911C 00'091'C00'S Za'Z 910 00'5 99'1 3WE 95'Z 9S'Z 84'Z 17 3 12'Z 96' ESL L5'0 51'0 LVC 9E3 P. 'LP" 9r9 O VI, 09' OL'Z SZ"£ 05'3 09'b LE OCT 83'Z 9Z L 80 91'0 S9'b 601 0Z'S L9'Z g:[•4Ecsv«axx ' J.Ie , ,ke:14, a_Y;:iVel =4.:i:3'23,•:74: LE'0 C3'0 9E 0 £20 Bl'0 61'0 51MinfiiMan 0'0 01'0 19i991 BO 0 L0'0 90'0 10'0 697 OW3 39'3 lb'Z 90'0 90'0 . 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SONGS AON3OV VD •siosiniadns 3o plzog kiunop aqi Xq panoidde puu aa4mnuop TOTsianp ivaunsanui s,Xiunop atia Xq Xffenuue pamatnai sl Xagod siq,i, •apoo ivauzuianoo gnuopreD alp nun anpouisai afoul st XOU0d ivaunsanui s,llunop ata •XoNod wow:I anus 3o iuomaieis s,lamseai,i, alit TPA aDNAITIMATOD 11II3 ut sung pund ivaulsanui paiood s,lainseaii, aqZ • • £E Rio uainsta lXTunoo •mmm srreo•ap sianlroogn si.olnulmIdeo SOZZ-ZOSZ6 VD `apisiongi sp3puT I jeltdva - Jooi3 42.17 `1004S uou orl 080t JamoD ang ustutuzpv Xlunoo AGENDA ITEM 8B RIVERSIDE COUNTY TRANSPORTATION COMM/SS/ON DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Budget and Implementation Committee Michele Cisneros, Accounting and Human Resources Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Interfund Loan Activity Report BUDGET AND IMPLEMENTATION COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to receive and file the Interfund Loan Activity Report. BACKGROUND INFORMATION: At its April 14, 2004 meeting, the Commission approved the Interfund Loan Policy and adopted Resolution No. 04-009, Resolution of the Riverside County Transportation Commission to Authorize Interfund Loans". Subsequently, the Commission requested that the interfund loan activity be reported on a quarterly basis. The attached report includes all interfund loan activity through March 31, 2008. The total outstanding interfund loans aggregate $1,236,945 as of March 31, 2008. Attachment: Interfund Loan Activity Report Agenda Item 8B 34 • • • Riverside County Transportation Commission Interfund Loan Activity Report For and quarter ended March 31, 2008 Loan Amount Repayment Amount Date of Loan of Loan Begins Outstanding Lending Fund Borrowing Fund Purpose of Loan March 4, 2004 275,000 July 1, 2009 275,000 1989 Measure A - WC Commuter 1989 Measure A - WC Highway (222) Additional local match for the SR-71 Assistance (226) Widening/Animal Crossing Project June 30, 2007 486,402 July 1, 2009 486,402 1989 Measure A - WC Highway (222) 2009 Measure A -WC Highway Improvements (262) Advance 2009 Measure A 1.215 BlCounty project (Maximum loan available of $2 million) June 30. 2007 475,543 July 1, 2009 475,543 1989 Measure A - WC Highway (222) 2009 Measure A - WC Highway Improvements (262) Advance 2009 Measure A working capital Total $ 1,236,945 $ 1,236,945 35 Date Commission Approved December 10, 2003 April 9, 2003 June 13, 2007 0 • • AGENDA ITEM 8C • IF 1 , !' 1 1 ' .1 !I i1 * !: II 1 • • RIVERSIDE COUNTY TRANSPORTATION COMM/SS/ON DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Budget and Implementation Committee Shirley Medina, Program Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Need For Additional Funding for the State Route Occupancy Vehicle Lane Project 91 High BUDGET AND IMPLEMENTATION COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to: 1) Approve funding up to $51 million for the SR-91 high occupancy vehicle (HOV) right-of-way phase to be funded by a combination of federal funds and a Traffic Congestion Relief Program (TCRP) letter of no prejudice (LONP) reimbursement by Caltrans; 2) Approve up to $3.8 million of 1989 Measure A Highway funds as a loan to match the federal funds for cash flow purposes until the TCRP LONP funds are available to pay back any Measure A funds used; and 3) Authorize the Executive Director, pursuant to legal counsel review, to execute the Cooperative Agreement Amendment No. 08-31-002-01 and Corridor Mobility Improvement Account (CMIA) baseline certification amendment on behalf of the Commission. BACKGROUND INFORMATION: The SR-91 HOV lane project, from Adams Street to the 60/91/215 interchange, was approved for CMIA funds in the amount of $157,198,000 for the construction phase. The approval of these funds completed the funding picture based on engineering estimates as of January 2007. The environmental document for the SR-91 HOV project was approved on August 31, 2007. Caltrans is currently working on the design phase and finalizing right -of- way costs. The latest estimate for right-of-way indicates up to an additional $51 million may be needed for this phase. Now that the design is 35% complete, the number of required parcel acquisitions has increased from 49 to 70 parcels. In addition, the number of conflicts with utilities has substantially increased. Agenda Item 8C 36 The original estimate and current programmed amount for right-of-way is $24 million of State Transportation Improvement Program (STIP) funds. The.STIP funds were allocated at the February 2008 California Transportation Commission (CTC) meeting. The CMIA agreement between the CTC and the Commission states that any cost increases on CMIA projects will be funded by theprojectsponsor, or in this case, the Commission. Additionally, CMIA projects are monitored by the CTC to ensure project milestones are met and funding is secured. The CTC website includes the project milestone dates for each CMIA project to ensure accountability of the bond funds. Due to the cost increase for right-of-way, an amendment to the CMIA baseline certification is needed prior to the next CTC meeting in May to prevent this project from being placed on the "watch" list, which is a list of projects in jeopardy of losing CMIA funds. Staff has reviewed the funding availability and is proposing to fully fund the right-of-way phase through a combination of a TCRP LONP reimbursement and Congestion Mitigation and Air Quality (CMAQ) program funds. In 2005, the Commission approved a loan to the state of $21 million of CMAQ funds to cover TCRP funds that were suspended due to the 2003 budget crisis. The repayment is anticipated to occur when the 2008/09 State budget is passed. Utility Relocations Staff has identified up to $30 million of federal Congestion Mitigation and Air Quality (CMAQ) program funds that are available for programming this fiscal year. Staff proposes that these funds be used to cover the utility relocation cost increases currently estimated at $25 million. The availability of the CMAQ funds is due to project schedule delays, which frees up capacity this fiscal year. Staff proposes to encumber $20-25 million of the CMAQ funds within the next month. When design plans are closer to completion and it is determined more funds are needed staff will encumber additional CMAQ funds up to $30 million. Federal funds are required to have a local match. Staff proposes that the match be funded with the TCRP LONP repayment. Additionally, staff recommends that up to $3.8 million of 1989 Measure A Highway funds be approved as a loan to match the federal funds for cash flow purposes until the TCRP LONP funds are available to pay back any Measure A funds used. Agenda Item 8C 37 • • • Acquisitions Staff recommends that TCRP LONP funds that are not used for matching the utility relocations be approved for right-of-way acquisition cost increases. This amount is approximately $17 million. The $24 million of STIP funds allocated in February 2008 is sufficient to fund current year right-of-way acquisition activities. In summary, staff recommends funding the right-of-way shortfall by programming up to $30 million of federal CMAQ funds and $21 million of the TCRP loan repayment from Ca!trans. The urgency for resolving the additional funding need is so that the Commission can amend the CMIA baseline certification and cooperative agreement and meet the CMIA delivery schedule. Financial Information In Fiscal Year Budget: NA Yes Year: FY 2007/08 FY 2008l09 Amount: $30 Million $21 Million Source of Funds: CMAQ - S30 Million state pass -through) TCRP Loan Repayment - $ 21 Million Budget Adjustment: No GLA No.: 222 31 81401 P3005 Fiscal Procedures Approved: \14,444,034,44, Date: 04/18/2008 Agenda Item 8C 38 AGENDA ITEM 8D • • RIVERS/DE COUNTY TRANSPORTATION COMM/SS/ON DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Tanya Love, Program Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Alameda Corridor East Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users Earmark Update STAFF RECOMMENDATION: This item is for the Commission to: 1) Allocate $4.05 million of the Commission's Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) Alameda Corridor East (ACE) earmark funds to the city of Riverside for the Iowa Avenue grade separation; 2) Deobligate $4.05 million of Surface Transportation Program (STP) funds that were previously allocated to the city of Riverside for the Iowa Avenue grade separation; 3) Approve the reprogramming of $600,000 in SAFETEA-LU funds from the McKinley Street grade separation to Auto Center Drive grade separation; and 4) Approve the Riverside County ACE corridor updated financial plan for submission to the Federal Highway Administration (FHWA). BACKGROUND INFORMATION: In July 2005, Congress approved the reauthorization of the Federal Transportation Bill commonly referred to as SAFETEA-LU. Among the categories of earmarks are the "Projects of National and Regional Significance." The Commission joined with others in seeking an earmark for $125 million for the ACE; through this process, it was agreed that the earmark would be split evenly between Los Angeles, Orange, Riverside, and San Bernardino Counties and used to fund grade separation projects to mitigate the impacts of ever-increasing freight traffic. In April 2006, the Commission approved $21 million of the $31.25 million of the Commission's SAFETEA-LU ACE earmark funds leaving a fund balance of $10.25 million. In December 2007, the Commission allocated $6.2 million of the remaining funds to the city of Corona for Auto Center Drive as part of the project nominations for the Trade Corridors Improvement Fund (TCIF) Proposition 1 B funding, leaving an earmark fund balance of $4.05 million to be allocated on a first come, first -served basis: Agenda Item 8D 39 Project Allocation Fund Balance $ 31.25 Avenue 48/Dillon Road $ 2.50 Auto Center Drive 7.70 Clay Street 2.50 Jurupa Avenue 6.00 McKinley Street 1.00 Sunset Avenue 7.50 Total Allocated: $ 27.20 $ 27.20 Balance Available: $ 4.050 Commission staff is requesting that the balance of $4.05 million be allocated to the city of Riverside for the Iowa Avenue grade separation, which was recently awarded $13 million in TCIF funds. The project, which is designed as an overpass, is scheduled to begin construction by March 2010. In exchange for the $4.05 in SAFETEA-LU funds, staff is requesting that $4.05 million of the $8 million in STP funds that was originally allocated to the city of Riverside for the Iowa Avenue grade separation be deobligated'. To cover design and right-of-way costs on Auto Center Drive, Commission staff received a request from the city of Corona to reprogram $600,000 of the funds originally programmed in 2006 for the McKinley Street grade separation to Auto Center Drive. If approved, this would add an additional $600,000 to Auto Center Drive increasing the SAFETEA-LU allocation from $7.7 million to $8.3 million; decreasing the McKinley Street earmark from $1 million to $400,000. Once the various allocation and reprogramming requests are approved, staff will work with the FHWA to update the Riverside County portion of the ACE Corridor program application so that recipient agencies can draw down the funds identified on the attached corridor plan spreadsheet. Attachment: ACE Corridor Plan - Section 1301 ' Total federal funding for the Iowa Avenue grade separation would remain at $8 million ($4.05 in SAFETEA-LU + $3.95 in STP funds) Agenda Item 8D • 40 • ALAMEDA CORRIDOR - EAST TRADE CORRIDOR PLAN Section 1301 CCillke 1 Table Cl Project Allocation No. Year Agency Project Year of Task Expenditure Local Match SAFETEA-LU Source Amount % of Total Authorized Amount Net Committed Project Detail Project 1 1 FY 07 RCTC Ave 48/Dillon Rd Construction FY 07 City Local 625,000 20.0% 2,500,000 2,500,000 Total - Project No.1 625,000 20.0% 2,500,000 2,500,000 Project 2 2 FY 07 RCTC 2 FY 08 RCTC Jumps Avenue Jurupa Avenue Construction FY 07 Construction FY 08 City Local City Local 500,000 1,000,000 20.0% 20.0% 2,000,000 4,000,000 2,000,000 4,000,000 Total - Project No. 2 1,500,000 20.0% 6,000,000 6,000,000 Project 3 3 FY 08 RCTC Sunset Avenue Construction FY 08 City Local 1,875,000 20.0% 7,500,000 7,500,000 Total - Project No. 3 1,875,000 20.0% 7,500,000 7,500,000 Project 4 4 FY 08 RCTC 4 FY 09 RCTC Auto Center Drive Auto Center Drive Design & ROW FY 08 Construction FY 09 TUMF & City Local City Local 420,000 1,240,000 20,0% 20.0% 2,100,000 6,200,000 2,100,000 6,200,000 Total -Project No. 4 1,660,000 20.0% 8,30Q 000 8,300,000 Project 5 5 FY 07 RCTC 5 FY 08 RCTC Clay Street Clay Street Preliminary Eng FY 08 Design FY 09 County Local County Local 225,000 400,000 20.0% 20.0% 900,000 1,600,000 900,000 1,600,000 Total - Project No. 5 625,000 20.0% 2,500,000 2,500,000 Project 6 6 FY 07 RCTC 6 FY 08 RCTC McKinley Street McKinley Street Preliminary Eng FY 07 Preliminary Eng FY 08 TUMF Local TUMF Local 12,400 67,600 20.0% 20.0% 62,000 338,000 62,000 338,000 Total - Project No. 6 80,000 20.0% 400,000 400,000 Project 7 7 FY08 RCTC Iowa Avenue ROW FY 09 City Local 1,012,500 20.0% 4,050,000 4,050,000 Total - Project No. 7 1,012,500 20.0% 4,050,000 4,050,000 Total Detail 7,377,500 20.0% 31,250,000 31,250,000 41 000`0SZ`I £ 000`OSZI %0'OZ OOS`LL£'L aanllpuadxa jo asaA Rg - ploy " - " - - - - - - - %0'OZ %0'OZ OOS`ZSZ'Z 009`Z9L`£ OOb`Z9£`1 - SI Ad bI Ad £I Ad ZI Ad II Ad OI Ad 60 Ad 80 Ad LO Ad 90 Ad SO Ad aoud aanllpnadxg 3o asat Rg 000`0SZ`I£ 000`OSZ`I£ %0'OZ OOS'LL£`L Ksey,fg - ploy 000`0SZ`bZ 000`OSZ`n 000`000`Z 000`000`Z 000`009'Z 000`009`Z 000`OOb`Z 000`OO17`Z %O.OZ %O.OZ %O.OZ %O.OZ 000`017Z`S 00S`ZI0'i 000`0Z8 000`5O£ uopon.ysuoO MOII u2!saQ 3ug Anulunlaad Issy Au 000`0SZ`i £ 000`O5Z` I£ %0'OZ OOS`LL£`L asaA uolleaolly Ag - ploy 000`OSZ'OI 000`0SZ`OI 000`8£S`SI DOO`8£S`SI 000`Z917`5 000`Z9b`S - - " - %0'OZ %O.OZ %0'OZ 000`017Z`I 00I`000'S DOb`L£I'I - - 60Ad 80Ad LOAI 90 Ad SO Ad asaj uollsaolld Rg uotssiultuop uopupodsuc , Slunop app anpa :A.muiulns palllumoO lunouay laNT pazuoglnv laloy to %. lunomd aaanos aanllpuadxg Isey laaioad Aluoly asai •om ;o aeaA nollaaolly loaload R'I-vaialVs ipwjAT I13307 iO algs.L Z 98sd - IOO IOU 110173as Nvaa uoanIuOO aavui isva - NoanRIOO yam/spire i AGENDA ITEM 8E �� r • RIVERS/DE COUNTY TRANSPORTATION COMMISSION DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Property Committee Stephanie Wiggins, Regional Programs Director Min Saysay, Right -of -Way Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Amendment No. 2 with BRE Properties for Transit Development at the La Sierra Metrolink Station Oriented PROPERTY COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to: 1) Approve Agreement No. 07-67-004-02, Amendment No. 2 to Agreement No. 07-67-004-00, with BRE Properties for transit oriented development (TOD) at the La Sierra Metrolink station; and 2) Authorize the Chair, pursuant to legal counsel review to execute the agreement on behalf of the Commission. BACKGROUND INFORMATION: At its July 12, 2006 meeting, the Commission awarded an exclusive negotiating agreement (ENA) No. 07-67-004-00 for joint development at the La Sierra Metrolink station to BRE Properties for a 180-day period. The ENA allows for the Commission to negotiate exclusively with BRE Properties. At its February 14, 2007 meeting, the Commission approved Agreement No. 07-67-004-01 authorizing a six-month extension of the negotiating period. Representatives from the Commission, BRE Properties, Best, Best & Krieger, the city of Riverside Planning and Redevelopment, and Keyser Marston Associates (real estate financial advisory) have participated in the negotiations. Briefings with Riverside Public Utilities and Riverside Transit Agency representatives have also been held. The TOD project at the La Sierra station proposed by BRE Properties contemplates construction of two 1,000 space parking structures to the Commission for Metrolink parking in exchange for Commission property in two phases. The first phase option would terminate in December 2009, while the second phase option would terminate in December 2012. Agenda Item 8E 43 At its September 2007 meeting, the Commission approved Agreement No. 08-67-018-00 with BRE Properties for a TOD option at the La Sierra station. The proposed option agreement also contemplates the use of the Infrastructure Financing Act (Government Code Section 5956-5956.10), which would require a public hearing prior to the opening of each Metrolink parking structure related to a parking fee to cover maintenance of the parking structure. The proposal does not require a fee for the capital construction of the parking structure since the Commission would convey its property to the developer, BRE Properties. Need For Exclusive Negotiating Agreement Extension Since the September 2007 meeting, the option agreement has not been executed at the request of BRE Properties. During the last few months, the downturn in the residential market coupled with the costs of the public infrastructure requirements give pause to BRE Properties in light of their impact to the pro -forma. BRE Properties continues to meet with the city of Riverside and Commission staff to discuss funding alternatives. BRE recently submitted a joint application with the Commission for Prop 1 C TOD funds for the parking structure at the . La Sierra station. As a result, BRE Properties is requesting an ENA extension in order to pursue other funding/financing options to complete its funding plan. Staff recommends that the ENA extension term end September 30, 2008. Agenda Item 8E 44 • AGENDA ITEM 8F • • • RIVERS/DE COUNTY TRANSPORTATION COMMISSION DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Property Committee Sheldon Peterson, Program Manager Min Saysay, Right -of -Way Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Property Easement Amendments to Accommodate Transit Oriented Development Plans with BRE Properties Adjacent to the Riverside Downtown Metrolink Station PROPERTY COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to: 1) Amend property easement nos. 73060 and 313756 to accommodate transit oriented development (TOD) plans with BRE Properties adjacent to the Riverside Downtown Metrolink station; and 2) Authorize the Chair, pursuant to legal counsel review, to execute the agreement on behalf of the Commission. BACKGROUND INFORMATION: After the construction of the southside platforms at the Riverside Downtown station, the Commission established property easement nos. 73060 and 313756 in 1997. These were developed for the purpose of providing pedestrian and vehicular access to the platform for maintenance and emergency purposes and to provide emergency access, ingress and egress to and from the platform. These easements are located along the property east of the station and provide access along the continuation of 121" Street to Howard Avenue and roughly from the pedestrian access location west towards 14`" Street. From the station platform, there is a pedestrian crossing of the station tracks and a gate that provides access to the easement. The property encumbered by these easements is owned in fee by BRE Properties and is currently being designed as a TOD that will include a 14.9 acre development with 427 rental apartment units and 771 parking spaces. The developer is requesting that the Commission modify the existing easements to relocate them to coordinate with vehicle and pedestrian access areas designated within the project plans. This means that the easements will shift approximately 20 to 50 feet within Agenda Item 8F 45 the property to meet the proposed driveway locations. There will be no change in the total area of the easements and the Commission's rights will be fully retained. This change will support the creation of the first TOD in Downtown Riverside that will help to revitalize the neighborhood and increase Metrolink ridership. There is no fiscal impact with this easement modification. Attachment: Site Plan with Current Easement Agenda Item 8F 46 G6 b1/ Nil °�` ?!�� ir�� D9pg0201 L � • L4 iPM9Ar*WVMOH f3----- _-- .•��,mszrolipadav,•. I� �J110111111i11104P. rU 111 1 ,bbllsrti�,, 9sL£) s it • i AGENDA ITEM 8G RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Plans and .Programs Committee Henry Nickel, Staff Analyst Sheldon Peterson, Program Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Commuter Rail Program Update PLANS AND PROGRAMS COMMITTEE AND STAFF RECOMMENDATION: This item is for the Committee to receive and file an update on the Commuter Rail Program. BACKGROUND INFORMATION: Inland Empire -Orange County Weekend Service Performance Q3/Q4 FY 07/08 Passenger Trips IEOC Weekend Service FY 06/07 —®—FY 07/08 A� e � w � o$ o� A° o� o0 0� o° lac �acc° �a� aa� � k�� F°' <<° mac �aV �aV e 4$' P2 79 V q(l. �0 io `l% Of ^go e � qi ,th ,lit% `Lg F1 0 Daily passenger trips on the year-round Inland Empire -Orange County (IEOC) Metrolink weekend service have continued to grow through the third quarter and into the fourth quarter, providing 1,742 passenger trips quarter to date. This is an increase of nearly 24% over the 1,403 trips provided at this point last year. The success of this service is due in large part to the coordinated marketing efforts among the Commission, Orange County Transportation Authority (OCTA) and San Bernardino Associated Governments. Most all responsibilities for marketing of the service have transitioned to Metrolink; this has included revised seat drops, branding, and consolidation of the various weekend services under a single promotional umbrella. Agenda Item 86 48 La Sierra Photovoltaic Carport Structure Update In furtherance of the Riverside Public Utilities (RPU) goal to have one megawatt of local renewable resources in place by 2004, RPU and the Commission entered into an agreement for the construction of a photovoltaic carport generation structure at the Commission's La Sierra Metrolink station. Under the Self -Generation Incentive Program, authorized by the California Public Utilities Commission at that time, more than $1.2 million was allocated to the project. The program encouraged the installation of self -generation technologies by offering monetary incentives. Photovoltaic Carport Structure at the La Sierra Metrolink. RPU maintains the power generation equipment while the renewable energy benefit is shared with the Commission. As a result of the electricity generated by this facility and its agreement with RPU, the Commission has reduced its electricity costs at the station by nearly 60%. To date the Commission has saved an estimated $80,000 and is expected to save more than $400,000 over the anticipated 20-year life of the facility. Additionally, the carport provides 128 covered spaces, an added benefit for commuters utilizing the station. May 17 Ride Free Day on the IEOC Line from Riverside Downtown Station In order to further promote the IEOC weekend service and stimulate increased ridership, the Commission has partnered with OCTA to provide a free ride day for passengers who board the IEOC line at the Riverside Downtown station on Saturday May 17. Passengers who board at the Riverside Downtown station will be provided a special ticket allowing travel to any destination on the IEOC line between Riverside Downtown station and Oceanside. The cost of this promotion is to be shared between the Commission and OCTA. Marketing activities will include newspaper advertisement, seat drops, station banners and online promotion on the Metrolink website. Bicycle Facility Upgrade at Riverside Downtown and North Main Corona Stations To mitigate the costs of ever increasing Metrolink ridership and additional parking facilities, and to promote alternatives to single driver auto commutes, it is important for the Commission to reasonably accommodate alternative modes of transportation to its stations. This includes connecting bicycle commutes. In order to accommodate Agenda Item 8G • 49 • • • and promote bicycle ridership, the Commission has invested in both bicycle lockers and racks at its West Corona, La Sierra and Pedley stations. Until recently, the Commission lacked secure and covered bicycle facilities at its two most utilized stations, Riverside Downtown and North Main Corona. In addition to bicycle racks, lockers provide an added level of security against possible theft and vandalism. However, conventional lockers require continuous maintenance and management. Lock mechanisms break; keys have to be distributed, tracked and hopefully returned; key deposits and refunds have to be tracked and accounted for; the potential for misuse, non-use and under use is significant as conventional lockers are assigned. All this adds complexity and cost to a conventional bike locker program, diminishing the benefit to the Commission as well as the overall passenger experience. To address such complexity and costs, alternatives to conventional bike lockerswere explored. The primary factor contributing to the complexity and cost of conventional lockers is the design. Essentially metal boxes, conventional lockers pose particular challenges to ensure proper and efficient use. In the past, lockers have been used for storage, remained assigned but unused, are an ideal habitat for any number of pests and pose a potential safety threat concealing devices intended to inflict public harm. Demonstration of the BikeLid's clamshell design. In consideration of these concerns, the Commission has purchased and installed six BikeLids at both the Riverside Downtown and North Main Corona stations. The BikeLid is a competitively priced alternative product that significantly alleviates both the complexity and cost of a traditional bike locker. The design is essentially hybrid, integrating the simplicity of a bike rack with a clamshell hinged lockable cover. BikeLids allow first come/first served single use while patrons utilize their own standard bicycle lock. This eliminates the need of a separate key and lock mechanism while still providing the security of covered storage, discouraging misuse and optimizing proper use. Furthermore, the unique design has been demonstrated to increase awareness and consideration of bicycle use. The BikeLid product is utilized at the Oceanside transit center. The units are durable, simple and attractive. BikeLid provides a 5-year warranty on material and workmanship. In addition, the Commission staff is considering additional bicycle facilities at the two stations, having constructed a designated bicycle area at the Riverside Downtown station. Agenda Item 8G 50 Riverside Line 6,000 5,600 0 5,200 F` 4,800 c 4,400 ik 4,000 3,600 3,200 Passenger Trips Riverside Line �p� o� �� 01 J�0'� �01 00 1 �off 0A �0� �CIS 093 Ct V9 � )%° ) PJ y�Q 0a 45 4.06 Month Daily passenger trips on Metrolink's Riverside line for the month of March averaged 5,150, an increase of 142, 3% more than the month of February. Compared to one year prior, the line averaged an overall daily increase of 221 passenger trips. This is nearly 4% more than a year ago. On Time Performance (95% Goal) Riverside Line c T- ro 85 so m a 75 70 r 4 4 0 o\ 0 01 01 6\ 4.k 1 � o0 00 A )J0 )o\ P0� coos Our �0 �0 )ass Qe� lac Month March on -time performance averaged 95% inbound (-1 % from February) and 96% outbound (-2% from February). There were six delays greater than five minutes during the month of March. The following are primary causes: Signals/Track/MOW Dispatching Mechanical Operations Agenda Item 8G 51 • • • Inland Empire -Orange County Line 5,000 4,800 m 4,600 a F 4,400 c 4,200 4,000 3,800 3,600 Passenger Trips Inland Empire Orange County Line Month Daily passenger trips on Metrolink's IEOC line for the month of March averaged 4,984, an increase of 163 trips, 3% more than the month of February. The line has increased by 136 daily trips or 3% from a year ago March 2007. Percentage On Time Performance (95% Goal) Inland Empire Orange County Line 100 95 90 85 80 75 70 o� x o`e0\ Al 0o`oq' o`b \g) JJaoti °� p ay Op� Month March on -time performance averaged 98% southbound (+1% from February) and 95% northbound (no change from February). There were 20 delays greater than five minutes during the month of March. The following are primary causes: Agenda Item 8G Signals/Track/MOW Dispatching Mechanical Operations 52 91 Line 2,800 2,600 w 2,400 H 2,200 `0 2,000 ae 1,800 1,600 1,400 Passenger Trips 91 Line PJ 5e4 oc, °�pecf0 )a0 Qo 40c Month Daily passenger trips on Metrolink's 91 line for the month of March averaged 2,400' an increase of five trips, no significant change from the month of February. The line has increased by 179 daily trips or 8% from a year ago March 2007. On Time Performance (95% Goal) 91 Line 100 d 95 w 90 N 85 • 80 a 75 70 4 01 O\ 0\ Al 0� p1 4p1 �j1 00 p0 !zit' PQt �`�� �Jc �J� PJA gel Oo ;os peo �e� <ce, sec Month March on -time performance averaged 96% inbound (+2% from February) and 95% outbound (-2% from February). There were two delays greater than five minutes during the month of March. The following are primary causes: Signals/Track/MOW Dispatching Mechanical Operations Agenda Item 8G 53 • Connecting Transit Service Performance The Commission's role facilitating interconnectivity between Metrolink and connecting transit services is essential to ongoing viability of the system. Such services address the needs of transit dependent riders as well as help mitigate congestion and the necessity for expensive parking capacity at the Commission stations. The Commission is working to improve the efficiency and effectiveness of transit connections. In order to meet these requirements, the Commission has worked with Metrolink and local transit operators to offer connecting services to and from Riverside County Metrolink stations at no cost for those with valid Metrolink tickets. Within Riverside County, services include free transfers to routes operated by RTA, RTA's Commuter Link service and Corona Cruiser. The following graphs show total monthly Metrolink transfer passenger trips on each of the three services. Passenger Trips RTA Fixed Route 3,000 H 2,500 a 1 2,000 w 0 * 1,500 1,000 �6 6 � 0�o� Jo1 �o\ 01 0� �01 6�o�' o93. 00 QQ� �y a �J ,s3` . �eQ O°� O� )a Month Monthly Metrolink transfer trips on RTA's connecting fixed routes (1, 3, 15, 16, 21, 29, and 38) totaled 2,341 for the month of March, a decrease of 11 trips, -0.47% less than the month of February. Monthly trips increased by 61 or 2.68%° over last year. Agenda Item 8G 54 7,000 6,400 O. 5,800 F c 5,200 4,600 4,000 0 :0 01 1 NV- PQ� Asa Passenger Trips RTA Commuter Link �6\ O\ 01 �6\ O\ O\ Pp� �0 pc ��' O# Month 6' Monthly Metrolink transfer trips on RTA's Commuter Link routes (202, 204, 206, 208, and 210) totaled 6,261 for the month of March, an increase of 200 trips, or 3.30% from the month of February. Monthly trips have increased by 325 or 5.48% over the last year. Passenger Trips Corona Cruiser 700 600 500 400 300 200 100 0� 6\ oS\ 6\ o� 6\ 01 0"\ 6\ 00 06 04' far PQc �a� 'J� �J� P°� �0� cf' 434 Of �a� (eeo far Month Monthly Metrolink transfer trips on the Corona Cruiser totaled 536 for the month of March, an increase of 126, 30.73% from the month of February. Monthly trips have increased by 88 or +19.64% over the past fiscal year. 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L.��11�i�"z l°'j'Zd4 � lr"..a-�%%.�m.,k��lh IN.'�lri'."3�'" ill,^�^°�'in� ? "..... ". �r "s�� ..�:C �.. . �'�1�i� • SHINOW £} 1SsLY1 ew!1 PolnPe4o3;o swum 9 ul4}!M Belnllly sulell to eBewealed 301A213S AVON33M - Amvvimf1S 3oN3a3Hav 311103H3S NI 1110aJ.3W • 0 AGENDA ITEM 8H • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Plans and Programs Committee Brian Champion, Program Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Riverside Transit Agency's Fiscal Year 2007/08 Short Transit Plan Range PLANS AND PROGRAMS COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to approve Amendment No. 4 to Riverside Transit Agency's (RTA) FY 2007/08 Short Range Transit Plan (SRTP) to reflect an additional $135,000 in Commuter Rail Local Transportation Fund (LTF) funds to provide shuttle services to the leased satellite parking lot during construction of the North Main Corona parking structure. BACKGROUND INFORMATION: In January 2008, the Commission began construction of the North Main Corona Metrolink parking structure. With the implementation of the parking strategy program, there has been an increase in transit connections to the stations on both RTA and Corona Cruiser. Also, the alternative Metrolink stations at West Corona and La Sierra have seen an increase in ridership. The main component of the strategy is the satellite parking program at 351 W. Rincon Street in Corona, which has proven to be a success. Since January, over 200 vehicles daily are using this site to park for the North Main Corona Metrolink station. The greater frequencies of the RTA service help morning commuters by providing quick and reliable connections in order to not miss their trains. The larger buses are especially helpful in the afternoons when the trains arrive and there is the need to move many passengers quickly. Passengers are extremely happy with the level of shuttle service, and there have been no complaints received for the shuttles or the satellite parking lot. At its April 9, 2008 meeting, the Commission approved Agreement No. 08-25-095-00 with RTA to provide shuttle services to the North Main Corona station, however the required amendment to the SRTP was inadvertently omitted from the item. Agenda Item 8H 58 The cost related to RTA's shuttle services for the six-month period in FY 2007/08 totals $135,000 and will be paid from Commuter Rail operating LTF funds. The costs for shuttle services next year will be included in the Commission's FY 2008/09 budget and RTA's FY 2008/09 SRTP (both service levels and required funding). Agenda Item 8H • • 59 r 1 AGENDA ITEM 81 rr • RIVERS/DE COUNTY TRANSPORTATION COMMISSION DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Plans and Programs Committee Fina Clemente, Staff Analyst Stephanie Wiggins, Regional Programs Director THROUGH: Anne Mayer, Executive Director SUBJECT: Western Riverside Measure A Specialized Transit Program Allocation to the Independent Living Partnership Funds PLANS AND PROGRAMS COMMITTEE AND STAFF RECOMMENDATION; This item is for the Commission to: 1) Allocate $32,000 in Western Riverside Measure A Specialized Transit funds to Independent Living Partnership to accommodate additional program participation; and 2) Approve a budget adjustment for a $32,000 increase to Measure A Specialized Transit expenditures in FY 2007/08. BACKGROUND INFORMATION: As part of the Commission's biennial call for projects for the Western Riverside Measure A Specialized Transit program, the Independent Living Partnership was allocated $416,598 in FY 2007/08 for its Trip Reimbursement and Information Project (TRIP), which provides escorted travel for eligible program participants by volunteer drivers. The program provides disabled and frail senior citizens with transportation to medical appointments and other needed social service destinations. Volunteer drivers are reimbursed at $0.32 per mile for assisted travel. The Independent Living Partnership also provides information relating to other available means of transportation and discounted or free bus tickets for use on public transit for its clients. Annually, volunteers provide approximately 500 clients with over 60,000 (one-way) trips. Through the end of February 2008, 136 new TRIP applicants have been approved for program participation resulting in mileage reimbursements projected to exceed available funding. As a result, TRIP is requesting an additional allocation of $30,000 to cover increased program participation. The program is also requesting $2,000 as matching funds to acquire an updated version of Agenda Item 81 60 TripTrak software, the database program currently used to manage and monitor TRIP program operations and performance records. If approved, the additional funding will cover the cost of mileage reimbursement payments for Measure A participants through the end of June 2008 as well as the agency's software upgrade. There are adequate Measure A Specialized Transit funds available to cover the additional costs. Financial Information In Fiscal Year Budget: No Year: FY 2007/08 Amount: 032,000 Source of Funds: Western Riverside Measure A Budget Adjustment: Yes GLA No.: 225 26 86101 Fiscal Procedures Approved: \ 19 Date: 04/18/2008 Agenda Item 81 61 AGENDA ITEM 8J • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Budget and Implementation Committee Min Saysay, Right -of -Way Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Agreements with Epic Land Solutions, Inc., Real Estate Consulting & Services, Inc.,, and Overland Pacific & Cutler, Inc. to Provide On -Call Property Management Services BUDGET AND IMPLEMENTATION COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to: 1) Approve Agreement No. 07-33-151-01, Amendment No. 1 to Agreement No. 07-33-151-00, with Epic Land Solutions, Inc.; 2) Approve Agreement No. 07-33-153-05, Amendment No. 2 to Agreement No. 07-33-153-00, with Real Estate Consulting & Services, Inc; • 3) Approve Agreement No. 07-33-152-01, Amendment No. 1 to Agreement No. 07-33-152-00, with Overland Pacific & Cutler, Inc., to provide on -call right-of-way property management services in the amount of $750,000 each, plus a pool contingency of $1 million, for a total services amount of $3.87 million; and 4) Authorize the Chair, pursuant to legal counsel review, to execute the agreements on behalf of the Commission. BACKGROUND INFORMATION: At its June 13, 2007 meeting, the Commission approved Agreement No. 07-33-151-00 to Epic Land Solutions, Inc.; Agreement No. 07-33-153-00 to Real Estate Consulting & Services, Inc.; and Agreement No. 07-33-152-00 to Overland Pacific & Cutler, Inc. for on -call right-of-way property management services in the amount of $140,000 each. At the time of approval, it was not possible to accurately identify projects and specific properties that would require demolition, testing for and removal of hazardous materials, fencing, security, and other similar site -clearing related services. During the last few months, more detailed preliminary engineering work has been completed which identified more specifically the properties that would be needed for the Perris Valley Line, the Perris Multimodal Facility, the Agenda Item 8J 62 State Route 91/Adams Street to 60/91/215 interchange high occupancy vehicle (HOV) lanes, and the SR-60/East Junction to 1-215 HOV lanes. The total cost to test, abate, demolish, and secure the improvements located on these properties is estimated to require more funding than the unencumbered amounts remaining in the various contracts. Staff projects that an additional $2.25 million plus a pool contingency of $1 million or a total services amount of $3.25 million will be required to cover the anticipated work. A budget adjustment of $250,000 for the current fiscal year is requested. Staff recommends approval of amendments to the contracts concerned, which will increase compensation by $750,000 for each of the three consultants. With these amendments, the total services amount will be $3.87 million. Financial Information No FY 2007/08 $ 250,000 In Fiscal Year Budget: Yes Year: FY 2008/09 Amount: $1,825,000 N/A FY 2009/10 $1,175,000 Source of Funds: Measure A and State funds Budget Ad ustment: Yes* 221 33 81403 P3800 $ 975,000 GLA No.: 105 51 81403 $ 250,000* 222 31 81403 P3005 $1,537,500 222 31 81403 P3017 $ 487,500 Fiscal Procedures Approved: \�biAi;oi Date: 04/18/2008. Agenda Item 8J 63 AGENDA ITEM 8K J • • • RIVERS/DE COUNTY TRANSPORTATION COMMISSION DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Budget and Implementation Committee Min Saysay, Right -of -Way Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Agreements with Bryan A. Stirrat & Associates, Leighton Consulting, Inc., Ninyo & Moore Geotechnical, Bureau Veritas NA, Inc., and Tetra Tech for On -Call Right -of -Way Phase I and Phase II Environmental Soil Assessment Services BUDGET AND IMPLEMENTATION COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to: 1) Approve Agreement No. 07-31-146-03, Amendment No. 1 to Agreement No. 07-31-146-00, with Bryan A. Stirrat & Associates; 2) Approve Agreement No. 07-31-147-06, Amendment No. 2 to Agreement No. 07-31-147-00, with Leighton Consulting, Inc.; 3) Approve Agreement No. 07-31-148-01, Amendment No. 1 to Agreement No. 07-31-148-00, with Ninyo & Moore Geotechnical; 4) Approve Agreement No. 07-31-149-02, Amendment No. 1 to Agreement No. 07-31-149-00, with Bureau Veritas NA, Inc.; 5) Approve Agreement No. 07-31-150-02, Amendment No. 1 to Agreement No. 07-31-150-00, with Tetra Tech to perform on -call right-of-way phase I and phase II environmental assessment services in the amount of $350,000 each, plus a pool contingency of $1 million, for a total services amount of $3.138 million; and 6) Authorize the Chair, pursuant to legal counsel review, to execute the agreements on behalf of the Commission. BACKGROUND INFORMATION: At its June 13, 2007 meeting, the Commission approved Agreement No. 07-31-146-00 to Bryan A. Stirrat & Associates; Agreement No. 07-31-147-00 to Leighton Consulting, Inc.; Agreement No. 07-31-148-00 to Ninyo & Moore Geotechnical; Agreement No. 07-31-149-00 to Bureau Veritas NA, Inc.; and Agreement No. 07-31-150-00 to Tetra Tech to perform on -call right-of-way phase and phase II environmental assessment services in the amount of $75,600 each. Agenda Item 8K 64 At the time of approval, it was not possible to accurately identify projects and specific properties that would require phase 1 and phase II ,environmental soil assessment services. During the last few months, more detailed preliminary engineering work has been completed which identified more specifically the properties that would be needed for the proposed SR-79 realignment, the Perris Valley Line, the Perris Multimodal Facility, the SR-91 /Adams Street to 60/91 /215 interchange high occupancy vehicle (HOV) lanes, SR-74/G Street to 1-215 widening, and the SR-60 /East Junction to 1-215 HOV lanes. The total cost of phase I and phase II environmental soil assessment services for the properties required for the projects is estimated to require more funding than the unencumbered amounts remaining in the various contracts. Staff projects that an additional $1.75 million plus a pool contingency of $1 million or a total services amount of $2.75 million will be required to cover the anticipated work. Staff recommends approval of amendments to the contracts concerned, which will increase compensation by $350,000 for each of the five consultants. With these amendments, the total services amount will be $3.138 million. Financial Information In Fiscal Year Budget: Yes Yes N/A Year: FY 2007/08 FY 2008/09 FY 2009/10 Amount: $ 275,000 $1,375,000 $1,100,000 Source of Funds: Measure A, State, and TUMF funds Budget Ad ustment: No GLA No.: 210 72 81403 P5127 $ 137,500 221 33 81403 P3800 $ 770,000 221 33 81403 P3816 $ 192,500 222 31 81403 P3005 $1,237,500 222 31 81403 P3015 $ 220,000 222 31 81403 P3017 $ 192,500 Fiscal Procedures Approved: \14,4,4,0040, Date: 04/18/2008 Agenda Item 8K 65 AGENDA ITEM 8L I !I 9 .1 U i RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Budget and Implementation Committee Min Saysay, Right -of -Way Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Agreement with Volt Edge Services to Provide Minor General, Electrical, Maintenance, and Repair Services for the Commission - owned Metrolink Stations BUDGET AND IMPLEMENTATION COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to: 1) Approve Agreement No. 08-24-087-00 with Volt Edge Services to provide minor general, electrical maintenance, and repair services for the five Commission -owned Metrolink stations in the amount of $150,000; and 2) Authorize the Chair, pursuant to legal counsel review, to execute the agreement son behalf of the Commission. BACKGROUND INFORMATION: After having been involved with the construction of all of the Metrolink stations in Riverside County over 14 years ago, Volt Edge was contracted by the Commission to provide various minor general, electrical, and mechanical repair services on an as -needed basis at those same stations. In addition, Volt Edge has provided installation, repair, and maintenance services for Metrolink/Southern California Regional Rail Authority (SCRRA). As a result of its involvement in construction and the years of experience doing maintenance and repairs on the Metrolink stations, Volt Edge has gained a specialized and detailed knowledge of the electrical fixtures, hidden wiring and plumbing, and potential problem areas. This has benefited the Commission in terms of greater time and cost efficiencies in resolving electrical, plumbing, and equipment failures, enhancing staff's ability to respond effectively to emergencies. The existing contract with Volt Edge will soon expire. Given the specialized knowledge of this firm, staff therefore recommends that an agreement be executed with Volt Edge Services for a period of three years, at $50,000 per year, with a not to exceed amount of $150,000. Agenda Item 8L 66 Financial Information Yes FY 2007/08 $ 8,300 In Fiscal Year Budget: Yes Year: FY 2008/09 Amount: $50,000 N/A FY 2009/10 $50,000 N/A FY 2010/11 $41,700 Source of Funds: Measure A Budget Ad ustment: No 103 24 73315 P4001 $60,000 103 24 73315 P4002 $ 7,500 GLA No.: 103 24 73315 P4003 $30,000 103 24 73315 P4004 $22,500 103 24 73315 P4006 $30,000 Fiscal Procedures Approved:\14,444,,avivrtDate: 04/18/2008 Agenda Item 8L 67 AGENDA ITEM 8M T II * i • • RIVERS/DE COUNTY TRANSPORTATION COMM/SS/ON DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Budget and Implementation Committee Aaron Hake, Government Relations Manager THROUGH: Anne Mayer, Executive Director SUBJECT: State and Federal Legislative Update BUDGET AND IMPLEMENTATION COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to: 1) Receive and file an update on state and federal legislation; and 2) Approve positions on the following state bills and proposition: a) AB 3021 (Nava) - Support; b) AB 1854 (Duvall) - Work with author; c) Proposition 98 - Oppose. BACKGROUND INFORMATION: Commission Legislation Moves Forward Both of the Commission's sponsored bills in Sacramento have been approved by their first policy committees. AB 1954 (Jeffries), to authorize the Commission to implement high occupancy toll (HOT) lanes on Interstate 15, cleared the Assembly Transportation Committee unanimously. Executive Director Anne Mayer testified on behalf of the bill. AB 1954 will now move to the Assembly Appropriations Committee, where the bill will be assessed for its cost to the state. SB 1316 (Correa), which will allow the Commission to implement an extension of the State Route 91 express lanes, was approved by the Senate Transportation and Housing Committee by an 8-2 vote. Commissioner Mary Craton traveled to Sacramento to meet with the committee's chairman, Senator Alan Lowenthal ID -Long Beach), and testify in support of the bill alongside representatives from Orange County Transportation Authority (OCTA). That bill will now go to the Senate Appropriations Committee to assess its cost to the state. These initial steps are encouraging signs, although both bills have a long vetting process by the Legislature still ahead. Assemblymember Kevin Jeffries and Senator Lou Correa are both owed credit for their leadership in carrying this important legislation. Agenda Item 8M 68 AB 3021 (Nava), Recommended Position: Support This bill would create the California Transportation Financing Authority (CTFA) for increased construction of new capacity for the state highway system through the issuance of revenue bonds. The objective of CTFA is to increase the construction of new capacity for the state highway system through the issuance of, or the approval of the issuance of, revenue bonds secured by Local Transportation Funds (LTF), fuel taxes, fuel sales taxes, local transportation sales taxes, developer fees, tolls, and other state revenues approved for this purposes by the Legislature or by initiative. The CTFA would be chaired by the state treasurer, and also include the director of finance, state controller, Ca!trans director, California Transportation Commission (CTC) executive director, and two local agency representatives appointed by the Legislature. The bill provides an entity through which agencies such as the Commission could apply to the state for authority to perform innovative financing on projects such as SR-91 and 1-15 for which the Commission is already pursuing authority by statute. The bill moves the state closer to developing a coherent policy on issues of tolling and alternative project financing. Staff recommends a support position on the bill, based on the Commission's experience of pursuing authority to finance important capacity -enhancing projects absent an existing comprehensive legal framework. AB 1854 (Duvall), Recommended Position: Work with Author This bill would delete the California Public Utilities Commission's Section 190 grade separation funding program. The program provides $15 million annually to grade separation projects according to a prioritized statewide list. The program was the subject of a Bureau of State Audits report last year at the request of local Assemblymember John Benoit (R-Bermuda Dunes). The audit recommended that the Legislature follow one of two paths: fund the program at a higher level or eliminate it all together and reconsider the state's role in funding grade separations. Previous attempts to fund the program at a higher level have failed, and considering the state's fiscal problems, it is unlikely that the program will receive more money anytime soon. Assemblymember Benoit has passed legislation that helps clean-up some of the arcane parts of the program, and Assemblymember Cathleen Galgiani (D-Merced) is currently authoring a bill, which the Commission is seeking to amend that would further reform the structure of the program. Assemblymember Michael Duvall's bill would take the state auditor's latter recommendation and do away with the program. Grade separations would then become eligible to compete in the State Transportation Improvement Program (STIP) and the $15 million that would otherwise be spent on grade separations would be added to the STIP program. This bill has cleared its first policy committee; however it is expected to be further amended upon stakeholder input. Mr. Duvall's office has expressed an openness to Agenda Item 8M 69 • discuss changes to the bill. Commission staff recommends that the Commission adopt a "work with author" position on this bill. The impact of moving grade separations to the STIP program requires further evaluation. Changes to grade separation funding should enhance the state's role in funding grade separations. Proposition 98, Recommended Position: Oppose The June California Primary ballot will include two initiatives relating to eminent domain: Propositions 98 and 99. Consistent with the Commission's position on the most recent eminent domain initiative to qualify for the ballot in 2006, Proposition 90, staff is recommending an oppose position for Proposition 98. In many ways, Prop 98 is similar to Prop 90, and is an attempt by Prop 90 proponents to again achieve "reform" of eminent domain in California in the wake of the Kelo vs. New London, CT Supreme Court decision. Prop 98 has been opposed by the League of California Cities, the California Transportation Commission, and other transportation agencies in California. The basis for the recommended oppose position is the vast potential for increased transportation project costs and delays to project delivery. Prop 98 institutes new requirements and processes mandated with regard to property acquisition by agencies such as the Commission or Ca!trans. The initiative would require transportation agencies to compensate property owners for attorney's fees and litigation expenses if the court awards more for a property than the agency was offering, even if agencies acts in good faith with a reasonable settlement offer. Currently property owners are responsible for their own expenses in this regard. "Just compensation" is also expanded to include temporary business losses, relocation expenses, business reestablishment costs, and "other actual and reasonable expenses incurred." This definition is not well-defined and rather open- ended, exposing the Commission to an unknown magnitude of cost impacts on transportation projects. Also, as Prop 90 did, there is an increased exposure to litigation over the intent of the vague and open-ended language of Prop 98. This is likely to result in increased project delays and increased costs. The initiative also creates impediments to transportation agencies implementing "public -private partnerships" because of the proposition's restrictions on acquiring land for private purposes. Federal Update Transportation has finally become a topic in the race for White House. Senator John McCain (R-Arizona), the presumed Republican nominee for President, has proposed to suspend the federal gas tax for three months this summer in order to provide an economic stimulus. Senator McCain brought this matter before the U.S. Senate in the form of an amendment to the Safe, Accountable, Flexible, Efficient Agenda Item 8M 70 Transportation Equity Act: A Legacy for Users (SAFETEA-LU) Technical Corrections bill, which was being debated on the Senate floor. The outcome of Senator McCain's amendment was not yet resolved at the time this agenda .item was written. Commission staff and lobbyists will keep up-to-date on the issue as it develops. Agenda Item 8M • 71 AGENDA ITEM 9 • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Theresia Trevino, Chief Financial Officer THROUGH: Anne Mayer, Executive Director SUBJECT: Authorization for Issuance of Sales Tax Revenue Bonds STAFF RECOMMENDATION: This item is for the Commission to: 1) Receive and file the overview presentation regarding the issuance of the 2008 Series A Sales Tax Revenue Bonds; 2) Adopt Resolution No. 08-010, "Resolution Authorizing the Issuance and Sale of Not to Exceed $130,000,000 Aggregate Principal Amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), Series 2008, the Execution and Delivery of an Indenture, Supplemental Indenture, Purchase Contract, Official Statement and Continuing Disclosure Agreement and the Taking of All Other Actions Necessary in Connection Therewith'; 3) Approve the draft Preliminary Official Statement for the issuance of $130,000,000 in 2008 Series A Sales Tax Revenue Bonds and authorize the Executive Director to approve and execute the issuance of the final Official Statement; 4) Approve the draft Indenture between the Riverside County Transportation Commission and U.S. Bank National Association, as Trustee, and authorize the Executive Director to approve and execute the final indenture; 5) Approve the draft First Supplemental Indenture between the Riverside County Transportation Commission and U.S. Bank National Association, as Trustee, and authorize the Executive Director to approve and execute the final first supplemental indenture; and 6) Approve the draft Bond Purchase Agreement between the Riverside County Transportation Commission and Lehman Brothers, as Underwriter Representative acting on behalf of itself and Banc of America Securities LLC, and authorize the Executive Director to approve and execute the final bond purchase agreement. Agenda Item 9 72 BACKGROUND INFORMATION: At its April 9, 2008 meeting, the Commission directed staff to continue: efforts to develop a plan to refinance the outstanding commercial paper as a result of the need for additional financing capacity. Drafts of the proposed documents relating to the issuance of the 2008 Series A Sales Tax Revenue Bonds (2008 Bonds) were also provided at that meeting for preliminary consideration. The continuing efforts regarding the plan to refinance the commercial paper included presentations to the rating agencies to confirm the strong credit ratings on the Commission's outstanding bonds and to seek ratings on the 2008 Bonds. Meetings were held on April 21, 2008 in New York with Standards & Poor's and Fitch Ratings and on April 30, 2008 in San Francisco with Moody's Investors Service. Credit ratings are expected to be received by May 7, 2008 and will be presented at the May 14, 2008 Commission meeting. The financing team has also continued to review and revise the draft documents as the specific details of the plan of finance have been refined. The financing team is comprised of the following key members: • Financial Advisor: Fieldman, Rolapp & Associates; • Bond Counsel: Orrick Herrington & Sutcliffe LLP; • Disclosure Counsel: Nossaman, Guthner, Knox & Elliott LLP; • General Counsel: Best, Best & Krieger LLP; • Underwriters/Remarketing Agents: Lehman Brothers and Banc of America Securities LLC; and • Underwriters Counsel: Stradling Yocca Carlson & Rauth. The latest drafts of the following documents for the 2008 Bonds are included as attachments to this staff report for the Commission's adoption or approval: • Preliminary official statement (draft); • Resolution No. 08-010 (draft) authorizing the issuance and sale of a not to exceed amount of sales tax revenue bonds; the execution and delivery of an indenture, supplemental indenture, purchase contract, and official statement; and the taking of all other actions necessary in connection with this transaction; • Indenture between the Commission and the trustee (draft) regarding the terms and conditions of the issuance of sales tax revenue bonds; • First supplemental indenture between the Commission and the trustee (draft) regarding the terms and conditions of the issuance of the 2008 Bonds; and Agenda Item 9 73 • • • • Bond purchase agreement (draft) between Lehman Brothers, as senior managing underwriter and representative of the underwriters, and the Commission regarding the purchase of the 2008 Bonds. As noted at the April 9, 2008 Commission meeting, one of the actions at today's meeting is for the Commission to approve the form of the Preliminary Official Statement and authorize its distribution in connection with the sales of the 2008 Bonds, as well as the preparation of a final Official Statement once the 2008 Bonds have been priced. These offering documents are required under state and federal securities laws prohibiting the offer and sale of securities such as the 2008 Bonds unless all matters that would be material to an investor in the 2008 Bonds have been adequately disclosed and that there is no omission of material facts. Furthermore, under rules of the Securities and Exchange Commission, the underwriters cannot purchase the 2008 Bonds unless they have received a "substantially final" offering document which discloses all material information that they reasonably believe to be true and correct. The Commissioners serving on the Board as the governing body of the issuer of the 2008 Bonds are expected to read and be familiar with the information described in the draft Preliminary Official Statement included with this staff report. The Commissioners may employ the services of experts to take the lead in the drafting and review of the official statement; however, the Commissioners have the duty to review the information and bring to the attention of those responsible for the preparation of the offering document any misstatements or omissions in the draft and to ask questions if they are unclear about the information or their role. The financing team will be available at the Commission meeting to respond to the identification of any misstatements or omissions or to such questions. Significant changes to these documents are not anticipated, with the exception of the final details of the bond pricing scheduled for May 28-29, 2008. Since general legal counsel is a key member of the financing team, staff recommends that the executive director be authorized to approve and execute the final documents. The preclosing activities related to the 2008 Bonds, including the execution of all documents, is scheduled for June 9, 2008 at the offices of bond counsel in San Francisco. Executive Director Anne Mayer and Chief Financial Officer Theresia Trevino are scheduled to attend the preclosing meeting. Plan of Finance The plan of finance is to issue approximately $130 million of sales tax revenue bonds to refinance the outstanding commercial paper of approximately $110 million; fund capitalized interest on the bonds through December 1, 2009, Agenda Item 9 74 since sales tax receipts will not commence until September 2009; establish a debt service reserve fund; and pay costs of issuance of the 2008 Bonds. The 2008 Bonds are long-term bonds due in June 2029 with a mandatory tender to purchase the' 2008 Bonds on December 1, 2009. The initial interest rate will be a fixed interest rate through December 1, 2009. On December 1, 2009, the 2008 Bonds will be required to be remarketed and a new long-term rate period would be established. In the unlikely event that the Commission does not have access to the capital markets on December 1, 2009, the existing bond holders would continue to own the 2008 Bonds and those bonds will bear an interest rate of 11 % until such time as the bonds can be remarketed. Considering the Commission's current strong underlying credit ratings, there are no plans to obtain a liquidity facility (e.g., letter of credit) or credit enhancement (e.g., bond insurance) to support the 2008 Bonds. The 2008 Bonds will be repaid solely from 2009 Measure A sales tax receipts. This plan of finance was presented to the rating agencies, and the presentation is included as an attachment to this staff report. Staff recommends adoption of Resolution 08-010, approval of the draft preliminary official statement; indenture, first supplemental indenture, and bond purchase agreement, and authorization of the Executive Director to approve and execute the final documents. Financial Information $130,000,000 bond proceeds; In Fiscal Year Budget: No Year: FY 2007/08 Amount: $1 10,005,000 principal payment; $950,000 costs of issuance Source of Funds:. 2008 Sales Tax Revenue Bonds Budget Ad ustment: Yes 303 31 59102 $130,000,000 Bond Proceeds GLA No.: 303 31 97101 $110,005,000 Principal Payment 303 31 96103 $ 950,000 Costs of Issuance Fiscal Procedures Approved: Date: Attachments: (1) April 2008 Presentation to the Rating Agencies (2) Resolution No. 08-010 (Draft) (3) Preliminary Official Statement (Draft) (4) Indenture (Draft) (5) First Supplemental Indenture (Draft) (6) Bond Purchase Agreement (Draft) Agenda Item 9 75 MEASURE A SALES TAX REVENUE IS THE PRIMARY SOURCE OF FINANCING O 7.71% average growth in Measure A annual receipts since 1991 O Measure A revenues reflect stable, diversified local economy and population growth FINANCING PROGRAM OVERVIEW O 1989 Measure A bonds are performing well with coverage in excess of 3x debt service • All bonds mature in 2009 O 2009 Measure A interim financing program performing as planned • $185 million commercial paper program started in 2005 • Forward starting swaps executed in 2006, hedging $185 million long-term financing in 2009 • New $130 million Series 2008 Bonds pricing in May 2008 O RCTC has no exposure to auction rate securities and, therefore, no impact from market fallout 1989 MEASURE A DEBT SERVICE COVERAGE O Outstanding bonds of $65,495,000 on June 30, 2007 - Maturing in June 2009 with annual debt service payments of approximately $35.5 million • No plans for additional bond issuance under 1989 Measure A O Additional Bonds Test • 1.50x Maximum Annual Debt Service - 1.15x on Junior Debt O Commission Policy • Maintain 2.0x debt service coverage O Projected Debt Service Coverage of at least 3.0x through 2009 • Includes all senior and subordinate debt • Assumes revenue projections provided by RCTC HISTORICAL AND PROJECTED DEBT SERVICE COVERAGE $100,000,000 $90,000,000 $90,0011,000 - $70,000,000 $60,000 000 - $50,000,000 $40,000,000 $30,000000 $20,000,000 $10,000,000 Rejected 1997 19913 1999 2000 2001 2002 2003 2004 2005 2006 2007 2036 2009 rsswl Year 77 5.00 450 4.00 3.50 3.00 250 2.00 150 1AD 050 0.00 FINANCIAL UPDATE & SERIES 2008 SALES TAX REVENUE. BONDS ;FINANCIAL ' IPDATE & =RIES 2008 SALES TAX REVENUE BONDS 2009 MEASURE A COMMERCIAL PAPER PROGRAM O $185 million commercial paper authorization • Secured by letter of credit from Bank of America which expires March 2010 O $110 million of commercial paper issued as of April 2008 • Significant land mitigation acquisitions • Strategic partnership efforts • Local jurisdiction projects • Preliminary engineering on highway projects O FY 2008/09 project requirements exceed remaining capacity of the program 2006 FORWARD STARTING SWAPS O $185 million notional amount - $100 million — Banc of America Securities • $85 million— Lehman Brothers O 3.679% for 20 years vs. 67% of 1-month LIBOR O Effective date: October 1, 2009 SWAP -RELATED FINANCING ALTERNATIVES O In 2009 RCTC will have the following financing alternatives with respect to the outstanding swaps: • Issue $185 million of variable rate bonds matching the swaps - Issue $185 million under the existing commercial paper program to match the swaps • Terminate the swaps 78 NEW FINANCING: 2008 BONDS O Commercial paper program has met interim financing needs for 2009 Measure A program since March 2005 O Success with Perris Valley Line and other projects has expanded interim financing demand beyond the $185 million commercial paper program O Short-term fixed rate bond financing with 2009 maturity is most cost- effective way to expand interim funding capacity through start of new Measure A sales tax collections in 2009 SECURITY AND STRUCTURE FOR 2008 BONDS O Series 2008 bonds are secured by a gross pledge of 2009 Measure A sales tax revenues O Series 2008 bonds will be uninsured O $130 million* par amount of bonds • Refinance outstanding commercial paper of $110 million • Capitalized interest fund for interest payments through 12/1/2009 (2009 Measure A sales tax receipts begin in late 2009) • Debt service reserve fund to be established O Conventional 1.5x ABT for Senior Lien parity bonds • No parity bonds are expected to be issued before 2009 financing/ refinancing • 2009 Measure A Ordinance currently has a $500 million debt limit O Bonds will carry a fixed interest rate through December 2009 O On or before the maturity of the bonds (likely October 2009) RCTC will refinance these bonds and use the proceeds to repay bond holders O If RCTC does not have market access in 2009 as planned, bond holders keep the bonds and RCTC will pay a higher interest rate until bonds can be refinanced - Bondholders receive a failed tender rate of 11% until RCTC can refinance "preliminary, subject to change 79 FINANCIAL UPDATE & SERIES 2008 SALES TAX REVENUE BONDS FINAIvcAL ' IPDATE.& • CRIES 200$ SALES TAX REVENUE BONDS: 4 2009 MEASURE A COVERAGE & STRESS SCENARIOS O Ordinance limits outstanding debt to $500 million O Estimated 2008 revenues are $145 million O Expected debt service coverage for 2009 bonds is well over 6.0x O Stress Scenario 1: Refund 2008 bonds and all CP: $315 million 2009 senior lien refunding • $185 million of VRDBs at the 3.679% swap rate • $130 million of fixed rate bonds at 6% • 20 year level debt service amortization O Stress Scenario 2: Refund 2008 bonds and all CP + new money to hit debt limit: $500 million senior lien issue in 2009 • $185 million of VRDBs at the 3.679% swap rate • $315 million of fixed rate bonds at 6% • 20 year level debt service amortization O More modest utilization of debt and the ability to amortize debt up to 30 years add cushions that make these stress case coverage scenarios very conservative 0 SUMMARY OF CREDIT STRENGTHS O Strong historical sales tax growth O Strong economic foundation for continued sales tax receipts O Proactive organization and leadership O $500 million debt limit ensures strong debt service coverage under any scenario O Both sales tax measures achieved more than 2/3 voter support TIMELINE Wednesday, April 9, 2008 Monday, April 14, 2008 Monday, April 21, 2008 Wednesday, April 30, 2008 Wednesday, May 7, 2008 Wednesday, May 14, 2008 Thursday, May 29, 2008 Tuesday, June 10, 2008 80 Commission Approves Plan of Finance Documents Sent to Rating Agencies Meetings with Rating Agencies in New York Meeting with Rating Agency in San Francisco Bond Ratings Received Commission Approves Financing Documents Bond Sale Bond Closing 800Z PVT AeN M in X X M as 0 c m 03 O O. Why Issue 2008 Bonds? • Commercial paper program has provided ability to advance project development on 2009 Measure A projects — FY 2008/09 project requirements exceed remaining capacity — Short-term financing plan required for Perris Valley Line • Plan of finance fits with anticipated 2009 bond financing — Forward -starting interest rate swaps are effective October 1, 2009 Summary of 2008 Bonds • Secured by 2009 Measure A sales tax revenues • $130 million par amount of bonds (uninsured) — Refinancing of outstanding commercial paper of $110 million — Funding of capitalized interest fund for interest payments through 12/1/09 — Establishment of debt service reserve — Fixed interest rate through 12/1/09 — Required remarketing of bonds on 12/1/09 • Failed remarketing results in 11% interest rate to bondholders until bonds are remarketed • Intent is to refinance bonds in October 2009 to match swaps 3 2008 Bonds Analysis • Bond documents require 1 5x debt service coverage — RCTC board policy is 2.0x • 2008 Bonds indicate strong debt service coverage • Expected coverage of nearly 6.0x for anticipated 2009 bond issuance — Stress case of $500 million bonds = 3.5x coverage — Significant decline in revenues greater than 40% would be necessary to drive coverage below 2.0x 2008 Bond Ratings • April 2008 meetings in NY and San Francisco with three rating agencies • Exciting results — S&P: AA+ (stable outlook) • 1989 Measure A bonds: AAA Moody's: Aa2 — Fitch: AA (stable outlook) 2008 Bonds Documents • Resolution 08-010 • Preliminary Official Statement • Indenture • First Supplemental Indenture • Bond Purchase Agreement • Commission approval of financing documents today — Authorization for Executive Director to approve and execute final documents • Sale of bonds on May 28-29, 2008 • Preclosing activities on June 9, 2008 • Closing and receipt of bond proceeds on June 10, 2008 • Begin planning activities for 2009 Bonds issuance in Fall 2008 i i I ATTACHMENT 2 OH&S Draft 4/18/08 NO.08-010 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF NOT TO EXCEED $130,000,000 AGGREGATE PRINCIPAL AMOUNT OF RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS), 2008 SERIES A, THE EXECUTION AND DELIVERY OF AN INDENTURE, SUPPLEMENTAL INDENTURE, PURCHASE CONTRACT, OFFICIAL STATEMENT AND CONTINUING DISCLOSURE AGREEMENT AND THE TAKING OF ALL OTHER ACTIONS NECESSARY IN CONNECTION THEREWIT73 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; 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) yew; 0118 West:260379561.8 81 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 indebtedness and securities of any kind or class, including sales tax revenue bonds), 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 not to exceed $200,000,000 in aggregate principal amount of its Commercial Paper Notes (Limited Tax Bonds), Series A and Series B (collectively, the "CP Notes"), pursuant to an Indenture dated as of March 1, 2005 (the "CP Indenture"), by and between the Commission and U.S. Bank National Association, as successor trustee; WHEREAS, the Commission has heretofore executed and delivered interest rate swap agreements in an aggregate notional amount of $185 million (the "Initial Swaps"), which Initial Swaps have an effective date of October 1, 2009; WHEREAS, the Commission hereby determines that one or more new series or subseries of bonds in an aggregate principal amount not to exceed one hundred thirty million dollars ($130,000,000) is necessary in order to fmance (i) the refunding of all or a portion of the outstanding CP Notes, (ii) capitalized interest on the bonds through December 1, 2009, (iii) the reserve fund for such bonds, if any, (iv) swap termination payments, if any, (v) funds for projects authorized in the Expenditure Plan, and (vi) the costs of issuance incurred in connection with such bonds, and the Commission has determined that such bonds in an amount not to exceed such principal amount shall be issued, secured by the Sales Tax Revenues and entitled, "Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A" (the "Series 2008 Bonds"); WHEREAS, the Commission hereby further determines that the Series 2008 Bonds shall be issued pursuant to an Indenture (the "Indenture"), as amended and supplemented, including as amended and supplemented by a Supplemental Indenture thereto (the "Supplemental Indenture"), which Indenture and Supplemental Indenture are proposed to be entered into by the Commission and U.S. Bank National Association, as trustee (the "Trustee"); WHEREAS, there has been prepared and presented to the Board a proposed form of Indenture and proposed form of Supplemental Indenture; WHEREAS, in order to minimize debt service and maximize benefits to the Commission in connection with the issuance of the Series 2008 Bonds, it may be desirable to issue the Series OHS West:260379561.8 -2- 82 • • • 2008 Bonds as fixed rate bonds or as variable rate bonds in a term mode (the "Variable Rate Bonds"); WHEREAS, in order to set forth the terms of sale of the Series 2008 Bonds, the Commission proposes to enter into a bond purchase agreement (the "Purchase Contract") with Lehman Brothers Inc. and Banc of America Securities LLC (collectively, the "Purchasers"); WHEREAS, the Purchasers have caused to be prepared and submitted to the Commission a proposed form of Purchase Contract; WHEREAS, in order to provide liquidity support, credit enhancement or both, for the Series 2008 Bonds, the Commission may purchase bond insurance or enter into one or more credit agreements, reimbursement agreements, standby bond purchase agreements or other liquidity or credit support agreements (each, a "Support Agreement'), containing such terms and conditions as the Executive Director of the Commission (the "Executive Director") or the Chief Financial Officer of the Commission (the "Chief Financial Officer") considers appropriate and with a bank or other financial institution or insurance company or association (each a "Support Provider," and collectively, the "Support Providers") to be selected by the Executive Director or Chief Financial Officer in the event a Support Agreement is determined to be beneficial to the marketing of the Series 2008 Bonds; WHEREAS, in order to provide information about the Series 2008 Bonds and related matters to purchasers and potential purchasers of the. Series 2008 Bonds, the Commission proposes to execute and deliver an official statement (the "Official Statement'); WHEREAS, there has been prepared and presented to the Board a proposed form of. Official Statement in preliminary form (the "Preliminary Official Statement') and a proposed form of Continuing Disclosure Agreement (the "Continuing Disclosure Agreement'); WHEREAS, the Commission has been presented with the forms of the Indenture, the Supplemental Indenture, the Purchase Contract, the Continuing Disclosure Agreement and the Official Statement relating to the financing described herein (the "Financing"), and the Commission has examined and approved each document and desires to authorize and direct the execution of such documents as are specified herein and such other documents as are necessary in connection with the Financing and to authorize and direct the consummation of the Financing; and WHEREAS, all acts, conditions and things required by the 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 Financing 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 such Financing and to authorize the execution of the Indenture, the Supplemental Indenture, the Purchase Contract, one or more Support Agreements, the Official Statement and the Continuing Disclosure Agreement for the purposes, in the manner and upon the terms provided; OHS West:260379561.S -3- 83 NOW THEREFORE, THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION RESOLVES: Section 1. The Commission finds and determines that the foregoing recitals are true and correct. Section 2. The issuance by the Commission of not to exceed $130,000,000 aggregate principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A, in accordance with the provisions set forth in the Indenture, in one or more series or subseries, is hereby authorized and approved. Section 3. The proposed form of Indenture and Supplemental Indenture presented to this meeting and the terms and conditions thereof are hereby approved. The structure, date, maturity date or dates (not to exceed June 1, 2039), fixed or variable interest rate or rates (such rates not to exceed a maximum of 12% per annum) or methods of determining the same, interest payment dates, forms, registration privileges, place or places of payment, terns of redemption, tender, mandatory purchase, additional series designation and number thereof and other terms of the Series 2008 Bonds shall be (subject to the foregoing limitations) as provided in the Indenture and the Supplemental Indenture as finally executed and delivered. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver the Indenture and the Supplemental Indenture, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 4. The proposed form of Purchase Contract presented to this meeting and the terns and conditions thereof are hereby approved. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to sell the Series 2008 Bonds to the Purchasers pursuant to the Purchase Contract with the Purchasers' compensation not to exceed 1% of the principal amount of the Series 2008 Bonds and to execute and deliver a Purchase Contract, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 5. The Executive Director is hereby authorized to negotiate with Support Providers a Support Agreement for the Series 2008 Bonds, and, if the Executive Director, with the advice of Fieldman, Rolapp & Associates (the "Financial Advisor"), determines that doing so is in the best interests of the Commission, to enter into such Support Agreement on such terms as the Executive Director, with the advice of the Financial Advisor, determines are appropriate. Section 6. The proposed form of Preliminary Official Statement presented to this meeting is hereby approved. The Executive Director is hereby authorized and directed to execute and deliver to the Purchasers a certificate deeming the Preliminary Official Statement, in substantially the form on file with the Clerk and presented to this meeting and with such changes as the Executive Director approves in the interest of the Commission, final within the meaning of Securities Exchange Commission Rule 15c2-12. The Purchasers are hereby authorized to OHS West:260379561.8 -4- • 84 • distribute the Preliminary Official Statement in the form so deemed final by the Executive Director. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver a final Official Statement, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 7. The proposed form of Continuing Disclosure Agreement presented to this meeting is hereby approved. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver the Continuing Disclosure Agreement, in substantially said form, with such changes therein as such officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 8. The Executive Director is hereby authorized to negotiate with financial institutions and/or insurance companies, as applicable, an irrevocable letter of credit, or a surety bond, or an insurance policy, and, if the Executive Director, with the advice of the Financial Advisor, determines that doing so is in the best interest of the Commission, to secure such irrevocable letter of credit, surety bond, or insurance policy on such terms as the Executive Director, with the advice of the Financial Advisor, determines are appropriate, in order to fund any bond reserve fund established pursuant to the Indenture or the Supplemental Indenture. Section 9. The Executive Director is hereby authorized to enter into or to instruct the Trustee to enter into, with the advice of the Financial Advisor, one or more investment agreements, float contracts, swaps or other hedging products or to terminate or revise the Initial Swaps (hereinafter collectively referred to as "Hedge Agreements") providing for the hedging of interest rate or the investment of moneys in any of the funds and accounts created under the Indenture or the Supplemental Indenture, on such terms as the Executive Director shall deem appropriate. Pursuant to Section 5922 of the California Government Code, the Commission hereby finds and determines that the Hedge Agreements will reduce the amount and duration of interest rate risk with respect to amounts invested pursuant to the Hedge Agreements and/or 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 Initial Swaps and the Series 2008 Bonds or enhance the relationship between risk and return with respect to investments. Section 10. All approvals, consents, directions, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution or the Initial Swaps, including, without limitation, any amendment of any of the documents authorized by this Resolution or the Initial Swaps or other agreement related thereto, and any of the foregoing that may be necessary or desirable in connection with any Support Agreement or the extension or replacement thereof, or any reserve facility, any investment of proceeds of the Series 2008 Bonds, or in connection with the addition, substitution or replacement of underwriters or remarketing agents, or any agreements with paying agents, escrow agents or verification agents, the removal or replacement of the Trustee or any similar action may be given or taken by an Authorized Representative (as such term is defined in the Indenture), without further authorization or direction by this Board, and each Authorized Representative is hereby authorized and directed to give any such approval, consent, direction, notice, order, request or OHS West:260379561.8 85 other action and to take any such action which such Authorized Representative may deem necessary or desirable to further the purposes of this Resolution. All consents, approvals, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution, whether before or after the issuance of the Series 2008 Bonds, 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, 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. Section 11. All actions heretofore taken by the officers and agents of the Commission with respect to the Financing and the issuance and sale of the Series 2008 Bonds 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 or the Chief Financial Officer in lieu of the Executive Director. The Chief Financial Officer of the Commission shall act as the Auditor -Controller of the Commission for execution of the Series 2008 Bonds. TheClerkof the Board of the Commission is hereby authorized to attest to the execution by the Executive Director or the Deputy Executive Director or the Chief Financial Officer of any of such documents assaid officers deem appropriate. 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 or verification services, and any agreements for rebate compliance services, which they, or any of them, may deem necessary or advisable in order to consummate the Financing and the issuance and sale of the Series 2008 Bonds and otherwise to carry out, give effect to and comply with the terms and intent of the Ordinance, this Resolution, the Series 2008 Bonds and the documents approved hereby. OHS West:2603795611 -6- 86 • Section 13. This Resolution shall take effect immediately upon its adoption and approval. APPROVED AND ADOPTED by the Riverside County Transportation Commission at its meeting on May 14, 2008. ATTEST: By: Clerk of the Board of the Commission OHS West:260379561.8 By: Chairman, Board of Commissioners -7- 87 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 May 14, 2008, 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 fiuther 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, , 2008. .OHS West.•260379561.8 By Clerk -8- 88 I ATTACHMENT 3 NGKE Draft dated May 6, 2008 PRELIMINARY OFFICIAL STATEMENT, DATED , 2008 "VW ISSUE —BOOK -ENTRY ONLY Ratings for the Series 2008 Bonds (as defined herein): Moody's: " " Fitch" " S&P: " " See "RATINGS" herein [DAC Logo] In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Commission, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2008 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Series 2008 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Series 2008 Bonds. See "TAX MATTERS" herein.$ ' RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2008 Series A Initial Initial Long -Term Bated: Final Maturity Mandatory Rate ending on (but Yield to Initial Mandatory Date Tender Date excluding) December 1, Tender Date 2009 December 1, Date of Delivery June 1, 2029 2009 % % CUSIP No t The Sales Tax Revenue Bonds described above (the "Series 2008 Bonds") are being issued by the Riverside County Transportation Commission (the "Commission") to (i) refinance all of the outstanding principal amount of the Commission's Commercial Paper Notes (Limited Tax Bonds), Series A and Series B, as more particularly described herein (collectively, the "Notes") and all or a portion of accrued interest thereon, (ii) fund capitalized interest on the Series 2008 Bonds through December 1, 2009, (iii) fund a reserve fund for the Series 2008 Bonds, and (iv) pay costs of issuance of the Series 2008 Bonds. The initial Rate Period for the Series 2008 Bonds will be a Long -Term Rate Period and the initial Long -Term Rate Period will be the period commencing on and including the date of delivery of the Series 2008 Bonds and ending on and excluding December 1, 2009. The Series 2008 Bonds shall initially bear interest at a rate of % per annum. During the initial Long -Term Rate Period, interest on the Series 2008 Bonds is payable semi-annually on June 1 and December 1 of each year, commencing on December 1, 2008, and the final interest payment with respect to the initial Long Term Rate Period shall be paid on December 1, 2009. On December 1, 2009, the day following the end of the initial Long -Tenn Rate Period, the Series 2008 Bonds will be subject to redemption, at the option of the Commission, as more fully described herein. In order to synchronize with the effective date of the initial interest rate swap agreements described herein, the Commission may elect to issue refunding bonds on or about October 1, 2009 to redeem the Series 2008 Bonds. Such redemption from the proceeds of refunding bonds would occur on December 1, 2009. The Bonds are not subject to redemption prior to December I, 2009. Any redemption of the Series 2008 Bonds on December 1, 2009 will be at the Commission's sole discretion, and the Commission will be under no obligation to redeem the Series 2008 Bonds on that date. If the Commission does not exercise its option to redeem the Series 2008 Bonds on December 1, 2009, there will be a mandatory tender for purchase of the Series 2008 Bonds on that date (the "Initial Mandatory Tender Date"). On the Initial Mandatory Tender Date, the Commission will have the right to convert the interest rate on the Series 2008 Bonds to a Daily Rate, Weekly Rate, Commercial Paper Rate or Fixed Rate, or to establish another Long -Tenn Rate (each such interest rate, an "Interest Rate Determination Method"). The Commission is required under the Indenture to hire remarketing agents which will be required to use their best efforts to remarket the Series 2008 Bonds on the Initial Mandatory Tender Date. Hthe remarketing agents are unable to remarket all the Series 2008 Bonds on the Initial Mandatory Tender Date, the Series 2008 Bonds will continue to be owned by the then current Holders and will automatically commence to bear interest at a Weekly Rate of 11% per annum until such time as the Series 2008 Bonds •re successfully remarketed at an Interest Rate Determination Method. There is no liquidity facility supporting the purchase of * Preliminary, subject to change. t CUSIP numbers are provided for convenience of reference only_ Neither the Commission nor the Underwriters take any responsibility for the accuracy of such numbe6s. the Series 2008 Bonds on the Initial Mandatory Tender Date, nor is there any plan to provide such a liquidity facility. The Series' 2008 Bonds are initially being issued as fully registered bonds without coupons in the denominations of $5,000 or any integral multiple thereof. The Series 2008 Bonds will be registered in the name of Cede & Co., as holder of the Series 2008 Bonds and nominee for The Depository Trust Company ("DTC"), New York, New York. Purchasers will not receive certificates representing their interest in the Series 2008 Bonds purchased. The principal or redemption price of and interest on the Series 2008 Bonds are payable by wire transfer to DTC which, in hum, will remit such principal, redemption price or interest to the DTC Participants for subsequent disbursement to the Beneficial Owners of the Series 2008 Bonds, as more fully discussed herein. The Series 2008 Bonds will mature on June 1, 2029. This Official Statement is not intended to provide detailed information with respect to the Series 2008 Bonds (including the terms of such Series 2008 Bonds) after conversion from the initial Long -Term Rate. There can be no conversion of the interest rate on the Series 2008 Bonds during the Initial Long -Term Rate Period. Owners and prospective purchasers of the Series 2008 Bonds should not rely on this Official Statement for information conceming the Series 2008 Bonds in connection with, any conversion of the Series 2008 Bonds to Series 2008 Bonds bearing interest at a rate other than a Long -Term Rate, but should look solely to the offering document to be used in connection with any such conversion. The Series 2008 Bonds are special obligations of the Commission payable from and secured solely by a pledge of the Revenues (which is defined herein and which principally includes the receipts from the imposition in the County of Riverside, California of a'h- cent sales tax scheduled to take effect July t, 2009 (the "Sales Tax"), less certain administrative fees paid to the California State Board of Equalization), as described herein. The Sales Tax was approved by more than a two-thirds vote of the electorate of the County of Riverside on November 5, 2002 and is scheduled to expire on June 30, 2039. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OR PUBLIC AGENCY THEREOF, OTHER THAN THE COMMISSION TO THE EXTENT OF THE PLEDGE OF THE REVENUES, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2008 BONDS. The Series 2008 Bonds are offered when, as and if issued and received by the Underwriters, subject to the approval of validity by Orrick, Herrington & Sutcliffe LLP, Bond Counsel, and certain other conditions. Certain legal matters will be passed on for the Commission by Nossaman, Guthner, Knox & Elliott, LLP, Los Angeles, California, as disclosure counsel, and by Best Best & Krieger, LLP, Riverside, California, the Commission's General Counsel. Certain legal matters will be passed upon for the Underwriters by Stradling, Yocca, Carlson & Rauth; Newport Beach, California. It is anticipated that the Series 2008 Bonds will be available for delivery to DTC on or about June 10 , 2008. Lehman Brothers Banc of America Securities LLC Dated: , 2008 9.A3.TT.Comm.Bonds.Att 3 POS.DOC 90 • No dealer, salesman or any other person has been authorized by the Riverside County Transportation Commission (the "Commission") or the Underwriters to give any information or to make any statements or representations, other than those contained in this Official Statement, and, if given or made, such other information, statements or representations must not be relied upon as having been authorized. The information set forth herein has been obtained from the Commission and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness, and it is not to be construed as a representation by the Underwriters. The information in this Official Statement is subject to change, and neither the delivery of this Official Statement nor any sale made after any delivery shall, under any circumstances, create any implication that there has been no change since the date of this Official Statement. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy any of the Series 2008 Bonds in any jurisdiction in which such offer or solicitation as not authorized, or in which any person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. This Official Statement is not to be construed as a contract with the Purchasers of the Series 2008 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. THE PRICES AT WHICH THE SERIES 2008 BONDS ARE OFFERED TO THE PUBLIC BY THE UNDERWRITERS (AND THE YIELDS RESULTING THEREFROM) MAY VARY FROM THE INITIAL PUBLIC OFFERING PRICES OR YIELDS APPEARING ON THE COVER PAGE HEREOF. IN ADDITION, THE UNDERWRITERS MAY ALLOW CONCESSIONS OR DISCOUNTS FROM SUCH INITIAL PUBLIC OFFERING PRICES TO DEALERS AND OTHERS. IN CONNECTION WITH THE OFFERING OF THE SERIES 2008 BONDS, THE UNDERWRITERS MAY EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2008 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION CONCERNING THE COMMISSION AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY COMMISSION. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibility to investors under the federal securities law as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The information and expression of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in affairs of the Commission since the date hereof. This Official 91 Statement, including any supplement or amendment hereto, is intended to be deposited with one or more repositories. FORWARD -LOOKING STATEMENTS Certain statements included or incorporated by reference in this Official Statement constitute forward -looking statements. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "project, "budget" or other similar words. The achievement of certain results or other expectations contained in such forward- looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward -looking statements. No assurance is given that actual results will meet the forecasts of the Commission in any way, regardless of the level of optimism communicated in the information. The Commission is not obligated to issue any updates or revisions to the forward -looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD -LOOKING STATEMENTS. THE COMMISSION DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD -LOOKING STATEMENTS IF OR WHEN ANY OF ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR, OTHER THAN AS DESCRIBED UNDER "CONTINUING DISCLOSURE" HEREIN. 92 • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BOARD MEMBERS Jeff Stone, Chair Bob Magee, 1st Vice Chair Bob Buster, 2nd Vice Chair John F. Tavaglione Michael H. Wilson Roy Wilson Terry Henderson Marion Ashley Frank West Bob Botts Rick Gibbs Roger Berg Frank Hall Joseph DeConinck Dick Kelly John Chlebnik Ginny Foat Mary Craton Daryl Busch Gregory S. Pettis Gordon Moller Eduardo Garcia Steve Adams Jeff Miller Chris Carlson Yvonne Parks Ron Roberts Robin Lowe Mike Perovich Patrick J. Mullany MANAGEMENT Executive Director Anne Mayer Deputy Executive Director John Standiford Chief Financial Officer Theresia Trevino SPECIAL SERVICES Financial Advisor Fieldman, Rolapp & Associates Irvine, California Bond Counsel Orrick, Herrington & Sutcliffe LLP San Francisco, California Trustee U.S. Bank National Association Los Angeles, California 93 i TABLE OF CONTENTS Page INTRODUCTION 1 General 1 Authority for Issuance 1 Purpose 1 Security 1 Continuing Disclosure 2 References 2 THE SERIES 2008 BONDS 3 General 3 Initial Rate Period 4 Conversion of Interest Rate Determination Method After the Initial Long -Term Rate Period 5 Long -Term Rate Period 7 Payment of Principal and Interest 9 Redemption Terms of the Series 2008 Bonds 9 Purchase In Lieu of Redemption 11 General Redemption Provisions 11 Mandatory Tender Provisions 12 PLAN OF FINANCE 12 APPLICATION OF SERIES 2008 BOND PROCEEDS 13 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS 14 Limited Obligation 14 Pledge of Revenues 14 Revenue Fund; Allocation of Revenues 14 Bond Reserve Fund 16 Additional Bonds and Parity Obligations 17 Initial Swap Agreements 18 Subordinate Obligations 19 THE SALES TAX 19 General 19 Collection of Sales Tax Revenues 20 1988 Sales Tax Revenues 21 RIVERSIDE COUNTY TRANSPORTATION COMMISSION 22 General 22 Commissioners 23 Executive Staff 23 THE TRANSPORTATION EXPENDITURE PLAN 24 INVESTMENT CONSIDERATIONS 24 Economy of the County and the State 24 No Liquidity Facility 25 The Sales Tax 25 Proposition 218 25 Further. Initiatives 26 Loss of Tax Exemption 26 94 FINANCIAL STATEMENTS 26 LITIGATION 26 TAX MATTERS 26 CERTAIN LEGAL MATTERS 28 RATINGS 29 UNDERWRITING 29 FINANCIAL ADVISOR 29 CONTINUING DISCLOSURE 29 MISCELLANEOUS 30 APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E APPENDIX F Commission Audited Financial Statements For Fiscal Year Ended June 30, 2007 A-1 County Demographic and Economic Information B-1 Summary of Certain Provisions of the Indenture C-1 Book -Entry System D-1 Proposed Form of Bond Counsel Opinion E-1 Proposed Form of Continuing Disclosure Certificate F-1. ii 95 • • • OFFICIAL STATEMENT RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (Limited Tax Bonds) 2008 Series A INTRODUCTION General This Official Statement, which includes the cover page and the appendices hereto, sets forth certain information in connection with the offering by the Riverside County Transportation Commission (the "Commission') of $ * principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A (the "Series 2008 Bonds"). Authority for Issuance The Series 2008 Bonds are being issued by the Commission under and 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"), the Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance, adopted by the Commission on May 8, 2002 and approved by at least two-thirds of electors voting on such proposition in the November 5, 2002 election, and any amendments or extensions thereto (collectively, and together with the Act, the "Law"), an Indenture, dated as of June 1, 2008 (the "2008 Indenture"), between the Commission and U.S. Bank National Association (the "Trustee"), and the First Supplemental Indenture, dated as of June 1, 2008 (the "First Supplemental Indenture" and, collectively with the 2008 Indenture, the "Indenture"). All capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in "APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE," or, if not defined therein, in the Indenture. Purpose The Series 2008 Bonds are being issued in order to (i) refinance all of the outstanding principal amount of the Commission's Commercial Paper Notes (Limited Tax Bonds), Series A and Series B, and all or a portion of the accrued interest thereon, as more particularly described herein (collectively, the "Notes"), (ii) fund capitalized interest on the Series 2008 Bonds to December 1, 2009, (iii) fund a reserve fund for the Series 2008 Bonds, and (iv) pay costs of issuance of the Series 2008 Bonds. Security The Series 2008 Bonds are limited obligations of the Commission payable from and secured by certain revenues (the "Revenues") pledged under the Indenture, including a pledge of # Preliminary, subject to change. l 96 revenues (the "Sales Tax Revenues") derived from a '/z-cent sales tax scheduled to take effect July 1, 2009 (the "Sales Tax"), imposed in accordance with the Law and the California Transactions and Use Tax Law (Revenue and Taxation Code Section 7251 et seq.), net of an administrative fee paid to the California State Board of Equalization (the "Board of Equalization") in connection with the collection and disbursement of the Sales Tax. The Sales Tax was approved by more than a two-thirds vote of the electorate of the County of Riverside on November 5, 2002 and is scheduled to expire on June 30, 2039. Additional Parity Obligations may hereafter be issued and paid from the Sales Tax Revenues. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS - Additional Bonds and Parity Obligations" and "PLAN OF FINANCE" herein. A 2008 Bonds Reserve Fund is established under the Indenture. The 2008 Bonds Reserve Requirement under the Indenture with respect to the Series 2008 Bonds in the amount of $ will be funded from the proceeds of the sale of the Series 2008 Bonds.. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS - Bond Reserve Fund," and "APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE - Definitions" herein. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OR PUBLIC AGENCY THEREOF, OTHER THAN THE COMMISSION TO THE EXTENT OF THE PLEDGE OF THE REVENUES, IS PLEDGED TO THE PAYMENT OF THE SERIES 2008 BONDS. Continuing Disclosure The Commission has covenanted for the benefit of the owners and beneficial owners of the Series 2008 Bonds to provide certain financial information and operating data relating to the Commission by not later than 210 days following the end of the Commission's Fiscal Year (presently June 30), commencing with the report for the 2007-08 Fiscal Year, and to provide notices of occurrence of certain enumerated events, if material. See "CONTINUING DISCLOSURE" herein and "APPENDIX F - PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE." References The descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each such document for the complete details of all terms and conditions. All statements herein are qualified in their entirety by reference to each such document, copies of which are available for inspection at the offices of the Commission. 2 97 • • • THE SERIES 2008 BONDS General The Series 2008 Bonds are being issued in the aggregate principal amount of $ ` to (i) refinance all of the outstanding principal amount of the Notes and pay all or a portion of the accrued interest thereon, (ii) fund capitalized interest on the Series 2008 Bonds to December 1, 2009, (iii) fund a reserve fund for the Series 2008 Bonds, and (iv) pay costs of issuance of the Series 2008 Bonds. The following is a summary of certain provisions of the Series 2008 Bonds. Reference is made to the Series 2008 Bonds for the complete text thereof and to the Indenture for a more detailed description of these provisions. The discussion herein is qualified by such reference. See "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" herein. As used herein, the term "Bonds" means any Bonds, including the Series 2008 Bonds, issued pursuant to the Indenture. Further, "Series" means Bonds designated as being of the same Series and "Variable Interest Rate" means a Daily Rate, Weekly Rate, Commercial Paper Rate and a Long -Term Rate. The Series 2008 Bonds will be issued in the aggregate principal amount and will mature on the Maturity Date shown on the pages immediately succeeding the cover page of this Official Statement. The Series 2008 Bonds will be dated the date of original delivery. The Series 2008 Bonds shall bear interest on the unpaid principal amount thereof as described below. At no time shall any Series 2008 Bonds bear interest at a rate in excess of the Maximum Interest Rate, which is defined as the lesser of: (i) 12% per annum or (ii) the maximum rate of interest that may legally be paid on the Series 2008 Bonds. The Depository Trust Company, or DTC, will act as the initial securities depository for the Series 2008 Bonds, which will be issued initially pursuant to a book -entry only system. See "APPENDIX D — BOOK -ENTRY SYSTEM" herein. Under the Indenture, the Commission may appoint a successor securities depository to DTC for the Series 2008 Bonds. The Holders of the Series 2008 Bonds have no right to a book -entry only system for the Series 2008 Bonds. The information under this caption, "THE SERIES 2008 BONDS", is subject in its entirety to the provisions described below under "APPENDIX D — BOOK -ENTRY SYSTEM" while the Series 2008 Bonds are in the book -entry only system. This Official Statement is not intended to provide information with respect to the Series 2008 Bonds (including the terms of such Series 2008 Bonds) after conversion from the initial Long -Term Rate. Owners and prospective purchasers of the Series 2008 Bonds should not rely on this Official Statement for information concerning the Series 2008 Bonds in connection with any conversion of the Series 2008 Bonds to Series 2008 Bonds bearing interest at a rate other than a Long -Term Rate, but should look solely to the offering document to be used in connection with any such conversion. * Preliminary, subject to change. 3 98 Initial Rate Period The initial Rate Period for the Series 2008 Bonds will be a Long -Term Rate Period and the initial Long -Term Rate Period will be the period commencing on and including the date of delivery of the Series 2008 Bonds and ending on and excluding December 1, 2009, the last day of the initial Long -Term Rate Period. The Series 2008 Bonds shall initially bear interest at the rate as set forth on cover hereof. During the initial Long -Term Rate Period, interest on the Series 2008 Bonds is payable semi-annually on June 1 and December 1 of each year, commencing on December 1, 2008, and the final interest payment with respect to the initial Long -Term Rate Period will be paid on December 1, 2009. On December 1, 2009, the day following the end of the initial Long -Term Rate Period, the Series 2008 Bonds will be subject to redemption, at the option of the Commission, in whole or in part, at a redemption price equal to the amount of Series 2008 Bonds called for redemption, plus accrued interest, without premium. See "Redemption Terms of the Series 2008 Bonds" below. In order to synchronize with the effective date of the Initial Swap Agreements (described under "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS — Initial Swap Agreements" below), the Commission may elect to issue refunding bonds on or about October 1, 2009 to redeem the Series 2008 Bonds. Such redemption from the proceeds of refunding bonds would occur on December 1, 2009. If the Commission exercises its option to redeem the Series 2008 Bonds on December 1, 2009, the Trustee will be required to send notice of redemption to DTC not less than 10 nor more than 90 days prior to such date. Any redemption of all or some of the Series 2008 Bonds on December 1, 2009 will be at the Commission's sole discretion, and the Commission will be under no obligation to redeem the Series 2008 Bonds on that date. If the Commission does not exercise its option to redeem the Series 2008 Bonds on December 1, 2009, there will be a mandatory tender for purchase of the Series 2008 Bonds on such date (the "Initial Mandatory Tender Date"). On the Initial Mandatory Tender Date, the - Commission will have the right to convert the interest rate on the Series 2008 Bonds to a Daily Rate, Weekly Rate, Commercial Paper Rate or Fixed Rate, or to establish another Long -Tenn Rate (each such interest rate, an "Interest Rate Determination Method"). To exercise such right, the Commission will be required to deliver notice to the Trustee and the other Notice Parties in accordance with the Indenture. Upon receipt of such notice and not less than 15 days prior to the Initial Mandatory Tender Date, the Trustee will be required to give notice to DTC of the proposed conversion or the proposed establishment of a new Long -Term Rate. The Commission is required under the Indenture to hire one or more remarketing agents which will be required to use their best efforts to remarket the Series 2008 Bonds on the Initial Mandatory Tender Date. If, prior to the Initial Mandatory Tender Date, the Commission has not given notice to the Trustee of the proposed conversion to a new Interest Rate Determination Method or the proposed establishment of another Long -Term Rate at the time required by the Indenture, or if the conditions to the effectiveness of such conversion or of such Long -Term Rate set forth in the Indenture are not satisfied, including as a result of the remarketing agents failing to remarket all the Series 2008 Bonds on the Initial Mandatory Tender Date, then on the Initial Mandatory Tender Date the Series 2008 Bonds will automatically commence to bear interest at a Weekly Rate of 11% per annum. The Series 2008 Bonds will continue to bear interest at a Weekly Rate of 11% per annum until such time as the Series 2008 Bonds are successfully 4 99 • • • remarketed at an Interest Rate Determination Method in accordance with the Indenture. During such Weekly Rate Period, the Series 2008 Bonds will not be subject to optional tender, and notice of Conversion to another Interest Rate Determination Method may be given 5 Business Days prior to the Conversion Date. See "Long -Term Rate Period" herein. Also subject to redemption from refunding bonds or other sources any time in this period. Conversion of Interest Rate Determination Method After the Initial Long -Term Rate Period Right of Conversion. After the initial Long -Term Rate Period, the Series 2008 Bonds are subject to conversion from one Interest Rate Determination Method to another from time to time by the Commission, with such right to be exercised by delivery of a Conversion Notice to the Notice Parties for the Series 2008 Bonds as follows: (1) at least two Business Days prior to the fifteenth day preceding the effective date of such proposed Conversion, in the event of a Conversion to a Daily Rate, Weekly Rate or Commercial Paper Rate; and (2) at least three Business Days prior to the fifteenth day preceding the effective date of such proposed Conversion, in the event of a Conversion to a Long -Term Rate or a Fixed Rate. The date of the proposed Conversion must be a date on which the Series 2008 Bonds are subject to mandatory tender. The Conversion Notice must be accompanied by (i) an Opinion of Bond Counsel stating that the Conversion is authorized and permitted under the Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on the Series 2008 Bonds, and (ii) a notice of any 2008 Liquidity Facility or any 2008 Credit Enhancement, if at the same time as the Series 2008 Bonds are being converted there will be any 2008 Liquidity Facility or 2008 Credit Enhancement with respect to the Series 2008 Bonds. No Conversion to a new Interest Rate Determination Method may take effect under the Indenture unless each of the following conditions shall have been satisfied: (i) the Trustee shall have received a Favorable Opinion of Bond Counsel with respect to such Conversion; (ii) all Series 2008 Bonds are successfully purchased or deemed purchased from remarketing proceeds or from funds provided by a 2008 Liquidity Provider, if any, and remarketed in the new Interest Rate Determination Method on the Conversion Date; (iii) in the case of a Conversion to a Daily Rate, Weekly Rate or Commercial Paper Rate, the 2008 Liquidity Facility must cover principal plus accrued interest, calculated as provided in the Indenture; and (iv) such other conditions as are specified in the Indenture. On the Conversion Date, the Commission may, at its sole option, purchase Series 2008 Bonds not remarketed to other investors, but it will be under no obligation to do so. See "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" herein. 5 100 Conversion to a different Interest Rate Determination Method requires that all Series 2008 Bonds must be tendered for purchase on the Conversion Date. See "Mandatory Tender Provisions" below. Notice of Conversion to DTC and Beneficial Owners. Upon receipt of a Conversion Notice, as soon as possible, but in any event not less than 15 days prior to the proposed Conversion Date, the Trustee is to give notice of the proposed Conversion to DTC by first-class mail. Conveyance of notices and other communications by DTC to DTC Direct Participants, by DTC Direct Participants to DTC Indirect Participants, and by DTC Direct Participants and DTC Indirect Participants to Beneficial Owners of Series 2008 Bonds will be governed by arrangements among them, and the Commission and the Trustee will not have any responsibility or obligation to send a Conversion Notice to Beneficial Owners of Series 2008 Bonds. Rescission of Notice of Conversion. Notwithstanding anything in the Indenture to the contrary, the Commission may rescind any previously given Conversion Notice by giving written notice thereof to the Notice Parties two or more Business Days prior to the proposed Conversion Date. If the Trustee receives notice of such rescission prior to the time the Trustee has given notice of the proposed Conversion to DTC, then the Conversion Notice previously delivered by the Commission shall be of no force and effect. If the Trustee receives notice from the Commission of such rescission after the Trustee has given notice of the proposed Conversion to DTC, then the Series 2008 Bonds shall continue to be subject to mandatory tender for purchase on the proposed Conversion Date (unless, prior to the proposed Conversion Date, the Series 2008 Bonds were in a Long -Term Rate Period for which there was no Liquidity Facility) and the Rate Period for the Series 2008 Bonds shall automatically adjust to, or continue as, a Weekly Rate Period on the proposed Conversion Date. Failure to Convert. The Indenture includes provisions setting forth the procedures and conditions for the exercise by the Commission of its right of conversion of Series 2008 Bonds from one Interest Rate Determination Method to another, including the conditions described above under "— Right of Conversion'. Under certain circumstances, a planned conversion may not be completed. However, once a notice of conversion is provided to DTC as described above, all Series 2008 Bonds must be tendered for purchase (whether or not the planned conversion is completed, unless the planned conversion is from a Long -Term Rate Period for which there is no Liquidity Facility and the conversion is not completed, in which case the tender will be cancelled). The Indenture provides that a failed conversion of Series 2008 Bonds to another Interest Rate Determination Method means that the Series 2008 Bonds will continue to bear interest at the Interest Rate Determination Method in effect prior to the proposed Conversion Date (as if no proceedings for Conversion had taken place) and the rate of interest thereon shall be determined on the proposed Conversion Date. If the failed conversion is due to insufficient funds to purchase all Series 2008 Bonds (from remarketing proceeds or from funds provided by a 2008 Liquidity Provider, if any), that interest rate is required by the Indenture to be the lesser of the SIFMA Swap Index plus 3% and the Maximum Interest Rate (unless the conditions described below under "Long -Term Rate Period — End of Long -Term Rate" apply, in which case the interest rate is required to be 11% per annum) from the date of such failed purchase until all Series 2008 Bonds are purchased as required in accordance with the Indenture, and all tendered Series 2008 Bonds will be returned to their respective owners. 6 • • 101 i Long -Term Rate Period Conversion to or Continuation of Long -Term Rate. During a Long -Term Rate Period after the initial Long -Term Rate Period, the Series 2008 Bonds shall bear interest at the Long - Term Rate. The Interest Rate Determination Method for the Series 2008 Bonds may be converted by the Commission to a Long -Term Rate from another Interest Rate Determination Method, by the Commission's delivery of a Conversion Notice to the Notice Parties. See "Conversion of Interest Rate Determination Method" above. Prior to the end of a Long -Term Rate Period, the Commission may also elect to establish a new Long -Term Rate Period and Long -Term Rate for the Series 2008 Bonds, by its delivery of a Long -Term Rate Continuation Notice to the Notice Parties. The Long -Term Rate Continuation Notice must be accompanied by (i) an Opinion of Bond Counsel stating that the new Long -Term. Rate Period is authorized and permitted under the Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on the Series 2008 Bonds, and (ii) a notice of any 2008 Liquidity Facility or any 2008 Credit Enhancement, if at the same time as the new Long -Term Rate Period is being established there will be any 2008 Liquidity Facility or 2008 Credit Enhancement with respect to the Series 2008 Bonds. The Commission shall select the duration of each Long -Term Rate Period and shall include the duration of the Long -Term Rate Period in the Conversion Notice or the Long -Term Rate Continuation Notice, as applicable, delivered with respect to such Long -Term Rate Period. Each Long -Term Rate Period shall commence on the Long -Term Rate Conversion Date and end on a Business Day selected by the Commission which is a minimum of 180 days after the Long - Term Rate Conversion Date, but in no event later than the maturity date of the Series 2008 Bonds. The Long -Term Rate shall be determined by the Remarketing Agent on a Business Day no later than the Business Day next preceding the Long -Term Conversion Date. Subject to certain provisions of the Indenture, the Long -Term Rate shall be the rate of interest per annum determined by the Remarketing Agent to be the minimum interest rate which, if borne by the Series 2008 Bonds, would enable the Remarketing Agent to sell the Series 2008 Bonds on the Long -Term Conversion Date at a price (without regard to accrued interest) equal to the principal amount thereof (except as otherwise provided under "- Sale at Premium or Discount" below) End of Long -Term Rate. If, prior to the end of any Long -Term Rate Period, the Commission has not given a Long -Term Rate Continuation Notice or a Conversion Notice at the time required by the Indenture, or if the conditions to the effectiveness of a new Long -Term Rate Period or Conversion to a new Interest Rate Determination Method set forth in the Indenture are not satisfied, including as a result of the Remarketing Agent failing to remarket all the Series 2008 Bonds on the day following the last day of the current Long -Term Rate Period, then on such day the Series 2008 Bonds will automatically commence to bear interest at a Weekly Rate of 11% per annum. The Series 2008 Bonds will continue to bear interest at a Weekly Rate of 11% per annum until such time as the Series 2008 Bonds are successfully remarketed at an Interest Rate Determination Method in accordance with the Indenture. During such Weekly Rate Period, the Series 2008 Bonds will not be subject to optional tender, and notice of Conversion to another Interest Rate Determination Method may be given 5 Business Days prior to the Conversion Date. Notice of Conversion to or Continuation of Long -Term Rate. The Trustee shall give notice of a conversion to a (or the establishment of another) Long -Term Rate Period for the 7 102 Series 2008 Bonds to DTC not less than 15 days prior to the proposed effective date of such Long -Term Rate Period. Such notice shall state: (i) that the Interest Rate Determination Method for the Series 2008 Bonds shall be converted to, or shall continue to be, a Long -Term Rate on the applicable Long -Term Rate Conversion Date if the conditions specified in the Indenture are satisfied on or before such date, (ii) that all 2008 Bonds are subject to mandatory tender for purchase on the Long -Term Rate Conversion Date (whether or not the proposed new Long -Term Rate Period becomes effective on such date) at the Purchase Price, which shall be specified therein; provided, however, that if (a) prior to the Long -Term Rate Conversion Date, the Series 2008 Bonds were in.a Long -Term Rate Period for which there was no Liquidity Facility and (b) the new Long -Term Rate Period does not become effective, the mandatory tender will be cancelled; (iii) the Long -Term Rate Conversion Date and (iv) such other information as is specified in the Indenture. Sale at Premium or Discount. Notwithstanding the above provisions, the Long -Term Rate shall be the rate of interest per annum determined by the Remarketing Agent to be the interest rate which, if borne by the Series 2008 Bonds, would enable the Remarketing Agent to sell the Series 2008 Bonds at a price (without regard to accrued interest) which will result in the lowest net interest cost for the Series 2008 Bonds, after taking into account any premium or discount at which the Series 2008 Bonds are sold by the Remarketing Agent, provided that: (1) The Remarketing Agent certifies to the Trustee and the Commission that the sale of the Series 2008 Bonds at the interest rate and premium or discount specified by the Remarketing Agent is expected to result in the lowest net interest cost for the Series 2008 Bonds on the Long -Term Rate Conversion Date; (2) The Commission consents in writing to the sale of the Series 2008 Bonds by the Remarketing Agent at such premium or discount; (3) In the case of Series 2008 Bonds to be sold at a discount, either (a) a Series 2008 Liquidity Facility is in effect with respect to such Series 2008 Bonds and provides for the purchase of such Series 2008 Bonds at such discount or (b) the Commission agrees to transfer to the Remarketing Agent on the Long -Term Rate Conversion Date, in immediately available funds, for deposit in the 2008 Bonds Purchase Fund, an amount equal to such discount; (4) In the case of Series 2008 Bonds to be sold at a premium, the Remarketing Agent shall transfer to the Trustee for deposit in the Revenue Fund an amount equal to such premium, which amount may be used to pay the specific costs of conversion; (5) On or before the date of the determination of the Long -Term Rate, the Commission delivers to the Trustee and the Remarketing Agent a letter of Bond Counsel to the effect that Bond Counsel expects to be able to give a Favorable Opinion of Bond Counsel on the Long -Term Rate Conversion Date; and (6) On or before the Long -Term Rate Conversion Date, a Favorable Opinion of Bond Counsel shall have been received by the Trustee and confirmed to the Commission and the Remarketing Agent. 8 103 • Payment of Principal and Interest The Series 2008 Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of DTC. Individual purchases of interests in the Series 2008 Bonds will be made in book -entry form only, in authorized denominations of $5,000 or any integral multiple thereof. Purchasers of interests will not receive certificates representing their interests in the Series 2008 Bonds. For a description of the method of payment of principal, premium, if any, and interest on the Series 2008 Bonds and matters pertaining to transfers and exchanges while in the book -entry system, see "APPENDIX D — BOOK -ENTRY SYSTEM" So long as Cede & Co. is the registered owner of the Series 2008 Bonds, the Trustee will pay principal of and premium, if any, and interest on the Series 2008 Bonds to DTC, which will remit principal, premium, if any, and interest payments to the Beneficial Owners of the Series 2008 Bonds, as described under "APPENDIX D — BOOK -ENTRY SYSTEM." The principal, purchase price or redemption price of the Series 2008 Bonds and interest thereon shall be payable in lawful money of the United States of America at the principal corporate trust office of the Trustee. Redemption Terms of the Series 2008 Bonds Optional Redemption of the Series 2008 Bonds — Long -Term Rate Period. While any Long -Term Rate is in effect, the Series 2008 Bonds are subject to redemption prior to their stated maturity, at the option of the Commission, in whole or in part, in Authorized Denominations, in such amounts as may be specified by the Commission, on the day following the last day of the Long -Term Rate Period and (for any Long -Term Rate Period other than the initial Long -Term Rate Period) on such other dates specified in the conversion notice with respect to such Long - Term Rate Period, at a Redemption Price equal to the amount of Series 2008 Bonds called for redemption, plus accrued interest to the date fixed for redemption, without premium. Optional Redemption of the Series 2008 Bonds — Other Rate Periods. While bearing interest at a Daily Rate or a Weekly Rate, the Series 2008 Bonds will be subject to redemption prior to their stated maturity, at the option of the Commission, in whole or in part, in Authorized Denominations, on any Business Day, at a Redemption Price equal to the amount of Series 2008 Bonds called for redemption, plus accrued interest, if any, without premium. While bearing interest at a Commercial Paper Rate, the Series 2008 Bonds will be subject to redemption at the option of the Commission, in whole or in part, on the day following the end of the Commercial Paper Rate Period at a Redemption Price equal to the amount of Series 2008 Bonds called for redemption, plus accrued interest, if any, without premium. Unless the Commission obtains a Favorable Opinion of Bond Counsel and changes redemption provisions as provided in the Indenture, Series 2008 Bonds bearing interest at a Fixed Rate are subject to redemption in whole or in part (and if in part, in such order of maturity and Mandatory Sinking Account Payment dates as the Commission shall specify and within a maturity of Mandatory Sinking Account Payment dates by lot or by such other method as the 9 104 Trustee determines to be fair and reasonable and in Authorized Denominations), on any date, at such times and at such Redemption Prices as follows: (1) If, on the Fixed Rate Conversion Date, the remaining term of the Series 2008 Bonds is greater than eight (8) years, then the Series 2008 Bonds will not be subject to optional redemption until the first June I or December 1 (whichever is earlier) to follow the eighth (8th) anniversary of the conversion of such Series 2008 Bonds to a Fixed Rate. On such first June 1 or December 1, the Series 2008 Bonds will be subject to redemption at 102% of the principal amount thereof, plus accrued interest, if any, to the date of redemption, which Redemption Price will decline by one percent (1%) per annum on each succeeding anniversary of such first June 1 or December 1 until reaching a Redemption Price of 100% of the principal amount thereof, plus accrued interest, if any, to the date of redemption, and thereafter at a Redemption Price of 100% of the principal amount thereof, plus accrued interest, if any, to the date of redemption. (2) If, on the Fixed Rate Conversion Date, the remaining term of the Series 2008 Bonds is less than eight (8) years, then the Series 2008 Bond will not be subject to optional redemption. Mandatory Redemption of the Series 2008 Bonds from Mandatory Sinking Account Payments. The Series 2008 Bonds are subject to mandatory redemption from Mandatory Sinking Account Payments for the Series 2008 Bonds, on each date a Mandatory Sinking Account Payment for the Series 2008 Bonds is due, and in the principal amount equal to the Mandatory Sinking Account Payment due on such date at a redemption price equal to the principal amount thereof, plus accrued but unpaid interest to the redemption date, without premium, as set forth below. Redemption Mandatory Redemption Mandatory Date Sinking Account Date Sinking Account (June 1) Payment (June 1) Payment* j Final Maturity 10 105 • Purchase In Lieu of Redemption The Commission reserves the right at all times to purchase any of its Series 2008 Bonds on the open market. In lieu of mandatory redemption, the Commission may surrender to the Trustee for cancellation Series 2008 Bonds purchased on the open market, and such Series 2008 Bonds shall be cancelled by the Trustee. If any Series 2008 Bonds are so cancelled, the Commission may designate the Mandatory Sinking Account Payments or portions thereof within such Series 2008 Bonds so purchased that are to be reduced as a result of such cancellation. General Redemption Provisions Selection of Series 2008 Bonds for Redemption. The Commission will designate which maturities of Series 2008 Bonds are to be redeemed; provided that Series 2008 Bonds registered in the name of a 2008 Liquidity Provider must be redeemed prior to redeeming any other Series 2008 Bonds. If less than all Series 2008 Bonds maturing on any one date are to be redeemed at any one time, DTC's practice is to determine by lot the amount of the interest of each DTC Direct Participant in the Series 2008 Bonds to be redeemed. For purposes of such selection, the Series 2008 Bonds shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. The Commission may designate the Mandatory Sinking Account Payments, or portions thereof, that are to be reduced as a result of such redemption. Notice of Redemption. The Trustee will send each notice of redemption by first class mail not less than 10 nor more than 90 days prior to the redemption date, to DTC, the Remarketing Agent and other parties specified in the Indenture. Conveyance of notices and other communications by DTC to DTC Direct Participants, by DTC Direct Participants to DTC Indirect Participants, and by DTC Direct Participants and DTC Indirect Participants to Beneficial Owners of Series 2008 Bonds will be governed by arrangements among them, and the Commission and the Trustee will not have any responsibility or obligation to send a notice of redemption except to DTC. Failure of DTC to receive any notice of redemption or any defect therein will not affect the sufficiency of any proceedings for redemption. Each notice of redemption shall state (i) the date of the notice, (ii) the date of issue of the Series 2008 Bonds, (iii) the redemption date, (iv) the Redemption Price, (v) the place or places of redemption, including the name and address of the Trustee, (vi) the maturity, (vii) the CUSIP numbers, if any, and (viii) in the case of Series 2008 Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Rescission. The Commission may, at its option, prior to the date fixed for redemption in any notice of redemption rescind and cancel such notice of redemption by written notice of the Commission to the Trustee and the Trustee shall mail notice of such cancellation to the recipients of the notice of redemption being cancelled. Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the redemption price of, together with interest accrued to the redemption date on, the Series 2008 Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Series 2008 Bonds (or portions thereof) so called for redemption shall become due and payable at the redemption price specified 106 in such notice, together with interest accrued thereon to the date fixed for redemption, interest on the Series 2008 Bonds so called for redemption shall cease to accrue, such Series 2008 Bonds (or portions thereof) shall cease to be entitled to any benefit or security under the Indenture, and the Holders of such Series 2008 Bonds shall have no rights in respect thereof except to receive payment of said redemption price and accrued interest to the date fixed for redemption. Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the Commission shall execute, and the Trustee shall authenticate and deliver to the Holder of such Series 2008 Bond, at the expense of the Commission, a new Bond or Bonds of Minimum Authorized Denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered, at the same maturity and terms as the surrendered Bond. Mandatory Tender Provisions Tenders of Series 2008 Bonds and Deliveries of Converted Series 2008 Bonds Are Subject to DTC Procedures. As long as the book -entry only system is in effect with respect to the Series 2008 Bonds, all tenders for purchase and deliveries upon Conversion of Series 2008 Bonds tendered for purchase or subject to mandatory tender under the provisions of the Indenture shall be made pursuant to DTC's procedures as in effect from time to time, and neither the Commission; the Trustee, nor any Remarketing Agent shall have any responsibility for or liability with respect to the implementation of these procedures. For a description of the tender procedures through DTC, see "APPENDIX D — BOOK —ENTRY SYSTEM." Mandatory Tender for Purchase. The Series 2008 Bonds will be subject to mandatory tender for purchase, at a Purchase Price equal to the principal amount thereof, on the Interest Payment Date immediately following the initial Long -Term Rate Period; provided, however, that if all Series 2008 Bonds are not successfully remarketed on such date, the mandatory tender will be cancelled. See "Initial Rate Period" above. After the initial Long -Term Rate Period, the Series 2008 Bonds will be subject to mandatory tender for purchase on the date of each proposed Conversion to a new Interest Rate Determination Method and on such other dates as are specified in the Indenture. PLAN OF FINANCE The Series 2008 Bonds are being issued in order to refinance all of the outstanding principal amount of the Commercial Paper Notes and all or a portion of the accrued interest thereon, (ii) fund capitalized interest on the Series 2008 Bonds to December 1, 2009, (iii) fund a reserve fund for the Series 2008 Bonds, and (iv) pay costs of issuance of the Series 2008 Bonds. In March 2005, the Commission authorized the issuance of its Commercial Paper Notes (Limited Tax Bonds) Series A in an aggregate principal amount up to $110,000,000 and Series B in an aggregate principal amount up to $75,000,000. As of April 15, 2008, there is $110,005,000 outstanding principal amount of Notes. The Notes are secured by a pledge of the Sales Tax Revenues subordinate to the pledge of the Sales Tax Revenues in favor of the holders of the Series 2008 Bonds. The principal of and interest on the Notes are payable from draws under an irrevocable, direct pay letter of credit issued by Bank of America, N.A. (the `Bank"), pursuant to a reimbursement agreement dated as of March 1, 2005 ("Reimbursement Agreement") by and between the Commission and the Bank. The stated amount of the letter of credit may not exceed $190,000,000. The letter of credit expires March 29, 2010, unless terminated earlier as provided 12 • 107 • • • in the Reimbursement Agreement. The Commission's obligation to reimburse the Bank for draws under the letter of credit to pay the principal of and interest on the Notes is secured by a pledge of Sales Tax Revenues subordinate to the pledge in favor of the holders of the Series 2008 Bonds and on parity with the obligation to pay Note holders. The Commission may continue to issue the Notes while the Series 2008 Bonds are outstanding. The Commission has entered into the Initial Swap Agreements, in a combined notional amount of $185,000,000, which Initial Swap Agreements have an effective date of October 1, 2009 and expire on June 1, 2029. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS — Initial Swap Agreements" herein._ Pursuant to the Initial Swap Agreements, the Commission has agreed to pay a fixed interest rate to the Bank and Lehman, and the Bank and Lehman have agreed to pay the Commission a floating rate of interest. To secure its obligation to make regularly scheduled payments to the Bank and Lehman pursuant to the Initial Swap Agreements, until the Commission issues variable rate debt payable from the Sales Tax Revenues on a senior lien basis to the Notes, the Commission has pledged the Sales Tax Revenues on a parity basis with the obligation to pay principal of and interest on the Notes and to reimburse the Bank for draws under the letter of credit; after issuance of any variable rate debt payable from the Sales Tax Revenues on a senior lien basis to the Notes (such as the Series 2008 Bonds), the pledge of Sales Tax Revenues in favor of Lehman and the Bank will be on a parity basis with the pledge of the Sales Tax Revenues in favor of the senior lien variable rate bond holders. Accordingly, the Commission's obligation to make regularly scheduled payments under the Initial Swap Agreements will constitute a Parity Obligation under the Indenture. The Commission's obligation to pay any early termination amounts to Lehman and the Bank pursuant to the Initial Swap Agreements is secured by a pledge of the Sales Tax Revenues subordinate to the pledge in favor of the Series 2008 Bonds and the Notes. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS — Initial Swap Agreements". APPLICATION OF SERIES 2008 BOND PROCEEDS The proceeds from the sale of the Series 2008 Bonds will be applied as follows: Sources of Funds: Principal Amount of Bonds $ [Plus/Less]: Original Issue [Premium/Discount] Total Sources: $ Uses of Funds: Notes Escrow 2008 Capitalized Interest Fund(1) Costs of Issuance(2) Reserve Fund Total Uses: 0) Capitalized interest calculated from the date of the delivery of the Series 2008 Bonds to December 1, 2009. (2) Includes underwriters' discount, rating agency fees, trustee fees, printing costs, bond counsel, disclosure counsel and financial advisor fees and expenses and other miscellaneous expenses. 13 108 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS Limited Obligation The Series 2008 Bonds are limited obligations of the Commission and are payable as to both principal and interest, and any premium upon redemption thereof, exclusively from the Revenues, which principally include Sales Tax Revenues, pledged under the Indenture. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OR PUBLIC AGENCY THEREOF, OTHER THAN THE COMMISSION TO THE EXTENT OF THE PLEDGED REVENUES, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2008 BONDS. Pledge of Revenues All Sales Tax Revenues are irrevocably pledged by the Commission to secure the punctual payment of the principal of, premium, if any, and interest on the Series 2008 Bonds and any additional Series of Bonds issued under the Indenture (collectively, the "Bonds") and all amounts owing on any Parity Obligations in accordance with their terms. The Sales Tax Revenues shall not be used for any other purpose while any of the Bonds or Parity Obligations remain Outstanding, except as permitted by the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. Additionally, all amounts (including proceeds of the Bonds) held by the Trustee under the Indenture (except for amounts held in the Rebate Fund, any Letter of Credit Account and any Bond Purchase Fund) are pledged to secure the payment of all amounts owing on the Bonds and Parity Obligations, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. Pursuant to the Indenture, the pledge of Sales Tax Revenues constitutes a first lien to secure the Bonds and Parity Obligations. The pledge of Sales Tax Revenues shall be irrevocable until all Bonds issued under the Indenture, including the Series 2008 Bonds, and all Parity Obligations are no longer Outstanding. The Sales Tax Revenues pledged to the payment of the Bonds and Parity Obligations shall be applied without priority or distinction of one over the other and the Sales Tax Revenues shall constitute a trust fund for the security and payment of the Bonds and Parity Obligations; but nevertheless out of Sales Tax Revenues certain amounts may be applied for other purposes as provided in the Indenture. For a detailed description of the Sales Tax and projected receipts of Sales Tax Revenues, see "THE SALES TAX" herein. Revenue Fund; Allocation of Revenues As long as any Bonds are Outstanding or any Parity Obligations remain unpaid, the Commission has assigned the Sales Tax Revenues to the Trustee and shall cause the Board of Equalization to transmit the same directly to the Trustee. The Sales Tax Revenues shall be 14 • 109 • • • received and held in trust by the Trustee for the benefit of the Holders of the Bonds and any Parity Obligations. The Trustee shall forthwith deposit all Sales Tax Revenues in the Revenue Fund, maintained and held in trust by the Trustee, when and as such Sales Tax Revenues are received by the Trustee. See "APPENDIX C—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Allocation of Revenues." Investment income on amounts held by the Trustee (other than amounts held in the Rebate Fund or for which particular instructions are provided) shall also be deposited in the Revenue Fund. The Commission has also pledged to the Trustee all Swap Revenues. In each month while Bonds remain Outstanding, the Trustee is required to set aside receipts of Sales Tax Revenues in the following respective funds, amounts and order of priority (provided that deficiencies in any previously required deposit shall be made up prior to the deposit to a fund subsequent in priority and further provided that set asides or transfers required with respect to Parity Obligations shall be made on a parity basis, as provided in the Indenture): 1. Interest Fund. The Indenture requires the Trustee to make monthly deposits in the Interest Fund in an amount equal to (a) one -sixth of the aggregate half - yearly amount of interest becoming due and payable on Outstanding Current Interest Bonds (other than Bonds constituting Variable Rate Indebtedness) during the ensuing six- month period, plus (b) the aggregate amount of interest to accrue during that month, calculated as provided in the Indenture, on the Outstanding VariableRateIndebtedness;- provided that all Swap Revenues received with respect to Interest Rate Swap Agreements that are Parity Obligations shall be deposited in the Interest Fund and credited to the above -required deposits, and that payments on such Interest Rate Swap Agreements (other than fees and expenses and termination payments) shall be payable from the Interest Fund and the above -required deposits shall be adjusted to include such payments. 2. Principal Fund; Sinking Accounts. The Indenture also requires the Trustee to make monthly deposits in the Principal Fund in an amount equal to at least (a) one -sixth of the aggregate semiannual amount of principal, accreted value, if applicable, becoming due and payable within the next six months on Outstanding Bonds having semiannual maturity dates, plus (b) one -twelfth of the aggregate yearly amount of principal, accreted value, if applicable, becoming due and payable within the next twelve months on Outstanding Bonds having annual maturity dates, plus (c) one -sixth of the aggregate of the Mandatory Sinking Account Payments to be paid during the next six- month period into the respective Sinking Accounts for the Term Bonds of all Series for which Sinking Accounts have been created and for which semiannual mandatory redemption is required from said Sinking Accounts, plus (d) one -twelfth of the aggregate of the Mandatory Sinking Account Payments to be paid during the next 12-month period into the respective Sinking Accounts for the Term Bonds of all Series for which Sinking Accounts have been created and for which annual mandatory redemption is required from such Sinking Accounts. 3. Bond Reserve Fund. The Indenture also requires the Trustee to make deposits to the Bond Reserve Fund as set forth below. See "—Bond Reserve Fund" below. 4. Subordinate Obligations Fund. As long as any Subordinate Obligations remain unpaid, any Revenues remaining in the Revenue Fund after the transfers 15 110 described in (1), (2) and (3) above have been made shall be transferred to the Subordinate Trustee. After the Subordinate Trustee has made the required deposit of Revenues under the Subordinate Indenture, the Subordinate Trustee shall transfer any remaining Revenues back to the Trustee. 5. Fees and Expenses Fund. At the direction of the Commission, after the transfers described in (1), (2), (3) and (4) above have been made, the Trustee is required to deposit as soon as practicable in each month in the Fees and Expenses Fund (i) amounts necessary for payment of fees, expenses and similar charges (including fees, expenses and similar charges relating to any Liquidity Facility or Credit Enhancement for the Bonds or any Parity Obligations) owing in such month or the following month by the Commission in connection with the Bonds or any Parity Obligations and (ii) amounts necessary for payment of fees, expenses and similar charges owing in such month or the following month by the Commission in connection with Subordinate Obligations. The Commission shall inform the Trustee of such amounts, in writing, on or prior to the first Business Day of each month. Any Revenues remaining in the Revenue Fund after the foregoing transfers described in (1), (2), (3), (4) and (5) above, except as the Commission shall otherwise direct in writing or as is otherwise provided in a supplemental indenture, shall be transferred to the Commission on the same Business Day or as soon as practicable thereafter. The Commission may use and apply the Revenues when received by it for any lawful purpose of the Commission, including . the redemption of Bonds upon the terms and conditions set forth in the supplemental indenture relating to such Bonds and the purchase of Bonds as and when and at such prices as it may determine. See "APPENDIX C—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Allocation of Revenues" and " — Definitions" for a more complete discussion. Bond Reserve Fund Upon issuance of the Series 2008 Bonds, a 2008 Bonds Reserve. Fund is established pursuant to the Indenture to be maintained in an amount equal to the 2008 Bonds Reserve Requirement, for the purpose of paying principal of and interest on the Series 2008 Bonds when due when insufficient moneys for such payment are on deposit in the Principal Account and the Interest Account, and for such other purposes as are specified in the Indenture. The initial 2008 Bonds Reserve Requirement under the Indenture in the amount of $ will be funded from the proceeds of the sale of the Series 2008 Bonds. "2008 Bonds Reserve Requirement" is defined under the Indenture as follows: as of any date of calculation, the least of (i) 10% of the aggregate original principal amount of Series 2008 Bonds (or, if the amount of any original issue discount or premium exceeds 2%, 10% of the issue price of the Series 2008 Bonds), (ii) 125% of average Annual Debt Service for the Series 2008 Bonds or (iii) 100% of Maximum Annual Debt Service for the Series 2008 Bonds. Except as otherwise provided in the Indenture, upon the occurrence of any deficiency in the Bond Reserve Fund, the Trustee shall deposit in the Bond Reserve Fund, as soon as possible in each month, until the Balance therein is at least equal to the 2008 Bonds Reserve Requirement, one -twelfth (1/12th) of the aggregate amount of each unreplenished prior withdrawal from the Bond Reserve Fund or decrease resulting from any required valuation of the investments in the Bond Reserve Fund. 16 111 • • In lieu of a cash deposit, the Commission may fulfill all or a portion of its obligation to fund the Bond Reserve Fund by depositing a letter of credit, surety bond or insurance policy, as provided in the Indenture. See "APPENDIX C—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE - Funding and Application of Bond Reserve Fund" and " — Definitions" for a more complete discussion. Additional Bonds and Parity Obligations Under the Indenture, the Commission may issue other obligations payable in whole or in part from Sales Tax Revenues, subject to the terms and conditions contained in the Indenture. Issuance of Additional Series of Bonds. The Commission may by Supplemental Indenture establish one or more additional Series of Bonds payable from Sales Tax Revenues and secured by the pledge made under the Indenture equally and ratably with the Series 2008 Bonds, but only upon compliance by the Commission with the provisions of the Indenture. Certain of the applicable provisions of the Indenture are described below: (a) No Event of Default shall have occurred and then be continuing. (b) If so required in the Supplemental Indenture providing for the issuance of such Series, either (i) a Bond Reserve Fund shall be established to provide additional security for such Series of Bonds or (ii) the balance in the existing Bond Reserve Fund, forthwith upon the receipt of the proceeds of the sale of Bonds of such Series shall be increased, if necessary, to an amount at least equal to the Bond Reserve Requirement with respect to all Bonds to be considered Outstanding upon the issuance of Bonds of such Series. Said deposit may be made from the proceeds of the sale of Bonds of such Series or from other funds of the Commission or from both such sources or in the form of a letter of credit or surety bond or insurance policy as described under "APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE - Funding and Application of Bond Reserve Fund." (c) The Commission shall place on file with the Trustee a Certificate of the Commission certifying that the amount of Sales Tax Revenues and 1988 Sales Tax Revenues collected during the Fiscal Year for which audited financial statements are available preceding the date on which such additional Series of Bonds will become Outstanding shall have been at least equal to 1.5 times Maximum Annual Debt Service on all Series of Bonds and Parity Obligations then Outstanding and the additional Series of Bonds then proposed to be issued, which Certificate shall also set forth the computations upon which such Certificate is based. Nothing in the Indenture shall prevent or be construed to prevent the Supplemental Indenture providing for the issuance of an additional Series of Bonds from pledging or otherwise providing, in addition to the security given or intended to be given by the Indenture, additional security for the benefit of such additional Series of Bonds or any portion thereof Issuance of Refunding Bonds. Refunding Bonds may be authorized and issued by the Commission without compliance with the provisions of the Indenture described above under "Issuance of Additional Series of Bonds" and other terms of the Indenture; provided that Maximum Annual Debt Service on all Bonds and Parity Obligations Outstanding following the issuance of such Refunding Bonds is less than or equal to Maximum Annual Debt Service on all Bonds and Parity Obligations Outstanding prior to the issuance of such Refunding Bonds. 17 112 Issuance of Parity Obligations. The Commission may also issue Parity Obligations which will have, when issued, an equal lien and charge upon the Sales Tax Revenues, provided that the conditions to the issuance of such Parity Obligations set forth in the Indenture are satisfied, including satisfaction of the coverage test described in subsection (c) above under the caption "Issuance of Additional Series of Bonds (unless such Parity Obligations are being issued for refunding purposes, in which case the coverage test shall not apply)." As defined in the Indenture, "Parity Obligations" means any indebtedness, installment sale obligation, lease obligation or other obligation of the Commission for borrowed money, the Initial Swap Agreements and any other Interest Rate Swap Agreement (excluding fees and expenses and termination payments on Interest Rate Swap Agreements) entered into in connection with a Series of Bonds, in each case incurred in accordance with the provisions of the Indenture and having an equal lien and charge upon the Sales Tax Revenues and therefore being payable on a parity with the Bonds (whether or not any Bonds are Outstanding). The Commission's obligation to make regularly scheduled payments under the Initial Swap Agreements constitutes a Parity Obligation under the Indenture. Initial Swap Agreements The Commission has entered into the following interest rate swap agreements (collectively, the "Initial Swap Agreements"), in a combined notional amount of $185,000000, which Initial Swap Agreements have an effective date of October 1, 2009 and expire on June 1, 2029: a. An ISDA Master Agreement, dated as of August 22, 2006, between the Bank and the Commission, as supplemented by the Schedule, dated as of August 22, 2006 and the confirmation of a transaction entered into on August 22, 2006 between the Bank and the Commission (the "Bank Swap Agreement"); and b. An ISDA Master Agreement, dated as of August 22, 2006, between Lehman Brothers Derivative Products Inc. ("Lehman") and the Commission, as supplemented by the Schedule, dated as of August 22, 2006 and the confirmation of a transaction entered into on August 22, 2006 between Lehman and the Commission (the "Lehman Swap Agreement"). The Commission's obligation to make regularly scheduled payments to the swap counterparties under the Initial Swap Agreements is secured by Sales Tax Revenues on a parity basis with the Commission's obligation to pay principal of and interest on the Series 2008 Bonds, and therefore such obligation constitutes a Parity Obligation under the Indenture. The Commission's obligation to make any early termination payment under the Initial Swap Agreements is secured by a pledge of Sales Tax Revenues subordinate to the pledge of Sales Tax Revenues in favor of the Series 2008 Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations. The Bank Swap Agreement is in the notional amount of $100,000,000. Pursuant to this agreement, the Commission has agreed to pay the Bank a floating rate equal to 67% of USD- LIBOR (One Month) and the Bank has agreed to pay the Commission a fixed rate equal to 3.6790%. The Bank Swap Agreement is subject to early termination in the event that the 18 • 113 • unenhanced ratings on the Series 2008 Bonds issued by Moody's and S&P fall below investment grade or are withdrawn or suspended; a reduction in the long-term unsubordinated ratings of the Bank below investment grade can also result in an early termination of the Bank Swap Agreement. The Commission has the option of terminating the Bank Swap Agreement upon two Business Days' notice provided it has sufficient funds to pay any early termination amount. The Lehman Swap Agreement is in the notional amount of $85,000,000. Pursuant to this agreement, the Commission has agreed to pay Lehman a floating rate equal to 67% of USD- LIBOR (One Month) and Lehman has agreed to pay the Commission a fixed rate equal to 3.6790%. Under certain circumstances, Lehman's rights and obligations under the Lehman Swap Agreement can be assigned to Lehman Brothers Special Financing Inc. ("LBSF") in which event LBSF's obligations would be guaranteed by Lehman Brothers Holdings Inc. The Lehman Swap Agreement is subject to early termination in the event that the unenhanced ratings on the Series 2008 Bonds issued by Moody's and S&P fall below investment grade or are withdrawn or suspended; if LBSF has been substituted for Lehman, a reduction in the unenhanced unsecured senior debt ratings of Lehman Brothers Holdings Inc. below investment grade can also result in an early termination of the Lehman Swap Agreement. The Commission has the option of terminating the Lehman Swap Agreement upon two Business Days' notice provided it has sufficient funds to pay any early termination amount. Subordinate Obligations The Commission may issue obligations ("Subordinate Obligations") payable out of Sales Tax Revenues on a basis subordinate to the payment of the principal, premium, interest and reserve fund requirements for the Bonds and all Parity Obligations, as the same become due and payable. The Notes and the credit agreements supporting the Notes constitute Subordinate Obligations under the Indenture. The Commission's obligation to make early termination payments under the Initial Swap Agreements is secured by a pledge of the Sales Tax Revenues subordinate to the pledge in favor of the Series 2008 Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations. THE SALES TAX General The Act, among other things, authorizes the Commission to develop a countywide consensus on a proposed transaction expenditure plan to be submitted to the voters as part of an ordinance imposing a retail transactions and use tax in the County in accordance with the provisions of the California Transactions and Use Tax Law (Revenue and Taxation Code Section 7251, et. seq.). In accordance with the Act, on November 5, 2002, more than two-thirds of the voters of the County voting on the measure approved Measure "A", which authorized the imposition of the Sales Tax in the County commencing in July 2009. The Sales Tax will be collected for a thirty year period. The Sales Tax consists of a one-half of one percent (1/2%) sales tax on the gross receipts of retailers from the sale of tangible personal property sold in the county and a use tax at the same rate upon the storage, use or other consumption in the county of such property purchased from any retailer for storage, use or other consumption in the county, subject to certain limited exceptions described below. 19 114 The one-half of one percent sales tax imposed in the county for transportation purposes and administered by the Commission, is in addition to a seven and one -quarter percent sales tax levied statewide by the State of California. In general, the statewide sales tax applies to the gross receipts of retailers from the sale of tangible personal property. The statewide use tax is imposed on the storage, use or other consumption in the state of property purchased from a retailer for such storage, use or other consumption. Since the use tax does not apply to cases where the sale of the property is subject to the sales tax, the application of the use tax generally is to purchases made outside of the state for use within the state. The Sales Tax is generally imposed upon the same transactions and items subject to the sales and use tax levied statewide by the state (hereinafter collectively referred to as the "State Sales Tax"), with generally the same exceptions. Many categories of transactions are exempt from the State Sales Tax and the Sales Tax. The most important of these exemptions are: sales of food products for home consumption, prescription medicine, edible livestock and their feed, seed and fertilizer used in raising food for human consumption, and gas, electricity and water when delivered to consumers through mains, lines and pipes. In addition, "Occasional Sales" (i.e., sales of property not held or used by a seller in the course of activities for which he or she is required to hold a seller's permit) are generally exempt from the State Sales Tax and from the Sales Tax; however, the "Occasional Sales" exemption does not apply to the sale of an entire business and other sales of machinery and equipment used in a business. Sales of property to be used outside the county which are shipped to a point outside the county, pursuant to the contract of sale, by delivery to such point by the retailer, or by delivery by the retailer to a carrier for shipment to a consignee, at such point, are exempt from the State Sales Tax and from the Sales Tax. Action by the State Legislature or by voter initiative could change the transactions and items upon which the State Sales Tax and the Sales Tax are imposed. The State Legislature could further change the transactions and items upon which the State Sales Tax and the Sales Tax are imposed. In addition, other voter initiative measures could be adopted, further affecting the receipt of sales tax revenues. Such changes or amendments could have either an adverse or beneficial effect on the sales tax revenues. The Commission is not currently aware of any proposed legislative change which would have a material adverse effect on sales tax revenues. See also "INVESTMENT CONSIDERATIONS Proposition 218" below. Collection of Sales Tax Revenues Collection of the Sales Tax is administered by the California State Board of Equalization (the 'BOE" or the "State Board of Equalization"). The Commission and the State Board of Equalization have entered into an agreement for state administration of district transactions and use taxes to authorize payment of Sales Tax Revenues directly to the Trustee. The State Board of Equalization, after deducting amounts payable to itself, is required to remit the balance of amounts received from the Sales Tax directly to the Trustee. The Trustee is required to apply the Sales Tax Revenues to make deposits to the funds and accounts established under the Indenture and to transfer the remaining amounts to U.S. Bank Trust National Association,, as issuing and paying agent for the Notes (the "Issuing and Paying Agent"). The remaining unapptied Sales Tax Revenues, if any, are transferred to the Commission for use for any purpose contemplated by the ordinance. The fee charged by the BOE to the Commission for fiscal year 2006-07 for collection of the 1988 Sales Tax was $1,395,000. The fee that the BOE is authorized to charge 20 115 i • for collection of The Sales Tax is determined by State Legislation; there can be no assurances that the amount of this fee or the method for determining the amount of the fee will be the same in July 2009, when collection of the Sales Tax commences. 1988 Sales Tax Revenues The 1988 Sales Tax (as defined below) represents an additional source of revenue to the Commission, is a separate tax from the Sales Tax and does not secure the Series 2008 Bonds. On November 8, 1988, more than two-thirds of the voters approved the Riverside County Transportation Commission Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance (the "Prior Ordinance") which authorized the imposition of a -retail transactions and use tax of one-half of one percent (0.5%) of the gross receipts of retailers from the sales of all tangible personal property sold at retail in the county and a use tax at the same rate upon the storage, use or other consumption in the County of Riverside ("County") of such property purchased from any retailer for storage, use or other consumption in the county, subject to certain limited exceptions (the "1988 Sales Tax"). The 1988 Sales Tax ceases to be effective on June 30, 2009, with major collection of the 1988 Sales Tax to be received by the Commission no later than September 30, 2009. The Commission has issued indebtedness secured by the 1988 Sales Tax and expects all outstanding principal and interest on these obligations to be fully paid on or before June 1, 2009. The Sales Tax does not serve as security for the repayment of the obligations secured by the 1988 Sales Tax. The following table shows the 1988 Sales Tax remitted to the Commission during the fiscal years ended June 30, 1997 through June 30, 2007. RIVERSIDE COUNTY TRANSPORTATION COMMISSION HISTORICAL 1988 SALES TAX REVENUE RECEIPTS Fiscal Year Net Sales % Change Ended June 30 Tax Receipts") From Prior Fiscal Year 1997 $57,888,147 4.46 1998 63;496,222 9.69 1999 70,396,828 10.87 2000 81,543,732 15.83 2001 89,464,634 9.71 2002 94,400,890 5.52 2003 102,817,407 8.92 2004 117,632,722 14.41 2005 134,516,986 14.35 2006 155,206,029 15.38 2007 157,092,807 1.22 (1) Net of State Board of Equalization administrative fee. Source: The Commission 21 116 The Series 2008 Bonds are not secured by 1988 Sales Tax Revenues. Annual 1988 Sales Tax Revenues to be received as projected for the Fiscal Year ended June 30, 2008, total $145,000,000. The projection of 1988 Sales Tax receipts for Fiscal Year ended June 30, 2008 represents a 7.70% decline from Fiscal Year ended June 30, 2007. This decline is higher than what is being experienced at the state and national level with regard to sales tax receipts for this period. There can be no assurances if and when sales tax receipts will begin to increase. For a summary of historical taxable retail sales within the County see the table entitled "County of Riverside, Taxable Sales Transactions" in APPENDIX B of this Official Statement. RIVERSIDE COUNTY TRANSPORTATION COMMISSION General The Commission is charged with a number of important responsibilities in serving the residents of the County. Administering the prior sales tax program, which has raised more than $1 billion, is by far the most prominent of these responsibilities. The Commission, which has the responsibility of placing future transportation ballot measures before the public, was successful in November 2002 in obtaining more than two-thirds voter approval of the Sales Tax. In addition to the Commission's Measure A responsibilities, the Commission has also been designated as the congestion management agency (the "CMA") for the County. As the CMA, the Commission has developed a congestion management program that more effectively utilizes transportation funds by linking land use, transportation and air quality efforts. The Commission serves as the service authority for freeway emergencies and operates the freeway service patrol (the "FSP") for the County. The results of these programs — 650 call boxes along the County roadways and 20 FSP tow trucks providing assistance to more than 55,000 motorists annually — are among the most visible of the Commission's programs. In 1998, the State Legislature gave new authority to the Commission by changing the way funding is distributed from the State Transportation Improvement Program, which is funded through state and federal gas taxes. In simple terms, counties no longer apply to the State for funding their most urgent transportation needs. Instead, State transportation dollars are given directly as an entitlement, leaving the decision -making about transportation spending up to the designated county transportation commission like the Commission. While this gives the Commission greater control over how transportation dollars are spent, it also requires a much higher level of local communication and participation to determine how these dollars are spent throughout a county with so many transportation needs. The Commission has the responsibility to program funds received under the California Transportation Development Act, a statewide source of funding for transit purposes, primarily to the County's major public transit providers, although the Commission has no responsibility to provide transit services. In order to enhance county -wide participation and improve its decision -making, the Commission made a major change in its structure in 1999 by expanding the Board from eight members to thirty. The expanded Commission ensures better representation throughout the 22 117 • • • County and provides the participatory framework for continued success among these responsibilities. Commissioners Section 130053 of the California Public Utilities Code specifies that the Commission consists of five members of the Riverside County Board of Supervisors, one member from each incorporated city in Riverside County (each of whom must be a mayor or member of the City Council) and one non -voting member appointed by the governor of the State of California. The role of the Commission is to act as the policy -making board for Riverside County transportation activities. Executive Staff The Commission's key staff members, the position held by each and a brief statement of the background of each staff member are set forth below. ANNE MAYER, EXECUTIVE DIRECTOR. Anne Mayer was appointed in October 2007 as the Chief Executive Officer of the Commission. She is responsible for overall management of the Commission including execution of operational policies and procedures and all personnel decisions. Ms. Mayer joined the Commission in May 2005 as Deputy Executive Director. Prior to joining the Commission, she was the District 8 Director for the California Department of Transportation (CALTRANS). As District Director, she was responsible for management of the state highway system in San Bernardino and Riverside counties. With over 24 years of experience in the public works field, Ms. Mayer was with CALTRANS for 14 of those years. Ms. Mayer holds a civil engineering degree from Michigan State University. JOHN STANDIFORD, DEPUTY EXECUTIVE DIRECTOR. In January 2008, John Standiford was appointed as Deputy Executive Director for the Commission, he joined the Commission in 1999 and was the Public Affairs Director prior to his new appointment. He also served as the Manager of Government and Media Relations for the Orange County Transportation Authority, where he worked for more than seven years. Earlier in his career, Mr. Standiford worked for three state legislators from the Los Angeles area. He received his bachelor and masters degrees from the University of California, Irvine. THERESIA TREVINO, CHIEF FINANCIAL OFFICER. Ms. Trevino joined the Commission as the Chief Financial Officer in January 2004. Ms. Trevino previously worked as Manager of Accounting and Financial Reporting for the Orange County Transportation Authority. She also served as an adjunct professor for governmental accounting and reporting at the University of Redlands. Ms. Trevino's 19-year public accounting career included 16 years with Ernst & Young LLP. As Senior Manager in its Assurance and Advisory Business Services practice serving government clients, she led the development of the Southern California practice and served as a national technical resource. She is a Certified Public Accountant in California and completed the Executive Management Program at the University of California, Riverside. Ms. Trevino received a bachelor of science degree in accounting from Loyola Marymount University with Magna Cum Laude Honors. 23 118 THE TRANSPORTATION EXPENDITURE PLAN On November 5, 2002, 69.2 percent of the voters of the County approved Measure "A" — The Riverside County Transportation Commission Transportation Expenditure Plan (the "Plan") and Retail Transaction and Use Tax Ordinance which expressed the following concerns in its preamble: "The transportation system in Riverside County is rapidly deteriorating and our population and economy are growing rapidly. Maintenance and repairs of existing roadways and improvements to relieve congestion cannot be accomplished with available funds. Without additional funds, the system will bog down and pavement will crumble into permanent disrepair... Local governments must either generate revenues to expand our system and maintain our investments or watch the system collapse and endanger the health, welfare and safety of all Riverside County residents." The goals of the Plan are as follows: (1) Maintain and improve the quality of life in Riverside County by supplementing existing funds for transportation; (2) provide for accountability in the expenditure of taxpayer funds; (3) provide for equity in the distribution of Measure "A" Revenues; and (4) provide for local control of the Transportation Improvement Program. To address the concerns as expressed in the preamble, and to accomplish its goals and policies, the ordinance provided that sales tax revenues be distributed to the specific geographic areas of Riverside County (i.e., Western County, Coachella Valley, and Palo Verde Valley) based on their proportionate share of revenues generated in the County, and that funds be allocated for highway and regional arterial projects, local streets and roads, transit and commuter rail, new corridors and economic development. In the Western County, $370 million is to be used for new corridor projects, $1.020 million for highway projects, $300 million for regional arterial projects, $390 million for public transit, $970 million for local street and road improvements, $270 million for bond financing costs, and the remaining $40 million for economic development projects. In the Coachella Valley, fifty percent is to be earmarked for its highway and regional arterial system, thirty-five percent for local streets and roads, and the remaining fifteen percent for transit. All Palo Verde Valley funds are designated for the maintenance of local streets and roads. INVESTMENT CONSIDERATIONS Economy of the County and the State The level of Sales Tax Revenues collected at any time is dependent upon the level of retail sales within the County, which level of retail sales is, in turn, dependent upon the level of economic activity in the County and in the State generally. The economy of the County is currently experiencing a slowdown as evidenced by an increased unemployment rate, a slowdown in total personal income and taxable sales, a drop in residential building permits, a 24 119 i decline in the rate of home sales and the median price of single-family homes and condominiums and in increase in notices of default on mortgage loans secured by homes and condominiums. Any substantial deterioration in the level of economic activity within the County or in the State could have a material adverse impact upon the level of Sales Tax Revenues and therefore upon the ability of the Commission to issue sales tax revenue bonds in the future. For information relating to current economic conditions within the County and the State see "APPENDIX B - COUNTY DEMOGRAPHIC AND ECONOMIC INFORMATION." No Liquidity Facility There is no initial or planned third -party liquidity facility supporting the purchase of the Series 2008 Bonds. If the remarketing agents appointed by the Commission are unable to remarket all the Series 2008 Bonds on the Initial Mandatory Tender Date, the Series 2008 Bonds will continue to be owned by the then current Holders and will commence to bear interest at a Weekly Rate of 11% per annum until such time as the Series 2008 Bonds are successfully remarketed at a Daily Rate, Weekly Rate, Long -Term Rate, Commercial Paper Rate or Fixed Rate. See "THE SERIES 2008 BONDS — Initial Rate Period" herein. The Sales Tax With limited exceptions, the Sales Tax will be imposed upon the same transactions and items subject to the sales tax levied statewide by the State. The State Legislature or the voters within the State, through the initiative process, could change or limit the transactions and items upon which the statewide sales tax and the Sales Tax are imposed. Any such change or limitation could have an adverse impact on the Sales Tax Revenues collected. For a further description of the Sales Tax, see "THE SALES TAX." Proposition 218 On November 5, 1996, voters in the State approved an initiative known as the Right to Vote on Taxes Act ("Proposition 218"). Proposition 218 added Articles XIIIC and XIIID to the California Constitution. Article XIIIC requires majority voter approval for the imposition, extension or increase of general taxes and two-thirds voter approval for the imposition, extension or increase of special taxes by a local government, which is defined to include local or regional governmental agencies such as the Commission. The Sales Tax was approved by more than two- thirds of the voters in Riverside County and is therefore in compliance with the requirements of Proposition 218. Article XIIIC also removes limitations that may have applied to the voter initiative power with regard to reducing or repealing previously authorized local taxes, even previously voter -approved taxes like the Sales Tax. In the view of the Commission, however, any attempt by the voters to use the initiative provisions of Proposition 218 to rescind or reduce the levy and collection of the Sales Tax in a manner which would prevent the payment of debt service on the Notes, would violate the Impairment Clause of the united States Constitution and, accordingly, would be precluded. However, the interpretation and application of Proposition 218 will ultimately be determined by the courts. 25 120 Further Initiatives Proposition 218 was adopted as a measure that qualified for the ballot pursuant to California's initiative process. From time to time other initiative measures could be adopted, which may affect the Commission's ability to levy and collect the Sales Tax, or change the types of products or items subject to a sales tax. Loss of Tax Exemption As discussed under "TAX MAI IERS," interest on the Series 2008 Bonds could become includable in federal gross income, possibly from the date of issuance of the Series 2008 Bonds, as a result of acts or omissions of the Commission subsequent to the issuance of the Series 2008 Bonds. Should interest become includable in federal gross income, the Series 2008 Bonds are not subject to redemption by reason thereof and will remain outstanding until maturity. FINANCIAL STATEMENTS The financial statements of the Commission for the Fiscal Year ended June 30, 2007, included in APPENDIX A of this Official Statement, have been audited by McGladrey & Pullen, LLP, certified public accountants, as stated in their report therein. McGladrey & Pullen, LLP was not requested to consent to the inclusion of its report in APPENDIX A, nor has it undertaken to update its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by McGladrey & Pullen, LLP with respect to any event subsequent to the date of its report. Except as described herein, the Commission represents that there has been no material adverse change in its financial position since June 30, 2007. LITIGATION There is not now pending any litigation restraining or enjoining the issuance or delivery of the Series 2008 Bonds or questioning or affecting the validity of the Bonds or the proceedings and authority under which they are to be issued. Neither the creation, organization or existence of the Commission, nor the title of the present members of the Commission to their respective offices, is being contested. TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Commission ("Bond Counsel"), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2008 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Series 2008 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix E hereto. 26 121 To the extent the issue price of any maturity of the Series 2008 Bonds is less than the amount to be paid at maturity of such Series 2008 Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2008 Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each beneficial owner thereof, is treated as interest on the Series 2008 Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Series 2008 Bonds is the first price at which a substantial amount of such maturity of the Series 2008 Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Series 2008 Bonds accrues daily over the term to maturity of such Series 2008 Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Series 2008 Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Series 2008 Bonds. Beneficial owners of the Series 2008 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2008 Bonds with original issue discount, including the treatment of beneficial owners who do not purchase such Series 2008 Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2008 Bonds is sold to the public. The Series 2008 Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Series 2008 Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Series 2008 Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a beneficial owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such beneficial owner. Beneficial owners of Premium Series 2008 Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. The Code impose various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2008 Bonds. The Commission has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Series 2008 Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Series 2008 Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Series 2008 Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the Series 2008 Bonds may adversely affect the value of, or the tax status of interest on, the Series 2008 Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters. Although Bond Counsel is of the opinion that interest on the Series 2008 Bonds is excluded from gross income for federal income tax purposes and is exempt from State of 27 122 California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Series 2008 Bonds may otherwise affect a beneficial owner's federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the beneficial owner or the beneficial owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Series 2008 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. As one example, on November 5, 2007, the United States Supreme Court heard an appeal from a Kentucky state court which ruled that the United States Constitution prohibited the state from providing a tax exemption for interest on bonds issued by the state and its political subdivisions but taxing interest on obligations issued by other states and their political subdivisions. The introduction or enactment of any such future legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Series 2008 Bonds. Prospective purchasers of the Series 2008 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Series 2008 Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Commission or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Commission has covenanted, however, to comply with the requirements of the Code. Bond Counsel's engagement with respect to the Series 2008 Bonds ends with the issuance of the Series 2008 Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Commission or the beneficial owners regarding the tax-exempt status of the Series 2008 Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the Commission and their appointed counsel, including the beneficial owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax- exempt bonds is difficult, obtaining an independent review of IRS positions with which the Commission legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Series 2008 Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the marketprice for, or the marketability of, the Series 2008 Bonds, and may cause the Commission or the beneficial owners to incur significant expense. CERTAIN LEGAL MATTERS Orrick, Herrington & Sutcliffe LLP, Bond Counsel, will render an opinion with respect to the validity of the Series 2008 Bonds. The proposed form of such approving opinion is attached hereto as APPENDIX E. Bond Counsel assumes no responsibility for the accuracy, completeness, or faimess of this Official Statement. Compensation paid to Bond Counsel, 28 123 • • Disclosure Counsel and Underwriters' Counsel is conditioned upon the successful issuance of the Series 2008 Bonds. Certain legal matters will be passed upon for the Commission by Nossaman, Guthner, Knox & Elliott, LLP, Los Angeles, California, as disclosure counsel, and by Best Best & Krieger LLP, Riverside, California, the general counsel for the Commission. Certain legal matters will be passed upon for the Underwriters by Stradling, Yocca, Carlson & Rauth, Newport Beach, California. RATINGS The Series 2008 Bonds have been assigned ratings of " " by Moody's Investors Service, Inc., " " by Fitch Ratings and " " by Standard & Poor's Ratings Group, a division of the McGraw Hill Companies, Inc. These ratings reflect only the views of the rating agencies, and do not constitute a recommendation to buy, sell or hold securities. The Commission has furnished to the rating agencies certain information respecting the Series 2008 Bonds and the Commission. Generally, rating agencies base their ratings on such information and materials and their own investigations, studies and assumptions. The ratings are subject to revision or withdrawal at any time by the rating agencies, and there is no assurance that the ratings will continue for any period of time or that they will not be lowered or withdrawn. Any reduction or withdrawal of the ratings may have an adverse effect on the market price of the Series 2008 Bonds or the ability to remarket the Series 2008 Bonds. UNDERWRITING Lehman Brothers Inc., as representative of the underwriters of the Series 2008 Bonds, has agreed, subject to certain conditions, to purchase the Series 2008 Bonds at a price of $ (representing $ aggregate principal amount of the Series 2008 Bonds, {plus/less] original issue [premium/discount] of $ and less $ Underwriters' discount). The Purchase Contract provides that the Underwriters will purchase all the Series 2008 Bonds if any are purchased. FINANCIAL ADVISOR The Commission has retained Fieldman, Rolapp & Associates, Irvine, California, as Financial Advisor in connection with the authorization and delivery of the Series 2008 Bonds. Compensation paid to the Financial Advisor is conditioned on the successful issuance of the Series 2008 Bonds. CONTINUING DISCLOSURE The Commission has covenanted for the benefit of the owners and beneficial owners of the Series 2008 Bonds to provide certain financial information and operating data relating to the Commission by not later than 210 days following the end of the Commission's Fiscal Year (presently June 30) (the "Annual Report"), commencing with the report for the 2007-08 Fiscal Year, and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by the Dissemination Agent on behalf of the Commission with each Nationally Recognized Municipal Securities Information Repository (the "NRMSIRs"). The notices of material events will be filed by the Dissemination Agent on behalf of the Commission with the Municipal Securities Rulemaking Board and with the NRMSIRs. The specific nature of the information to be contained in the Annual Report and the notices of material events is set forth under the caption "APPENDIX F — PROPOSED FORM OF CONTINUING 29 124 DISCLOSURE CERTIFICATE." These covenants have been made in order to assist the Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). The Commission is in compliance with all continuing disclosure requirements applicable to its securities. MISCELLANEOUS The references herein to the Act and the Indenture are brief outlines of certain provisions thereof. Such outlines do not purport to be complete and for full and complete statements of such provisions reference is made to said documents or the Act, as the case may be. Copies of the documents mentioned under this heading are available for inspection at the Commission and following delivery of the Series 2008 Bonds will be on file at the offices of the Trustee in Los Angeles, California. References are made herein to certain documents and reports which are brief summaries thereof which do not purport go be complete or definitive. Reference is made to such documents and reports for full and complete statements of the content thereof. Any statement in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Commission and the purchasers or Holders of any of the Series 2008 Bonds. 30 125 • The execution and delivery of this Official Statement has been duly authorized by the Commission. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: 31 126 Executive Director APPENDIX A COMMISSION AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2007 A-1 127 • • • APPENDIX B COUNTY DEMOGRAPHIC AND ECONOMIC INFORMATION Set forth below is certain demographic and economic information with respect to the County of Riverside (the "County"). Such information was provided by the County except as otherwise indicated. Population According to the State Department of Finance, Demographic Research Unit, the County's population was estimated at 2,031,625 as of January 1, 2007, reflecting a 3.3% increase over January 1, 2006. The largest cities in the County are the cities of Riverside, Moreno Valley, Corona, Murrieta, Temecula, Hemet, Indio and Cathedral City. The areas of most rapid population growth continue to be those more populated and industrialized cities in the western and central regions of the County and the southwestern unincorporated region of the County between Sun City and Temecula. The following table sets forth annual population figures as of January 1 of each year for cities located within the County for each of the years listed: B-1 128 • COUNTY OF RIVERSIDE POPULATION OF CITIES WITHIN THE COUNTY (As of January 1) CITY 1990 2000 2004 2005 2006 2007 Banning 20,570 23,562 27,667 28,130 28,128 28,272 Beaumont 9,685 11,384 16,631 19,105 23,145 28,250 Blythe 8,428 12,155 22,197 22,089 22,179 22,625 Calimesa 7,139 7,477 7,482 7,415 7,414 Canyon Lake 9,952 10,847 10,981 10,939 10,969 Cathedral City 30,085 42,647 49,447 50,957 51,081 52,115 Coachella 16,896 22,724 28,144 30,964 35,207 38,486 Corona 76,095 124,966 144,254 144,992 144,661 146,164 Desert Hot Springs 11,668 16,582 18,000 19,507 22,011 23,544 Hemet 36,094 58,812 64,880 66,873 69,544 71,705 Indian Wells 2,647 3,816 4,512 4,810 4,865 4,942 Indio 36,793 49,116 60,167 66,539 71,654 77,146 Lake Elsinore 18,285 28,928 35,983 38,289 40,985 47,634 La Quinta 11,215 23,694 33,099 36,377 38,340 41,092 Moreno Valley 118,779 142,381 157,842 166,385 174,565 180,466 Murrieta 44,282 79,037 85,648 92,933 97,257 Norco 23,302 24,157 25,859 26,846 27,263 27,361 Palm Desert 23,252 41,155 45,604 49,595 49,539 49,752 Palm Springs 40,181 42,807 45,033 46,000 46,437 48,858 Perris 21,460 36,189 42,043 44,880 47,139 50,663 Rancho Mirage 9,778 13,249 15,787 16,520 16,672 16,944 Riverside 226,505 255,166 281,775 287,321 287,820 291,398 San Jacinto 16,210 23,779 27,194 28,618 31,066 34,345 Temecula 27.099 57,716 78.831 81 921 93,923 97,935 TOTALS Incorporated 385,386 1,124,666 1,320,771 1,378,861 1,447,244 1,493,337 Unincorporated 785,027 420,721 484.748 506,766 519,363 538,288 County -Wide 1,170,413 1,545,387 1,805,519 1,885,627 1,966,607 2,031,625 California 29,473,000 33,873,086 36,252,878 36,743,186 37,195,240 37,662,518 Source: U.S. Census Bureau, except that 2004, 2005, 2006 and 2007 data is from the State Department of Finance, Demographic Research Unit (with 2000 DRU Benchmark). Effective Buying Income "Effective Buying Income" is defined as personal income less personal tax and nontax payments, a number often referred to as "disposable" or "after-tax" income. Personal income is the aggregate of wages and salaries, other than labor -related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner -occupants of non -farm dwellings), dividends paid by corporations, interest income from all sources and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local, nontax payments fines, fees, penalties, etc.) and personal contributions to social security insurance and federal retirement payroll deductions. According to U.S. government definitions, the resultant figure is commonly known as "disposable personal income." The following table summarizes the total effective buying income for the County and the State for the period 2001 through 2007. B-2 129 RIVERSIDE COUNTY AND CALIFORNIA TOTAL EFFECTIVE BUYING INCOME, MEDIAN HOUSEHOLD EFFECTIVE BUYING INCOME AND PERCENT OF HOUSEHOLDS WITH INCOMES OVER $50,000(1) Total Median Household Percent of Households Effective Buying Effective Buying with Income(2) Income Income over $50,000 2001 Riverside County $ 25,144,120 $39,293 38.1% California 652,190,282 44,464 44.3 2002 Riverside County 23,617,301 California 650,521,407 2003 Riverside County 25,180,040 California 647,879,427 2004 Riverside County 27,623,743 California 674,721,020 2005 Riverside County 29,468,208 California 705,108,410 2006 Riverside County 32,004,418 California 720,799,048 2007 Riverside County 35,656,620 California 764,120,982 37,480 43,532 38,691 42,484 39,321 42,924 40,275 43,915 41,326 44,681 43,490 46,275 31.9 41.9 34.8 40.5 36.0 41.2 37.1 42.5 38.9 43.7 41.8 45.6 Source: "Survey of Buying Power," Sales & Marketing Management Magazine, dated 2001, 2002, 2003 and 2004 and 2005, and Demographics USA, Trade Dimensions for 2006 and 2007. (1) Estimated. (2) Dollars in thousands. Industry and Employment The County is a part of the Riverside -San Bernardino Primary Metropolitan Statistical Area ("PMSA"), which includes all of Riverside and San Bernardino Counties. In addition to varied manufacturing employment, the Riverside -San Bernardino PMSA has large and growing commercial and service sector employment, as reflected in the following table. B-3 130 • INDUSTRY RIVERSIDE-SAN BERNARDINO-Ontario PMSA ANNUAL AVERAGE EMPLOYMENT(') (In Thousands) 2002 2003 2004 2005 2006 2007 Agriculture 20.3 20.3 18.7 18.3 17.2 16.8 Construction 90.9 99.0 111.8 123.3 129.5 112.8 Finance, Insurance and Real Estate 39.5 42.6 45.7 49.0 51.8 50.1 Government 212.7 211.6 212.5 220.4 224.2 225.7 Manufacturing: 115.4 116.1 120.1 121.0 124.0 118.9 Nondurables 33.4 33.7 34.6 35.0 36.4 36.4 Durables 82.0 82.4 85.5 86.1 87.6 82.5 Natural Resources and Mining 1.2 1.2 1.2 1.4 1.4 1.4 Retail Trade 137.5 142.7 153.8 165.7 171.5 175.4 Prof., Educ. and other Services 364.5 378.6 399.9 416.5 436.2 446.3 Trans., Whse. and Utilities 46.8 50.1 55.5 60.2 63.8 66.7 Wholesale Trade 41.9 43.5 45.6 49.9 53.8 56.4 Information, Pub. and Telecom. 14.1 13.9 14.0 14.5 15.2 15.2 Total, All Industries 1,084.8 1,119.4 1,178.7 1,240.3 1,288.4 1,285.5 Source: State Employment Development Department, Labor Market Information Division. (1) The employment figures by Industry which are shown above are not directly comparable to the "Total, All Industries" employment figures due to rounded data. B-4 131 2007: The following table sets forth certain of the ten major employers located in the County as of COUNTY OF RIVERSIDE CERTAIN MAJOR EMPLOYERS(1) (2007) Company Name The County of Riverside March Air Reserve Base University of California, Riverside Stater Brothers Markets Pechanga Resort & Casino Abbott Vascular Riverside Unified School District Riverside Community College District Kaiser Permanente'Riverside Med. Center Temecula Valley USD Product/Service County Government Government/Military College/University Grocery Retailer Casino/Resort Medical Device Manufacturer Education Higher Education Health Care Education No. of Local Employees(2) 19,595 8,400 6,657 6,425 4,800 4,500 4,041 3,753 3,200 2,952 Source: The Business Press 2008 Book of Lists. (1) Certain major employers in the County may have been excluded because of the data collection methodology used by The Business Press. (2) Includes employees within the County; includes, under certain circumstances, temporary, seasonal and per diem employees. Unemployment statistics for the County, the State and the United States are set forth in the following table. COUNTY OF RIVERSIDE COUNTY, STA 1'E AND NATIONAL UNEMPLOYMENT DATA County(l) California(') United States 2002 2003 2004 2005 2006 2007 6.4% 6.7 5.9 6.3% 6.8 6.0 5.7% 6.2 5.5 5.1% 5.4 5.1 5.0% 4.9 4.6 6.2% 5A 4.6 Source: State of California Employment Development Department Labor Market Information Division; U.S. Bureau of Labor Statistics. (1) Data is not seasonally adjusted. The unemployment data for the County and State is calculated using unrounded data. Commercial Activity Commercial activity is an important factor in the County's economy. Much of the County's commercial activity is concentrated in central business districts or small neighborhood commercial centers in cities. There are nine regional shopping malls in the County: Riverside Plaza, Galleria at Tyler (Riverside), Palm Springs Mall, Desert Fashion Mall, Indio Fashion Mall, Hemet Valley Mall, Palm Desert Town Center, Moreno Valley Mall at Towngate and Temecula Promenade Mall. There are also B-5 132 • two factory outlet malls (Desert Hills Factory Stores and Lake Elsinore Outlet Center) and over 200 area centers in the County. The following table sets forth taxable transactions in the County for the years 2002 through 2006. COUNTY OF RIVERSIDE TAXABLE SALES TRANSACTIONS (In Thousands) 2002 2003 2004 2005 2006 Apparel Stores $ 610,388 $ 746,015 $ 867,276 $ 990,129 $1 080385 General Merchandise Stores 2,237,605 2,427,411 2,756,019 3,021,908 3,250,377 Drug Stores 221,441 244,560 270,316 282,566 303,177 Food Stores 967,171 1,028,392 1,079,972 1,197,438 1,309,782 Packaged Liquor Stores 58,459 61,514 66,728 74,828 78,895 Eating and Drinking Places 1,559,215 1,713,632 1,940,610 2,157,801 2,316,422 Home Furnishing and Appliances 594,049 691,051 862,551 964,629 948,217 Building Materials & Farm Implements 1,581,792 1,868,995 2,476,092 2,756,280 2,738,153 Auto Dealers Supplies 3,314,133 3,662,151 4,179,940 4,474,566 4,326,040 Service Stations 1,249,646 1,536,240 1,855,263 2,277,082 2,630,716 Other Retail Stores 1,856 834 2 050,991 2,361,182 2,641,985 2,860,181 Retail Stores Total $14,250,733 $16,030,952 $18,715,949 20,839,212 21,842,345 All Other Outlets 5,248,261 5,678,183 6,521,199 7,417,279 7,973,892 Total All Outlets $19,498,994 $21,709,135 $25.237.148 $28,2 6 491 $29 816.237 Source: California State Board of Equalization, Research and Statistics Division. Building and Real Estate Activity The two tables below are a five-year summary of building permit valuations and new dwelling units authorized in the County (in both incorporated and unincorporated areas) since 2003. B-6 133 RESIDENTIAL New Single -Family New Multi -Family Alterations and Adjustments Total Residential NON-RESIDENTIAL New Commercial New Industry New Other(1) Alterations & Adjustments Total Nonresidential TOTAL ALL BUILDING COUNTY OF RIVERSIDE BUILDING PERMIT VALUATIONS (In Thousands) 2003 2004 2005 2006 2007 $4,665,678.0 $5,997,514.0 $6,243,790.0 $4,409.675.8 $2,209,586.7 406,483.0 404,616.0 407,429.0 431,864.8 237,887.0 106, 8 55.0 135,178.0 164,312.0 157,167.9 141,952.4 $5,179,016.0 $6,537,308.0 $6,815,531.0 $4,998,708.5 $2,589,426.0 $ 360,709.0 $ 580,058.0 $ 552,665.0 $647,460.4 $ 682,416.6 112,707.0 203,311.0 120,366.0 288,352.6 151,994.4 261,795.0 334,002.0 344,702.0 288,768.2 239,835.3 173,166.0 222,496.0 274,339.0 305,262.6 400.604.5 $ 908,377.0 $1,339,867.0 $1,292,072.0 $1,529,843.8 $1,474,850.9 $6,087,393 0 $7.87/.1110 $8,107,603.0 $ ,5?8,552 3 $4,064,276.9 Source: Construction Industry Research Board. (1) Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings and non-residential alterations and additions. COUNTY OF RIVERSIDE NUMBER OF NEW DWELLING UNITS 2002 2003 2004 2005 2006 2007 Single Family 20,591 25,137 29,478 29,994 20,725 9,766 Multi -Family 2,073 5,224 4,748 4,140 4,521 2,679. TOTAL 22.664 30,361 34,226 34,134 25 246 12,445 Source: Construction Industry Research Board. Agriculture Agriculture remains an important source of income in the County. Principal agricultural products are: nursery, milk, table grapes, eggs, avocados, grapefruit, alfalfa, bell peppers, dates, and lemons. Four areas in the County account for the major portion of agricultural activity: the Riverside/Corona and San Jacinto/Temecula Valley Districts in the western portion of the County, the Coachella Valley in the central portion and the Palo Verde Valley near the County's eastern border. The value of agricultural production in the County for 2002 through 2006 is presented in the following table. B-7 134 • • r COUNTY OF RIVERSIDE VALUE OF AGRICULTURAL PRODUCTION 2002 2003 2004 2005 2006 Citrus Fruits $ 95,402,300 $ 84,900,100 $ 123,574,100 Trees and Vines 183,138,900 216,566,200 211,936,500 Vegetables, Melons, Misc. 215,412,800 179,001,900 174,866,300 Field and Seed Crops 71,960,400 73,692,000 75,219,000 Nursery 183,073,600 205,846,300 211,271,200 Apiculture 2,803,800 3,520,600 2,951,300 Aquaculture Products 15,757,600 15,931,600 15 579,100 Total Crop Valuation $ 767,549,400 $ 779,458,700 $ 815,397,500 Livestock and Poultry Valuation 295,928,700 287,908,600 316,207,700 Grand Total $1 063 478 300 $1067 367300 $1,131,605,200 Source: Riverside County Agricultural Commissioner. Transportation $ 138,244,700 188,553,200 261,019,500 77,687,300 229,210,200 2,736,800 13,367,300 $ 910,819,000 $ 107,897,000 191,321,200 213,643,300 68,611,700 270,992,800 3,554,300 13.367,300 $ 869,387,600 257,852,100 234,903,400 $ L 16 8, 671, MO 1,104, 291,000 Several major freeways and highways provide access between the County and all parts of Southern California. The Riverside Freeway (State Route 91) extends southwest through Corona and connects with the Orange County freeway network in Fullerton. Interstate 10 traverses the width of the County, the western -most portion of which links up with major cities and freeways in the southern part of San Bernardino County with the eastern part linking to the County's Desert cities and Arizona. Interstate 15 and 2l5 extend north and then east to Las Vegas, and south to San Diego. State Route 60 provides an alternate (to Interstate 10) east -west link to Los Angeles County. Currently, Metrolink provides commuter rail service to Los Angeles, San Bernardino and Orange Counties from several stations in the County. Transcontinental passenger rail service is provided by Amtrak with stops in Riverside and Indio. Freight service to major west coast and national markets is provided by two transcontinental railroads — (i) Union Pacific Railroad and (ii) Burlington Northern and Santa Fe Railway Company. Truck service is provided by several common carriers, making available overnight delivery service to major California cities. Transcontinental bus service is provided by Greyhound Lines. Intercounty, intercity and local bus service is provided by the Riverside Transit Agency to western County cities and communities. There are also four municipal transit operators in the western County providing services within the cities of Banning, Beaumont, Corona and Riverside. The SunLine Transit Agency provides local bus service throughout the Coachella Valley, including the cities of Palm Springs and Indio. The Palo Verde Valley Transit Authority provided service in the far eastern portion of the County (City of Blythe and surrounding communities). The County seat, located in the City of Riverside, is within 20 miles of the Ontario International Airport in neighboring San Bernardino County. This airport is operated by the Los Angeles Department of Airports. Four major airlines schedule commercial flight service at Palm Springs Regional Airport. County -operated general aviation airports include those in Thermal, Hemet, Blythe and French Valley. The cities of Riverside, Corona and Banning also operate general aviation airports. There is a military base at March Air Reserve Base, which converted from an active duty base to a reserve -only base on April 1, 1996. Plans for joint military and civilian use of the base thereafter are presently being formulated by the March AFB Joint Powers Authority, comprised of the County and the Cities of Riverside, Moreno Valley and Perris. B-8 135 Education There are four elementary school districts, one high school district, eighteen unified (K-12) school districts and four community college districts in the County. Ninety-five percent of all K-12 students attend schools in the unified school districts. The three largest unified school districts are Riverside Unified School District, Moreno Valley Unified School District and Corona -Norco Unified School District. There are seven two-year community college campuses located in the communities of Riverside, Moreno Valley, Norco, San Jacinto, Menifee, Coachella Valley and Palo Verde Valley. There are also three universities located in the City of Riverside — the University of California, Riverside, La Sierra University and California Baptist University. B-9 136 • • APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE C-1 137 • APPENDIX D BOOK ENTRY SYSTEM The information concerning DTC set forth herein has been supplied by DTC, and the Commission assumes no responsibility for the accuracy thereof. DTC is a limited -purpose trust company.organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("DTC Participants") deposit with DTC. DTC also facilitates the settlement among DTC Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book -entry changes in DTC Participants' accounts, thereby eliminating the need for physical movement of securities certificates. "DTC Direct Participants" include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its DTC Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a DTC Direct Participant, either directly or indirectly ("DTC Indirect Participants"). The Rules applicable to DTC and its DTC Participants are on file with the Securities and Exchange Commission. Purchases of Series 2008 Bonds under the DTC system must be made by or though DTC Direct Participants, which will receive credit for the Series 2008 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2008 Bond (a `Beneficial Owner") is in turn to be recorded on the Direct and DTC Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the DTC Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2008 Bonds are to be accomplished by entries made on the books of DTC Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2008 Bonds, except in the event that use of the book -entry system for the Series 2008 Bonds is discontinued. To facilitate subsequent transfers, all Series 2008 Bonds deposited by DTC Participants with DTC are registered in the name of DTC's nominee, Cede & Co. The deposit of Series 2008 Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2008 Bonds; DTC's records reflect only the identity of the DTC Direct Participants to whose accounts such Series 2008 Bonds are credited, which may or may not be the Beneficial Owners. The DTC Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to DTC Direct Participants, by DTC Direct Participants to DTC Indirect Participants, and by DTC Direct Participants and DTC D-1 138 Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices will be sent to Cede & Co. If less than all of the Series 2008 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each DTC Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to Series 2008 Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the Commission as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those DTC Direct Participants to whose accounts the Series 2008 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Series 2008 Bonds will be made to DTC. DTC's practice is to credit DTC Direct Participants' accounts on the payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on a payment date. Payments by DTC Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such DTC Participant and not of DTC, the Trustee, or the Commission, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Trustee, disbursement of such payments to DTC Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and DTC Indirect Participants. The Commission and the Trustee cannot and do not give any assurances that DTC Direct Participants or DTC Indirect Participants will distribute to the Beneficial Owners (i) principal and interest on the Series 2008 Bonds, (ii) certificates representing an ownership interest in or other confirmation of ownership interests in the Series 2008 Bonds, or (iii) redemption or other notices sent to DTC or Cede & Co., its nominee, as registered owner of the Series 2008 Bonds, or that they will do so on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants will service and act in the manner described in the Official Statement. The Commission and the Trustee will be entitled to treat the person in whose name any Series 2008 Bond is registered as the Bond Owner thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the Commission; and the Commission and the Trustee will have no responsibility for transmitting payments to, communication with, notifying, or otherwise dealing with any Beneficial Owners of the Series 2008 Bonds. Neither the Commission nor the Trustee will have any responsibility or obligations, legal or otherwise, to the Beneficial Owners or to any other party including DTC or its successor (or substitute depository or its successor), except for the registered owner of any Series 2008 Bond. DTC may discontinue providing its services as securities depository with respect to the Series 2008 Bonds at any time by giving notice to the Commission or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2008 Bonds are required to be printed and delivered. D-2 • 139 • • • THE TRUSTEE, AS LONG AS A BOOK -ENTRY ONLY SYS 1'EM IS USED FOR THE SERIES 2008 BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE SERIES 2008 BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. D-3 140 APPENDIX E PROPOSED FORM OF BOND COUNSEL OPINION E-1 • 141 • • • APPENDIX F PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate"), dated as of , 2008, is executed and delivered by the Riverside County Transportation Commission (the "Commission") in connection with the issuance of its $ Sales Tax Revenue Bonds, Series 2008 (the `Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of June 1, 2008 (the "2008 Indenture"), by and between the Commission and U.S. Bank National Association (the "Trustee") and the First Supplemental Indenture, dated as of June 1, 2008 (the "First Supplemental Indenture" and, together with the 2008 Indenture, the "Indenture"). Pursuant to the Indenture, the Commission covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Commission for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). SECTION 2. Definitions. In addition to the, definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unlessotherwisedefined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the Commission pursuant to, and as described in; Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. "Disclosure Representative" shall mean the designee of the Commission to act as the Disclosure Representative. "Dissemination Agent" shall mean an entity selected and retained by the Commission, or any successor thereto selected by the Commission. The initial Dissemination Agent shall be Digital Assurance Certificate LLC. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate and any other event legally required to be reported pursuant to the Rule. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The National Repositories approved by the Securities and Exchange Commission as of the date of this Agreement are currently set forth at the following website: http://www.sec.gov/info/municipal/nrmsir.htm. "Participating Underwriters" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository" shall mean each National Repository and each State Repository. F-1 142 "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State" shall mean the State of California. "State Repository" shall mean any public or private repository or entity designated by the State as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Certificate, there is no State Repository. SECTION 3. Provision of Annual Reports. (a) The Commission shall provide to each Repository, or shall cause the Dissemination Agent to provide to each Repository, not later than 210 days after the end of the Commission's fiscal year, commencing with the fiscal year ending June 30, 2008, an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate. Not later than fifteen (15) Business Days prior to said date, the Commission shall provide the Annual Report to the Dissemination Agent. The Commission shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the Commission hereunder. The Dissemination Agent may conclusively rely upon such certification of the Commission. (b) If by fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to the Repositories, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Commission to determine if the Commission is in compliance with subsection (a). (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to the Municipal Securities Rulemaking Board in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and the State Repository, if any; and (ii) (if the Dissemination Agent is other than the Commission), to the extent appropriate information is available to it, file a report with the Commission certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Content of Annual Reports. The Commission's Annual Report shall contain or include by reference the following: F-2 143 • (a) The audited financial statements of the Commission for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Commission's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement relating to. the Bonds (the "Official Statement"), and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) An update (as of the most recently ended fiscal year of the Commission) for the table entitled "Historical 1988 Sales Tax Revenues" set forth in the Official Statement under the caption "THE SALES TAX - 1988 Sales Tax Revenues"; provided that, commencing with the fiscal year ending June 30, 2010, the Commission shall provide such information with respect to Sales Tax Revenues in lieu of such information with respect to 1988 Sales Tax Revenues. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the Commission is an "obligated person" (as defined by the Rule), which have been filed with each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Commission shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Commission shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: 1. principal and interest payment delinquencies; 2. non-payment related defaults; 3. modifications to rights of Bondholders; 4. optional, contingent or unscheduled Bond calls; 5. defeasances; 6. rating changes; 7. adverse tax opinions or events affecting the tax-exempt status of the Bonds; 8. unscheduled draws on the debt service reserves, if any, reflecting financial difficulties; 9. unscheduled draws on credit enhancements, if any, reflecting financial difficulties; 10_ substitution of credit or liquidity providers, if any, or their failure to perform; and F-3 144 11. release, substitution, or sale of property, if any, securing repayment of the Bonds. (b) Whenever the Commission obtains knowledge of the occurrence of a Listed Event, the Commission shall as soon as possible determine if such event would constitute material information for Holders of Bonds. (c) If the Commission has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Commission shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (d). (d) If the Dissemination Agent has been instructed by the Commission to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Repository. Notwithstanding the foregoing: (i) notice of the occurrence of a Listed Event described in subsections (a)(1), (4) or (5) shall be given by the Dissemination Agent unless the Commission gives the Dissemination Agent affirmative instructions not to disclose such occurrence; and (ii) notice of Listed Events described in subsections (a)(4) and (5) shall not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Holders of affected Bonds pursuant to the Indenture. (e) Termination of Reporting Obligation. The obligations of the Commission and the Dissemination Agent under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Commission shall give notice of such termination in the same manner as for a Listed Event under Section 5(f) hereof. SECTION 6. Dissemination Agent. The Commission may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign at any time by providing at least 30 days' notice in writing to the Commission. SECTION 7. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Commission may amend this Disclosure Certificate, provided no amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be made without the consent of such party, and any provision of this Disclosure Certificate may be waived if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to the Commission and the Dissemination Agent to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. SECTION 8. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Commission from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, F-4 145 • • in addition to that which is required by this Disclosure Certificate. If the Commission chooses to include any information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is specifically required by this Disclosure Certificate, the Commission shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 9. Default. In the event of a failure of the Commission to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Bonds may take such actions, as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Commission to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the Commission to comply with this Disclosure Certificate shall be an action to compel performance. The Commission hereby represents and warrants that it is currently not in default under any other continuing disclosure arrangement entered into in connection with the Rule. SECTION 10. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Commission agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or ire the exercise or performance of their respective powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Commission for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the Distract, the Bondholders, or any other party. The obligations of the Commission under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Commission, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: F-5 146 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Riverside County Transportation Commission Name of Bond Issue: $ Sales Tax Revenue Bonds, Series 2008 Date of Issuance: , 2008 NOTICE IS HEREBY GIVEN that the Riverside County Transportation Commission (the "Commission') has not provided an Annual Report with respect to the above -named Bonds as required by that certain Indenture, dated as of June 1, 2008, by and between the Commission and U.S. Bank National Association (the "Trustee") and that certain First Supplemental Indenture, dated as of June 1, 2008, by and between the Commission and the Trustee. The Commission anticipates that the Annual Report will be filed by Dated: DIGITAL ASSURANCE CERTIFICATE LLC, on behalf of the Commission By: Its: cc: Riverside County Transportation Commission Exhibit A 147 _J J ATTACHMENT 4 OH&S Draft 5/6/08 INDENTURE between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of June 1, 2008 Relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) OIIS West:260379475.8 148 • • TABLE OF CONTENTS Page ARTICLE I EQUALITY OF SECURITY; DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS SECTION 1.01 SECTION 1.02 SECTION 1.03 SECTION 2.01 SECTION 2.02 SECTION 2.03 SECTION 2.04 SECTION 2.05 SECTION 2.06 SECTION 2.07 SECTION 2.08 SECTION 2.09 SECTION 2.10 SECTION 3.01 SECTION 3.02 SECTION 3.03 SECTION 3.04 SECTION 3.05 SECTION 3.06 SECTION 3.07 SECTION 4.01 SECTION 4.02 SECTION 4.03 SECTION 4.04 SECTION 5.01 SECTION 5.02 OHS West:260379475.8 Equality of Security 3 Definitions 3 Content of Certificates 21 ARTICLE II THE BONDS Authorization of Bonds 22 Terms of the Bonds 22 Form of Bonds 22 Execution of Bonds 22 Transfer of Bonds 23 Exchange of Bonds 23 Bond Register 23 Temporary Bonds 24 Bonds Mutilated; Lost; Destroyed or Stolen 24 Use of Securities Depository 25 ARTICLE III ISSUANCE OF BONDS Issuance of Bonds 26 Issuance of Additional Bonds 26 Proceedings for Issuance of Additional Bonds 27 Issuance of Refunding Bonds 28 Limitations on the Issuance of Obligations Payable from Sales Tax Revenues; Parity Obligations; Subordinate Obligations 29 Calculation of Maximum Annual Debt Service with Respect to Bonds and Parity Obligations 31 Application of Proceeds 31 ARTICLE IV REDEMPTION, TENDER AND PURCHASE OF BONDS Terms of Redemption, Tender and Purchase 31 Notice of Redemption 32 Partial Redemption of Bonds 33 Effect of Redemption 33 ARTICLE V SALES TAX REVENUES Pledge of Revenues; Revenue Fund 33 Allocation of Sales Tax Revenues 34 —1- 149 TABLE OF CONTENTS (continued) Page SECTION 5.03 Application of Interest Fund 38 SECTION 5.04 Application of Principal Fund 38 SECTION 5.05 Establishment, Funding and Application of Bond Reserve Funds 39 SECTION 5.06 Application of Subordinate Obligations Fund 42 SECTION 5.07 Application of Fees and Expenses Fund 42 SECTION 5.08 Application of Redemption Fund 42 SECTION 5.09 Rebate Fund 42 SECTION 5.10 Payment Provisions Applicable to Interest Rate Swap Agreements 43 SECTION 5.11 Investment in Funds and Accounts 44 ARTICLE VI COVENANTS OF THE COMMISSION SECTION 6.01 Punctual Payments 45 SECTION 6.02 Extension of Payment of Bonds 45 SECTION 6.03 Waiver of Laws 46 SECTION 6.04 Further Assurances 46 SECTION 6.05 Against Encumbrances 46 SECTION 6.06 Accounting Records and Financial Statements 46 SECTION 6.07 Collection of Sales Tax Revenues 46 SECTION 6.08 Tax Covenants 47 SECTION 6.09 Continuing Disclosure 48 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES SECTION 7.01 Events of Default 48 SECTION 7.02 Application of the Revenues and Other Funds After Default; No Acceleration 49 SECTION 7.03 Trustee to Represent Bondholders 50 SECTION 7.04 Bondholders' Direction of Proceedings 51 SECTION 7.05 Limitation on Bondholders' Right to Sue 51 SECTION 7.06 Absolute Obligation of the Commission 52 SECTION 7.07 Termination of Proceedings 52 SECTION 7.08 Remedies Not Exclusive 52 SECTION 7.09 No Waiver of Default 52 SECTION 7.10 Credit Provider Directs Remedies Upon Event of Default 52 ARTICLE VIII THE TRUSTEE SECTION 8.01 Appointment, Duties Immunities and Liabilities of Trustee 53 SECTION 8.02 Accounting Records and Monthly Statements 54 SECTION 8.03 Merger or Consolidation 55 SECTION 8.04 Liability of Trustee 55 SECTION 8.05 Right of Trustee to Rely on Documents and Opinions 57 OHS West:260379475.8 -11- • 150 • TABLE OF CONTENTS (continued) Page SECTION 8.06 Compensation and Indemnification of Trustee 58 ARTICLE IX MODIFICATION OR AMENDMENT OF THIS INDENTURE SECTION 9.01 Amendments Permitted 58 SECTION 9.02 Effect of Supplemental Indenture 60 SECTION 9.03 Endorsement of Bonds; Preparation of New Bonds 61 SECTION 9.04 Amendment of Particular Bonds 61 ARTICLE X DEFEASANCE SECTION 10.01 Discharge of Indenture 61 SECTION 10.02 Discharge of Liability on Bonds 62 SECTION 10.03 Deposit of Money or Securities 62 SECTION 10.04 Payment of Bonds After Discharge of Indenture 63 ARTICLE XI MISCELLANEOUS SECTION 11.01 Liability of Commission Limited to Sales Tax Revenues 63 SECTION 11.02 Successor Is Deemed Included in All References to Predecessor 64 SECTION 1103 Limitation of Rights 64 SECTION 11.04 Waiver of Notice 64 SECTION 11.05 Destruction or Delivery of Canceled Bonds 64 SECTION 11.06 Severability of Invalid Provisions 64 SECTION 11.07 Notice to Commission and Trustee 65 SECTION 11.08 Evidence of Rights of Bondholders 65 SECTION 11.09 Disqualified Bonds 65 SECTION 11.10 Money Held for Particular Bonds 66 SECTION 11.11 Funds and Accounts 66 SECTION 11.12 Limitations on Rights of Credit Providers, Liquidity Providers, Reserve Facility Providers 66 SECTION 11.13 Article and Section Headings and References 67 SECTION 11.14 Waiver of Personal Liability 67 SECTION 11.15 Governing Law 67 SECTION 11.16 Business Day 67 SECTION 11.17 Effective Date of Indenture 67 SECTION 11.18 Execution in Counterparts 67 OHS West:260379475.8 -lil- 151 • • • INDENTURE This INDENTURE, dated as of June 1, 2008 (as more fully defined in Section 1.02, the "Indenture"), between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly established and existing under the laws of the State of California (the "Commission"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the "Trustee"); WITNESSETH: WHEREAS, 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" ("1988 Ordinance"), 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; WHEREAS, by its terms, 1988 Ordinance 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 "2002 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 2002 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; OHS West:260379475.8 1 152 WHEREAS, the 2002 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 any limit required by law 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 2002 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 indebtedness and securities of any kind or class, including sales tax revenue bonds), secured and payable in whole or in part from revenues of the Sales Tax (as more fully defined in Section 1.02, the "Sales Tax Revenues"); WHEREAS, the Commission has heretofore entered into an Indenture, dated as of March 1, 2005 (the "Notes Indenture"), between the Commission and U.S. Bank National Association, successor by merger to U.S. Bank Trust National Association; as trustee, pursuant to which the Commission has authorized the issuance of certain limited tax bonds (the "Notes") payable from and secured by the Sales Tax Revenues; WHEREAS, the Commission has heretofore executed and delivered interest rate swap agreements in an aggregate notional amount of $185 million (the "Initial Swaps"), which Initial Swaps have an effective date of October 1, 2009; WHEREAS, the Commission has determined to enter into this Indenture in order to provide for the authentication and delivery of certain limited tax bonds (the 'Bonds"), to establish and declare the terms and conditions upon which the Bonds and other obligations secured by the retail transactions and use tax shall be issued and secured and to secure the payment of the principal thereof, premium (if any), and interest on the Bonds and obligations secured by the retail transactions and use tax on a parity with the Bonds (as more fully defined in Section 1.02, 'Parity Obligations"); WHEREAS, the execution and delivery of this Indenture has in all respects been duly and validly authorized by resolution duly passed and approved by the Commission; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and the entering into of this Indenture do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Indenture; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of, premium, if any, and the interest on all Bonds at any time issued, authenticated and delivered hereunder, to secure the payment of Parity Obligations in accordance with terms hereof and to provide the terms and conditions under which all property, rights and interests hereby assigned and pledged are to be dealt with and disposed of, and to secure performance and observance of the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes hereinafter expressed, and in consideration of the premises and of the material OHS West:260379475.8 2 153 • • • covenants herein contained and of the purchase and acceptance of the Bonds by the owners thereof, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Commission does hereby agree and covenant with the Trustee for the benefit of the respective owners, from time to time, of the Bonds, or any part thereof, and for the benefit of the holders of Parity Obligations, in accordance with terms hereof, as follows: ARTICLE I EQUALITY OF SECURITY; DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS SECTION 1.01 Equality of Security. In consideration of the acceptance of the Bonds by the owners thereof from time to time, this Indenture shall be deemed to be and shall constitute a contract among the Commission, the Trustee and the owners from time to time of the Bonds and the covenants and agreements herein set forth to be performed by or on behalf of the Commission or the Trustee shall be for the equal and proportionate benefit, security and protection of all owners of the Bonds, without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reasons of the Series, time of issue, sale or negotiation thereof or for any cause whatsoever, except as expressly provided therein or herein. Nothing herein shall prevent additional security being provided for the benefit of a particular Series of Bonds under any supplement to this Indenture. SECTION 1.02 Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Indenture and of any Supplemental Indenture and of any certificate, opinion or other document herein mentioned, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined. "Accreted Value" means, with respect to any Capital Appreciation Bond, the principal amount thereof plus the interest accrued thereon, compounded at the approximate interest rate thereon on each date specified therein. The Accreted Value at any date shall be the amounts set forth in the Accreted Value Table as of such date, if such date is a compounding date, and if not, as of the immediately preceding compounding date. "Accreted Value Table" means the table denominated as such which appears as an exhibit to, and to which reference is made in, a Supplemental Indenture providing for a Series of Capital Appreciation Bonds issued pursuant to such Supplemental Indenture. "Act" means the Riverside County Transportation Sales Tax Act, Division 25 (Section 240000 et seq.) of the Public Utilities Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented. "Alternate Credit Enhancement" means, with respect to a Series of Bonds, any Insurance, letter of credit, line of credit, surety bond or other instrument, if any, which secures or guarantees the payment of principal of and interest on a Series of Bonds, issuedbyan insurance company, commercial bank, pension fund or other financial institution, and delivered or made available to the Trustee, as a replacement or substitution for any Credit Enhancement then in effect. OI IS West260379475.8 3 154 "Alternate Liquidity Facility" means, with respect to a Series of Bonds, a line of credit, letter of credit, standby purchase agreement or similar liquidity facility, issued by a commercial bank, insurance company, pension fund or other financial institution, and delivered or made available to the Trustee, as a replacement or substitute for any Liquidity Facility then in effect. "Annual Debt Service" means, for any Fiscal Year, the aggregate amount (without duplication) of principal and interest on all Bonds and Parity Obligations becoming due and payable during such Fiscal Year calculated using the principles and assumptions set forth under the defmition of Debt Service. "Assumed Debt Service" means for any Fiscal Year the aggregate amount of principal and interest which would be payable on all Bonds if each Excluded Principal Payment were: amortized on a substantially level debt service basis or other amortization schedule provided by the Commission for a period commencing on the date of calculation of such Assumed Debt Service and ending on the earlier of (i) the date specified by the Commission not exceeding thirty (30) years from the date of calculation, or (ii) the Tax Expiration Date, such Assumed Debt Service to be calculated on a level debt service basis or other amortization schedule provided by the Commission, based on a fixed interest rate equal to the rate at which the Commission could borrow for such period, as set forth in a certificate of a financial advisor or investment banker, delivered to the Trustee, who may rely conclusively on such certificate, such certificate to be delivered within thirty (30) days of the date of calculation. "Authorized Representative" means the Executive Director, the Deputy Executive Director, the Chief Financial Officer, the Accounting and Human Resources Manager, or any other person designated to act on behalf of the Commission by a written certificate furnished to the Trustee containing the specimen signature of such person and signed on behalf of the Commission by an Authorized Representative. "Beneficial Owner" means any Person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of any Bond, including, without limitation, any Person holding Bonds tbrough nominees or depositories, including the Securities Depository. "Board" means the Board of Commissioners of the Commission. "Bond Obligation" means, as of any given date of calculation, (1) with respect to any Outstanding Current Interest Bond, the principal amount of such Bond, and (2) with respect to any Outstanding Capital Appreciation Bond, the Accreted Value thereof. "Bond Register" has the meaning given to such term in Section 2.07. "Bond Reserve Fund" means any fund by that name established with respect to one or more Series of Bonds pursuant to the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. "Bond Reserve Requirement" with respect to a Series of Bonds for which the Commission shall have established a Bond Reserve Fund shall have the meaning specified in the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. OHS West:260379475.8 4 • 155 • "Bondholder" or "Holder", whenever used herein with respect to a Bond, means the person in whose name such Bond is registered. "Bonds" means the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) authorized by, and at any time Outstanding pursuant to, this Indenture. "Business Day" means, except as is otherwise provided in the Supplemental Indenture pursuant to which a Series of Bonds are issued, any day other than (1) a Saturday, Sunday, or a day on which banking institutions in the State, the State of New York or the jurisdiction in which the Corporate Trust Office of the Trustee is located are authorized or obligated by law or executive order to be closed, (2) for purposes of payments and other actions relating to Bonds secured by a Credit Enhancement or supported by a Liquidity Facility, a day upon which commercial banks in the city in which is located the office of the issuing bank at which demands for payment under the Credit Enhancement or Liquidity Facility, as applicable, are to be presented are authorized or obligated by law or executive order to be closed, or (3) a day on which the New York Stock Exchange is closed_ "Capital Appreciation Bonds" means the Bonds of any Series designated as Capital Appreciation Bonds in the Supplemental Indenture providing for the issuance of such Series of Bonds and on which interest is compounded and paid at maturity or on prior redemption. "Certificate," "Statement," "Request," 'Requisition" and "Order" of the Commission mean, respectively, a written certificate, statement, request, requisition or order signed in the name of the Commission by an Authorized Representative. If and to the extent required by Section 1.03, each such instrument shall include the statements provided for in Section 1.03. "Code" means the Internal Revenue Code of 1986, and the regulations applicable thereto or issued thereunder, or any successor to the Internal Revenue Code of 1986. Reference to any particular Code section shall, in the event of such a successor Code, be deemed to be reference to the successor to such Code section. "Commission" means the Riverside County Transportation Commission, a public entity of the State, duly organized and existing under the Act. "Continuing Disclosure Agreement" means, with respect to each Series of Bonds requiring an undertaking regarding disclosure under Rule 15c2-12, the Continuing Disclosure Agreement, dated the date of issuance of such Series of Bonds, executed by the Commission and a Dissemination Agent, as the same may be supplemented, modified or amended in accordance with its terms. "Corporate Trust Office" or corporate trust office means the corporate trust office of the Trustee at U.S. Bank National Association, 633 West Fifth Street, 24th Floor, Los Angeles CA 90071, Attention: Corporate Trust Services, or such other or additional offices as may be designated by the Trustee from time to time. "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the Commission and related to the authorization, execution, sale and delivery of OHS West:260379475.8 5 156 a Series of Bonds, including but not limited to advertising and printing costs, costs of preparation and reproduction of documents, filing and recording fees, travel expenses and costs relating to rating agency meetings and other meetings concerning such Series of Bonds, initial fees and charges of the Trustee, legal fees and charges, fees and disbursements of consultants and professionals, fmancial advisor fees and expenses, rating agency fees, fees and charges for preparation, execution, transportation and safekeeping of Bonds, surety, insurance, credit enhancement and liquidity costs, termination fees payable in connection with the termination of an Interest Rate Swap Agreement in connection with the delivery of such Series of Bonds, and any other cost, charge or fee in connection with the initial delivery of a Series of Bonds or any Parity Obligations delivered in connection with a Series of Bonds. "Costs of Issuance Fund" means a fund by that name established pursuant to the provisions of a Supplemental Indenture to pay Costs of Issuance with respect to a Series of Bonds being issued pursuant to such Supplemental Indenture. "Costs of the Project" means all items of expense related to the Project and directly or indirectly payable by or reimbursable to the Commission in accordance with the Act and the Ordinance. "Counterparty" means an entity which has entered into an Interest Rate Swap Agreement with the Commission. "County" means the County of Riverside, California. "Credit Enhancement" means, with respect to a Series of Bonds, any Insurance, letter of credit, line of credit, surety bond or other instrument, if any, which secures or guarantees the payment of principal of and interest on a Series of Bonds, issued by an insurance company, commercial bank or other financial institution, and delivered or made available to the Trustee, as from time to time supplemented or amended pursuant to its terms, or, in the event of the delivery or availability of an Alternate Credit Enhancement, such Alternate Credit Enhancement. "Credit Provider" means, with respect to a Series of Bonds, the Insurer, commercial bank or other financial institution issuing (or having primary obligation, or acting as agent for the financial institutions obligated, under) a Credit Enhancement then in effect with respect to such Series of Bonds. "Current Interest Bonds" means the Bonds of any Series designated as Current Interest Bonds in the Supplemental Indenture providing for the issuance of such Series of Bonds and that pay interest to the Holders thereof on a periodic basis prior to maturity. "Debt Service," when used with respect to any Bonds or Panty Obligations (for purposes of this defmition of "Debt Service," herein collectively referred to as "Obligations"), means, as of any date of calculation and with respect to any Fiscal Year, the sum of (1) the interest falling due on such Obligations during such Fiscal Year and (2) the principal or Mandatory Sinking Account Payments required with respect to such Obligations during such Fiscal Year; computed on the assumption that no portion of such Obligations shall cease to be Outstanding during such Fiscal Year except by reason of the application of such scheduled payments; provided, however, that for purposes of such computation: OHS West:260379475.8 6 157 • • • (A) Excluded Principal Payments (and the interest related thereto provided such interest is being paid from the same source as the Excluded Principal Payments) shall be excluded from such calculation and Assumed Debt Service shall be included in such calculation; (B) in determining the principal amount due in each Fiscal Year, payment . shall (unless a different subsection of this definition applies for purposes of determining principal maturities or amortization) be assumed to be made in accordance with any amortization schedule established for such Obligations, including any Mandatory Sinking Account Payments or any scheduled redemption or payment of Obligations on the basis of Accreted Value, and for such purpose, the redemption payment or payment of Accreted Value shall be deemed a principal payment and interest that is compounded and paid as Accreted Value shall be deemed due on the scheduled redemption or payment date of such Capital Appreciation Bond; (C) if any Obligations bear, or if any Obligations proposed to be issued will bear, interest at a variable interest rate for which an Interest Rate Swap Agreement is not in place and the interest on which is excluded or expected to be excluded from gross income for federal income tax purposes, the interest rate on such Obligations for periods when the actual interest rate cannot yet be determined shall be assumed to be equal to the average of the SIFMA Swap Index for the five (5) years preceding such date of calculation; (D) if any Obligations bear, or if any Obligations proposed to be issued will bear, interest at a variable interest rate for which an Interest Rate Swap Agreement is not in place and the interest on which is included or expected to be included in gross income for federal income tax purposes, the interest rate on such Obligations shall be calculated at an interest rate equal to 100% of the average One Month USD LIBOR Rate during the five (5) years preceding such date of calculation; (E) with respect to any Obligations bearing interest, or expected to bear interest, at a variable interest rate for which an Interest Rate Swap Agreement is in place providing for a fixed rate of interest to maturity or for a specific term with respect to such Obligations, the interest rate on such Obligations shall be assumed to be the synthetic fixed interest rate specified in such Interest Rate Swap Agreement for such term; provided that if, pursuant to a Certificate of the Commission filed with the Trustee, the sum of (i) interest payable on such Obligations, plus (ii) amounts payable by the Commission under such Interest Rate Swap Agreement, less (iii) amounts receivable by the Commission under such Interest Rate Swap Agreement, is expected to be greater than the interest payable on the Obligations to which such Interest Rate Swap Agreement relates (i.e., if such Interest Rate Swap Agreement is an 'off -market" Interest Rate Swap Agreement), then, in such instance, such excess amounts expected to be payable by the Commission under such Interest Rate Swap Agreement shall be included in the calculation of Debt Service; (F) with respect to any Obligations bearing interest, or expected to bear interest, at a fixed interest rate for which an Interest Rate Swap Agreement is in place providing for a net variable interest rate with respect to such Obligations for a specific term, the interest rate on such Obligations shall be assumed to be equal for such term to the sum of (i) the fixed interest rate or rates to be paid on the Obligations, minus (ii) the fixed interest rate receivable by the Commission under such Interest Rate Swap Agreement, plus (iii) the average interest rate of the OHS West:260379475.8 7 158 index on which the Interest Rate Swap Agreement is based, as identified in a Certificate of the Commission, or, if not based on an identifiable index, then the SIFMA Swap Index, in each case, over the five (5) years preceding the date of calculation; (G) if any Obligations feature an option, on the part of the owners or an obligation under the terms of such Obligations, to tender all or a portion of such Obligations to the Commission, the Trustee or other fiduciary or agent, and requires that such Obligations or portion thereof be purchased if properly presented, then for purposes of determining the amounts of principal and interest due in any Fiscal Year on such Obligations, the options or obligations of the owners of such Obligations to tender the same for purchase or payment prior to the stated maturity or maturities shall be ignored and not treated as a principal maturity; and (H) principal and interest payments on Obligations shall be excluded to the extent such payments are to be paid from Revenues then held on deposit by the Trustee or from other amounts on deposit with the Trustee or other fiduciary in escrow specifically therefor and interest payments shall be excluded to the extent that such interest payments are to be paid from the proceeds of Obligations held by the Trustee or other fiduciary as capitalized interest specifically to pay such interest. "Defeasance Securities" means: (i) U.S. Treasury Certificates, Notes and Bonds, including State and Local Government Series securities; (ii) direct obligations of the U.S. Treasury which have been stripped by the U.S. Treasury itself; (iii) Resolution Funding Corp. securities ("REFCORP"), provided, however, only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form are acceptable; (iv) pre -refunded municipal bonds rated "Aaa" by Moody's and "AAA" by Standard & Poor's, provided, however, that if such municipal bonds are rated only by Standard & Poor's, then such pre -refunded municipal bonds must have been pre -refunded with cash, direct United States or United States guaranteed obligations, or "AAA" rated pre -refunded municipal bonds; (v) obligations issued by the following agencies, which are backed by the full faith and credit of the United States: (a) Fanners Home Administration (FmHA) - certificates of beneficial ownership; (b) General Services Administration - participation certificates; (c) U.S. Maritime Administration - Guaranteed Title XI financing; (d) Small Business Administration guaranteed participation certificates and guaranteed pool certificates; (e) GNMA guaranteed MSB and participation certificates; and (f) U.S. Department of Housing and Urban Development (HUD) Local Authority Bonds, or (vi) certain obligations of govemment-sponsored agencies that are not backed by the full faith and credit of the United States limited to: (a) Federal Home Loan Mortgage Corp. (FHLMC) debt obligations; (b) Farm Credit System (formerly Federal Land Banks, Federal Intermediate Credit Banks, and Banks for Cooperatives) consolidated system- wide bonds and notes; (c) Federal Home Loan Banks (FHL Banks) consolidated debt obligations; (d) Federal National Mortgage Association (FNMA) debt obligations; (e) Student Loan Marketing Association (SLMA) debt obligations; and (f) Financing Corp. (FICO) debt obligations; and (g) other obligations approved by the Rating Agencies for defeasance escrows rated in the highest Rating Category. "Dissemination Agent" means, with respect to each Series of Bonds requiring an undertaking regarding disclosure under Rule 15c2-12(b)(5), the dissemination agent under the Continuing Disclosure Agreement delivered in connection with such Series of Bonds, or any OHS West:260379475.8 $ 159 successor dissemination agent designated in writing by the Commission and which has entered into a Continuing Disclosure Agreement with the Commission. "DTC" means The Depository Trust Company, New York, New York, or any successor thereto. "Electronic Means" means facsimile transmission, email transmission or other similar electronic means of communication providing evidence of transmission, including a telephone communication confirmed by any other method set forth in this definition. "Event of Default" means any of the events specified in Section 7.01. 'Excluded Principal Payment' means each payment of principal of Bonds or Parity Obligations which the Commission determines (in the Certificate of the Commission) that the Commission intends to pay with moneys that are not Sales Tax Revenues (such as commercial paper, balloon indebtedness or bond anticipation notes) but from future debt obligations of the Commission, grants from the State or federal government, or any agency or instrumentality thereof, or any other source of funds of the Commission, upon which determination of the Commission the Trustee may conclusively rely. No such determination shall affect the security for such Bonds or the obligation of the Commission to pay such payments from Sales Tax Revenues or amounts on deposit in the Bond Reserve Fund, if any. No payment of principal of Bonds may be determined to be an Excluded Principal Payment unless it is due on or prior to the Tax Expiration Date. "Fees and Expenses Fund" means the fiord by that name established pursuant to Section 5.02. "Fiscal Year" means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other 12-month period hereafter selected and designated as the official fiscal year period of the Commission, which designation shall be provided to the Trustee in a Certificate delivered by the Commission. "Fitch" means Fitch Inc., and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Fitch" shall be deemed to refer to any other nationally recognized securities rating agency selected by the Commission. "Holder" or "Bondholder," whenever used herein with respect to a Bond, means the person in whose name such Bond is registered. "Indenture" means this Indenture, dated as of June 1, 2008, between the Trustee and the Commission, as originally executed or as it may from time to time be supplemented or amended by any Supplemental Indenture delivered pursuant to the provisions hereof. "Initial Swaps" means the following Interest Rate Swap Agreements, in a combined notional amount of $185,000,000, which Initial Swaps have an effective date of October 1, 2009: OHS West:260379475.8 9 160 a. ISDA Master Agreement, dated as of August 22, 2006, between Bank of America, N.A. ("BOfA") and the Commission, as supplemented by the Schedule, dated as of August 22, 2006 and the confirmation of a transaction entered into on August 22, 2006 between BofA and the Commission; and b. ISDA Master Agreement, dated as of August 22, 2006, between Lehman Brothers Derivative Products Inc. ("Lehman") and the Commission, as supplemented by the Schedule, dated as of August 22, 2006 and the confirmation of a transaction entered into on August 22, 2006 between Lehman and the Commission. "Insurance" means any financial guaranty insurance policy or municipal bond insurance policy issued by an Insurer insuring the payment when due of principal of and interest on a Series of Bonds as provided in such fmancial guaranty insurance policy or municipal bond insurance policy. "Insurer" means any provider of Insurance with respect to a Series of Bonds. "Interest Fund" means the fund by that name established pursuant to Section 5.02. "Interest Payment Date," with respect to each Series of Bonds, shall have the meaning specified in the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. "Interest Rate Swap Agreement" means an interest rate swap, cap, collar, option, floor, forward, derivative, or other hedging agreement, arrangement or security, however denominated, entered into between the Commission and a Counterparty, in connection with or incidental to, the issuance or carrying of Bonds, including, without limitation, an interest rate swap, cap, collar, option, floor, forward, derivative, or other hedging agreement, arrangement or security entered into in advance of the issuance of Bonds. "Investment Securities" means the following: (1) any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America, including obligations of any of the federal agencies and federally sponsored entities set forth in clause (3) below to the extent unconditionally guaranteed by the United States of America; (2) any certificates, receipts, securities or other obligations evidencing ownership of, or the right to receive, a specified portion of one or more interest payments or principal payments, or any combination thereof, to be made on any bond, note, or other obligation described above in clause (1); (3) obligations of the Federal National Mortgage Association, the Government National Mortgage Association, Federal Home Loan Banks, Farmers Home Administration and Federal Home Loan Mortgage Corporation; OHS Wes1:260379475.8 10 161 • (4) housing authority bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States of America; or project notes issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a requisition or payment agreement with the United States of America; (5) obligations of any state, territory or commonwealth of the United States of America or any political subdivision thereof or any agency or department of the foregoing; provided that at the time of their purchase such obligations are rated in either of the two highest long-term or highest short-term Rating Categories by both Moody's and Standard & Poor's; (6) any bonds or other obligations of any state of the United States of America or any political subdivision thereof (a) which are not callable prior to maturity or as to which irrevocable instructions have been given to the trustee of such bonds or other obligations by the obligor to give due notice of redemption and to call such bonds for redemption on the date or dates specified in such instructions, (b) which are secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds or other obligations of the character described above in clause (1) or (2) which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the interest payment dates and the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, (c) as to which the principal of and interest on the bonds and obligations of the character described above in clause (1) or (2) which have been deposited in such fund along with any cash on deposit in such fund are sufficient to pay the principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (6) on the interest payment dates and the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in subclause (a) of this clause (6), as appropriate, and (d) which have been rated in one of the two highest long-term Rating Categories by Moody's and Standard & Poor's; (7) bonds, notes, debentures or other evidences of indebtedness issued or guaranteed by any corporation which are, at the time of purchase, rated by both Moody's and Standard & Poor's in their respective highest short-term Rating Categories, or, if the term of such indebtedness is longer than three (3) years, rated by both Moody's and Standard & Poor's in one of their respective two highest long-term Rating Categories, for comparable types of debt obligations; (8) demand or time deposits or certificates of deposit, whether negotiable or nonnegotiable, issued by any bank or trust company organized under the laws of any state of the United States of America or any national banking association (including the Trustee), provided that such certificates of deposit shall be purchased directly from such a bank, trust company or national banking association and shall be either (a) continuously and fully insured by the Federal Deposit Insurance Corporation, (b) continuously and fully secured by such securities and obligations as are described above in clauses (1) OHS West:260379475.8 11 162 through (5), inclusive, which shall have a market value (exclusive of accrued interest) at all times at least equal to the principal amount of such certificates of deposit and shall be lodged with the Trustee, as custodian, by the bank, trust company or national banking association issuing such certificates of deposit, and the bank, trust company or national banking association issuing each such certificate of deposit required to be so secured shall furnish the Trustee with an undertaking satisfactory to it that the aggregate market value of all such obligations securing each such certificate of deposit will at all times be an amount equal to the principal amount of each such certificate of deposit and the Trustee shall be entitled to rely on each such undertaking, or (c) be issued by an institution the senior debt obligations of which are rated "AA" or higher by Standard & Poor's; (9) taxable commercial paper, other than that issued by bank holding companies, or tax-exempt commercial paper rated in the highest Rating Category by both Moody's and Standard & Poor's; (10) variable rate obligations required to be redeemed or purchased by the obligor or its agent or designee upon demand of the holder thereof secured as to such redemption or purchase requirement by a liquidity agreement with a corporation and as to the payment of interest and principal either upon maturity or redemption (other than upon demand by the holder thereof) thereof by an unconditional credit facility of a corporation, provided that the variable rate obligations themselves are rated in the highest Rating Category for its short-term rating, if any, and in either of the two highest Rating Categories for its long-term rating, if any, by both Moody's and Standard & Poor's, and that the corporations providing the liquidity agreement and credit facility have, at the date of acquisition of the variable rate obligation by the Trustee, an outstanding issue of unsecured, uninsured and unguaranteed debt obligations rated in either of the two highest long -tern Rating Categories by both Moody's and Standard & Poor's; (11) any repurchase agreement with any bank or trust company organized under the laws of any state of the United States or any national banking association (including the Trustee) having a minimum permanent capital of one hundred million dollars ($100,000,000) or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, which agreement is secured by any one or more of the securities and obligations described in clauses (1), (2), (3) or (4) above, which shall have a market value (exclusive of accrued interest and valued at least monthly) at least equal to 103% of the principal amount of such investment and shall be lodged with the Trustee or other fiduciary, as custodian for the Trustee, by the bank, trust company, national banking association or bond dealer executing such repurchase agreement, and the entity executing each such repurchase agreement required to be so secured shall furnish the Trustee with an undertaking satisfactory to it that the aggregate market value of all such obligations securing each such repurchase agreement (as valued at least monthly) will be an amount equal to 103% of the principal amount of each such repurchase agreement and the Trustee shall be entitled to rely on each such undertaking; OHS West:260379475.8 12 163 • • (12) any cash sweep or similar account arrangement of or available to the Trustee, the investments of which are limited to investments describedin clauses (1), (2), (3), (4), (5) and (11) of this definition of Investment Securities and any money market fund, the entire investments of which are limited to investments described in clauses (1), (2), (3), (4), (5) and (11) of this definition of Investment Securities; provided that as used in this clause (12) and clause (13) investments will be deemed to satisfy the requirements of clause (11) if they meet the requirements set forth in clause (11) ending with the words "clauses (1), (2), (3) or (4) above" and without regard to the remainder of such clause (11); (13) any investment agreement with a fmancial institution or insurance company or whose obligations are guaranteed by a fmancial institution or insurance company which: (a) has at the date of execution thereof an outstanding issue of unsecured, uninsured and unguaranteed debt obligations or a claims paying ability rated in either of the two highest long-term Rating Categories by both Moody's and Standard & Poor's; or (b) is fully secured by obligations described in items (1), (2), (3) or (4) of the definition of Investment Securities which are (A) valued not less frequently than monthly and have a fair market value, exclusive of accrued interest, at all times at least equal to the principal amount of the investment, (B) held by the Trustee or other custodian acceptable to the Trustee, (C) subject to a perfected first lien in the Trustee, and (D) free and clear from all third party liens; (14) shares of beneficial interest in diversified management companies investing exclusively in securities and obligations described in clauses (1) through (13) of this defmition of Investment Securities and which companies have either the highest rating by both Moody's and Standard & Poor's or have an investment advisor registered with the Securities and Exchange Commission with not less than five (5) years experience investing in such securities and obligations and with assets under management in excess of $500,000,000; (15) shares in a common law trust established pursuant to Title 1, Division 7, Chapter 5 of the Goverment Code of the State which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State, as it may be amended; (16) bankers' acceptances issued by domestic or foreign banks, which are eligible for purchase by the Federal Reserve System, the short-term paper of which is rated in the highest category by both Moody's and Standard & Poor's, which purchases may not exceed two hundred seventy (270) days maturity; (17) the pooled investment fund of the County of Riverside, California, which is administered in accordance with the investment policy of said County as established by the Treasurer/Tax Collector thereof, as permitted by Section 53601 of the Government Code of the State, copies of which policy are available upon written request to said Treasurer/Tax Collector, OFIS We0:260379475.8 13 164 (18) the Local Agency Investment Fund or similar pooled fund operated by or on behalf of the State of California and which is authorized to accept investments of moneys held in any of the funds or accounts established pursuant to this Indenture; (19) obligations of the Resolution Trust Corporation and interest obligations of the Resolution Funding Corporation; (20) financial futures or financial option contracts with an entity the debt securities of which are rated in the highest short-term or one of the two highest long-term rating categories by Fitch, Moody's and Standard & Poor's; and (21) any other forms of investments, including repurchase agreements, approved by the Board and consented to by each Credit Provider and Liquidity Provider then providing Credit Enhancement or a Liquidity Facility for a Series of Bonds. "Letter of Credit Account" means an account by that name established to hold funds that are drawn on Credit Enhancement provided in the form of a letter of credit and that are to be applied to pay the principal of or interest on a Series of Bonds, which account shall be established pursuant to the Supplemental Indenture establishing the terns and provisions of such Series of Bonds. "Liquidity Facility" means, with respect to a Series of Bonds, a line of credit, letter of credit, standby purchase agreement or similar liquidity facility securing or guaranteeing the. payment of purchase price of such Series of Bonds and issued by a commercial bank, insurance company, pension fund or other fmancial institution, and delivered or made available to. the Trustee, as from time to time supplemented or amended pursuant to its terms, or, in the event of the delivery or availability of an Alternate Liquidity Facility, such Alternate Liquidity Facility. "Liquidity Facility Bonds" means any Bonds purchased with moneys drawn under (or otherwise obtained pursuant to the terms of) a Liquidity Facility, but excluding any Bonds no longer considered to be Liquidity Facility Bonds in accordance with the terms of the applicable Liquidity Facility. "Liquidity Facility Rate" means, with respect to a Series of Bonds, the interest rate per annum, if any, specified as applicable to Liquidity Facility Bonds in the Liquidity Facility delivered in connection with such Series of Bonds. "Liquidity Provider" means, with respect to a Series of Bonds, the commercial bank, insurance company, pension fund or other financial institution issuing (or having primary obligation, or acting as agent for the financial institutions obligated, under) a Liquidity Facility then in effect with respect to such Series of Bonds. "Mandatory Sinking Account Payment" means, with respect to Bonds of any Series and maturity, the amount required by the Supplemental Indenture establishing the terms and provisions of such Series of Bonds to be deposited by the Commission in a Sinking Account for the payment of Term Bonds of such Series and maturity. OHS West:260379475.8 14 • 165 • "Maturity Date" means, with respect to a Series of Bonds, the date of maturity or maturities specified in the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. "Maximum Annual Debt Service" means the maximum amount of Annual Debt Service becoming due and payable on all Bonds Outstanding and all Parity Obligations outstanding during the period from the date of such calculation through the final maturity date of the Bonds and Parity Obligations, calculated utilizing the assumptions set forth under the definition of Debt Service. "Maximum Interest Rate" means, with respect to all Bonds other than Liquidity Facility Bonds, the lesser of (i) twelve percent (12%) and (ii) the maximum rate of interest that may legally be paid on the Bonds from time to time, and means, with respect to Liquidity Facility Bonds, the lesser of (x) the Liquidity Facility Rate and (ii) the maximum rate of interest that may legally be paid on the Liquidity Facility Bonds from time to time. "Moody's" means Moody's Investors Service, a corporation duly organized and existing under the laws of the State of Delaware, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the Commission. "1988 Ordinance" means the Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance, adopted by the Commission on July 6, 1988 and approved by a majority of the electors voting on such proposition on November 8, 1988, as supplemented and amended. "1988 Sales Tax" means the sales and use tax imposed by the Commission pursuant to the 1988 Ordinance from July 1, 1989 to June 30, 2009. "1988 Sales Tax Revenues" means 100% of the amounts collected by the State Board of Equalization on behalf of the Commission pursuant to the Act from the 1988 Sales Tax. "Notes" means the Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds), Series A and Series B, authorized by, and at any time Outstanding pursuant to, the Notes Indenture in an aggregate amount not to exceed two hundred million dollars ($200,000,000). "Notes Indenture" means the Indenture, dated as of March 1, 2005, between the Commission and U.S. Bank National Association, successor by merger to U.S. Bank Trust National Association, as trustee, as supplemented and amended from time to time pursuant to its terms. "Notes Trustee" means U.S. Bank National Association, successor by merger to U.S. Bank Trust National Association, as trustee under the Notes Indenture, and its successors and assigns. "Notice Parties" means, as and to the extent applicable, the Commission, the Trustee, the Credit Provider, if any, for the Series of Bonds to which the notice being given relates, the OHS West:260379475.8 15 166 auction agent, if any, for the Series of Bonds to which the notice being given relates, the broker - dealer, if any, for the Series of Bonds to which the notice being given relates, the Liquidity Provider; if any, for the Series of Bonds to which the notice being given relates, and the remarketing agent, if any, for the Series of Bonds to which the notice being given relates. "Obligations" has the meaning given to such term in the defmition of "Debt Service:" "One Month USD LIBOR Rate" means the rate for deposits in U.S. dollars for a one - month maturity that appears on Reuters Screen LIBOR°I Page (or such other page as may replace that page on that service, or such other service as may be nominated by the British Bankers Association, for the purpose of displaying London interbank offered rates for U.S. dollar deposits) as of 11:00 a.m., London time, on the date of determination of such rate, except that, if such rate does not appear on such page on such date, the One Month USD LIBOR Rate means a rate determined on the basis of the rates at which deposits in U.S. dollars for a one -month maturity and in a principal amount of at least U.S. $1,000,000 are offered at approximately 11:00 a.m., London time, on such date, to prime banks in the London interbank market by three major banks in the London interbank market (herein referred to as the "Reference Banks") selected by the Trustee (provided, however, that the Trustee may appoint an agent to identify such Reference Banks). The Trustee or its agent is to request the principal London office of each of such Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the One Month LIBOR Rate will be the arithmetic mean of such quotations. If fewer than two quotations are provided, the One Month LIBOR Rate will be the arithmetic mean of the rates quoted by three (if three quotations are not provided, two or one, as applicable) major banks in New York City, selected by the Trustee or its agent, at approximately 11:00 a.m., New York City time, on such date for loans in U.S. dollars to leading European banks in a principal amount of at least U.S. $1,000,000 having a one -month maturity. If none of the banks in New York City selected by the Trustee or its agent is then quoting rates for such loans, then the One Month LIBOR Rate for the ensuing interest period will mean the One Month LIBOR Rate most recently in effect. "Opinion of Bond Counsel" means a written opinion of a law firm of national standing in the field of public finance selected by the Commission. "Ordinance" means the 2002 Ordinance, and any amendments or extensions thereto, together with any future ordinance that is adopted pursuant to the Act from time to time and that is designated as an "Ordinance" hereunder pursuant to a Supplemental Indenture, as such future ordinance may be amended or extended pursuant to the Act from time to time. "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 11.09) all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under this Indenture except: (1) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (2) Bonds with respect to which all liability of the Commission shall have been dischaiged in accordance with Section 10.02, including Bonds (or portions of Bonds) referred to in Section 11.10; and (3) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to this Indenture; provided, however, that in the event the principal of or interest due on any Bonds shall be paid by the Credit Provider OHS West:260379475.8 16 • • 167 • • pursuant to the Credit Enhancement issued in connection with such Bonds, such Bonds shall remain Outstanding for all purposes and shall not be considered defeased or otherwise satisfied or paid by the Commission and the pledge of Revenues and all covenants, agreements and other obligations of the Commission to the Holders shall continue to exist and shall run to the benefit of such Credit Provider and such Credit Provider shall be subrogated to the rights of such Holders. "Parity Obligations" means (i) any indebtedness, installment sale obligation, lease obligation or other obligation of the Commission for borrowed money, (ii) any obligation to pay the Rebate Requirement, or (iii) the Initial Swaps or any other Interest Rate Swap Agreement (excluding fees and expenses and termination payments on the Initial Swaps or any other Interest Rate Swap Agreements, which fees and expenses and termination payments shall be secured by a lien and charge on the Sales Tax Revenues subordinate to the lien and charge upon Sales Tax Revenues that secures the Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations) entered into in connection with a Series of Bonds, in each case (other than in the case of the Initial Swaps) incurred in accordance with Section 3.05(C), and in each case having an equal lien and charge upon the Sales Tax Revenues and therefore being payable on a parity with the Bonds (whether or not any Bonds are Outstanding). "Participating Underwriter" means any of the original underwriters of a Series of Bonds required to comply with Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as the same may be amended from time to time. "Person" means an association, corporation, firm, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. "Principal Fund" means the fund by that name established pursuant to Section 5.02. "Principal Office" means, with respect to the Trustee, the corporate trust office of the Trustee at 633 West Fifth Street, 24th Floor, Los Angeles, CA 90071, Attention: Corporate Trust Services, or such other or additional offices as may be designated by the Trustee from time to time, and means, with respect to a Credit Provider . or a Liquidity Provider, the office designated as such in writing by such party in a notice delivered to the Trustee and the Authority. "Project" means capital outlay expenditures for transportation purposes, including the construction, capital, acquisition and maintenance of streets, roads, highways and public transit systems and related purposes permitted by the Ordinance, including planning; environmental reviews, engineering and design costs and right-of-way acquisition and also including, without limitation, engineering, inspection, legal, fiscal agents, financial consultant and other fees, bond and other reserve funds, working capital, bond or note interest estimated to accrue during the construction period and for a period of not to exceed three years thereafter, and expenses for all proceedings for the authorization, issuance and sale of Bonds. "Project Fund" means, with respect to any Series of Bonds, a fund by that name established pursuant to the provisions of a Supplemental Indenture to hold the proceeds of a OHS West:260379475.8 17 168 Series of Bonds or a portion thereof prior to expenditure on the portion of the Project being financed with the proceeds of such Series of Bonds. "Proportionate Basis," when used with respect to the redemption of Bonds, means that the amount of Bonds of each maturity to be redeemed shall be determined as nearly as practicable by multiplying the total amount of funds available for redemption by the ratio which the amount of Bond Obligation of Bonds of such maturity bears to the amount of all Bond Obligation of Bonds to be redeemed, provided, however that, any Bond may only be redeemed in an authorized denomination. For purposes of the foregoing, Term Bonds shall be deemed to mature in the years and in the amounts of the Mandatory Sinking Account Payments, and Capital Appreciation Bonds and Current Interest Bonds maturing or subject to Mandatory Sinking Account Payments in the same year shall be treated as separate maturities. When used with respect to the payment or purchase of a portion of Bonds, "Proportionate Basis" shall have the same meaning set forth above except that "pay" or purchase" shall be substituted for "redeem" or "redemption" and "paid" or "purchased" shall be substituted for "redeemed." "Purchase Fund" means a fund by that name established to hold funds to be applied to pay the purchase price of a Series of Bonds, which fund shall be established pursuant to the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. "Rating Agency" means, as and to the extent applicable to a Series of Bonds, each of Fitch, Moody's and Standard & Poor's then maintaining a rating on such Series of Bonds at the request of the Commission. "Rating Category" means: (i) with respect to any long-term rating category, all ratings designated by a particular letter or combination of letters, without regard to any numerical modifier, plus or minus sign or other modifier; and (ii) with respect to any short-term or commercial paper rating category, all ratings designated by a particular letter or combination of letters and taking into account any numerical modifier, but not any plus or minus sign or other modifier. "Rebate Fund" means that fund by that name established pursuant to Section 5.09. "Rebate Instructions" means, with respect to any Series of Bonds, those calculations and directions required to be delivered to the Trustee by the Commission pursuant to the Tax Certificate delivered in connection with such Series of Bonds. "Rebate Requirement" means, with respect to any Series of Bonds, the Rebate Requirement determined in accordance with the Tax Certificate delivered in connection with such Series of Bonds. "Record Date," with respect to each Series of Bonds, shall have the meaning specified in the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. "Redemption Fund" means the fund by that name established pursuant to Section 5.08. OHS West:260379475.S 18 • 169 • • • "Redemption Price" means, with respect to any Bond (or portion thereof) the Bond Obligation of such Bond (or portion thereof) plus the applicable premium, if any, payable upon redemption thereof pursuant to the provisions of such Bond and this Indenture. "Refunding Bonds" means a Series of Bonds or a portion of a Series of Bonds issued pursuant to the provisions set forth in Section 3.04. "Repositories" means the public or private entities designated as Repositories in a Continuing Disclosure Agreement entered into in connection with a Series of Bonds. "Reserve Facility" means any insurance policy, letter of credit or surety bond issued by a Reserve Facility Provider, meeting the requirements set forth in Section 5.05, and delivered to the Trustee in satisfaction of all or a portion of the Bond Reserve Requirement applicable to one or more Series of Bonds. "Reserve Facility Provider" means any issuer of a Reserve Facility. "Revenue Fund" means the Revenue Fund established pursuant to Section 5.01. "Revenues" means: (i) all Sales Tax Revenues; and (ii) all Swap Revenues. In accordance with the provisions set forth in Section 3.02, the Commission by Supplemental Indenture may provide for additional revenues or assets of the Commission to be included in the definition of Revenues hereunder. "Rule 15c2-12" means Securities and Exchange Commission Rule 15c2-12, as supplemented and amended from time to time. "Sales Tax Revenues" means the amounts available for distribution to the Commission on and after July 1, 2009 on account of the retail transactions and use tax imposed in the County of Riverside pursuant to the Act and the Ordinance after deducting amounts payable by the Commission to the State Board of Equalization for costs and expenses for its services in connection with the retail transactions and use taxes collected pursuant to the Act. "Securities Depository" means DTC, or, in accordance with then -current guidelines of the Securities and Exchange Commission, such other securities depository, or no such depositories, as the Commission may designate in a Request of the Commission delivered to the Trustee. "Serial Bonds" means Bonds, maturing in specified years, for which no Mandatory Sinking Account Payments are provided. "Series," whenever used herein with respect to Bonds, means all of the Bonds designated as being of the same series, authenticated and delivered in a simultaneous transaction regardless of variations in maturity, interest rate, redemption and other provisions, and any Bonds thereafter authenticated and delivered upon transfer or exchange or in lieu of or in substitution for (but not to refund) such Bonds as herein provided. "SIFMA Swap Index" means, on any date, a rate determined on the basis of the seven- day high grade market index of tax-exempt variable rate demand obligations, as produced by OHS West:260379475.8 19 170 Municipal Market Data and published or made available by the Securities Industry & Financial Markets Association (formerly the Bond Market Association) ("SIFMA") or by any Person acting in cooperation with or under the sponsorship of SIFMA and acceptable to the Trustee and effective from such date. "Sinking Account" means an account by that name established in the Principal Fund pursuant to Section 5.04 for the payment of Term Bonds. "Standard & Poor's or "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc., a corporation duly organized and existing under and by virtue of the laws of the State of New York, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Standard & Poor's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the Commission. "State" means the State of California. "State Board of Equalization" means the California State Board of Equalization. "Subordinate Obligations" means the Notes, any other obligations of the Commission that constitute "Parity Debt" under and as defined in the Notes Indenture, and any other obligations of the Commission issued or incurred in accordance with Section 3.05(D). "Subordinate Obligations Fund" means the fund by that name established pursuant to Section 5.02. "Supplemental Indenture" means any indenture hereafter duly executed and delivered, supplementing, modifying or amending this Indenture, but only if and to the extent that such supplemental indenture is authorized specifically hereunder. "Swap Revenues" means all regularly -scheduled amounts (but not termination payments) owed or paid to the Commission by any Counterparty under any Interest Rate Swap Agreement after offset for the regularly -scheduled amounts (but not termination payments) owed or paid by the Commission to such Counterparty under such Interest Rate Swap Agreement. "Tax Certificate" means each Tax Certificate delivered by the Commission at the time of issuance and delivery of a Series of Bonds, as the same may be amended or supplemented in accordance with its terms. "Tax Expiration Date" means June 30, 2039, or such later date to which the levy of the retail transactions and use tax is extended in accordance with the Act. "Terre Bonds" means Bonds payable at or before their specified maturity date or dates from Mandatory Sinking Account Payments established for that purpose and calculated to retire such Bonds on or before their specified maturity date or dates. OHS West:260379475.8 20 171 • • • "Trustee" means U.S. Bank National Association, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, or its successor, as Trustee as provided in Section 8.01. "2002 Ordinance" means the Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance, adopted by the Commission on May 8, 2002, and approved by at least two- thirds of electors voting on such proposition in the November 5, 2002 election, as supplemented and amended. "2008 Bonds" means the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A, authorized by, and at any time Outstanding pursuant to, this Indenture. "Variable Rate Indebtedness" means any indebtedness, including Bonds, Panty Obligations, and Subordinate Obligations, the interest rate on which is not fixed at the time of incurrence of such indebtedness, and has not at some subsequent date been fixed, at a numerical rate or rates for the entire term of such indebtedness. SECTION 1.03 Content of Certificates. Every certificate provided for in this Indenture with respect to compliance with any provision hereof shall include: (1) a statement that the person making or giving such certificate has read such provision and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the certificate is based; (3) a statement that, in the opinion of such person, he or she has made or caused to be made such examination or investigation asis necessary to enable him to express an informed opinion with respect to the subject matter referred to in the instrument to which his signature is affixed; and (4) a statement as to whether, in the opinion of such person, such provision has been complied with. Any such certificate given by an officer of the Commission may be based, insofar as it relates to legal or accounting matters, upon a certificate or opinion of or representation by counsel, an accountant, a fmancial advisor, an investment banker or an independent consultant, unless such officer knows, or in the exercise of reasonable care should have known, that the certificate, opinion or representation with respect to the matters upon which such certificate or statement may be based, as aforesaid, is erroneous. Any such certificate or opinion made or given by counsel, an accountant, a financial advisor, and investment banker or an independent consultant may be based, insofar as it relates to factual matters (with respect to which information is in the possession of the Commission) upon a certificate or opinion of or representation by an officer of the Commission, unless such counsel, accountant, financial advisor, investment banker or independent consultant knows, or in the exercise of reasonable care should have known, that the certificate or opinion or representation with respect to the matters upon which such person's certificate or opinion or representation may be based, as aforesaid, is erroneous. The same officer of the Commission, or the same counsel, accountant, financial advisor, investment banker or independent consultant, as the case may be, need not certify to all of the matters required to be certified under any provision of this Indenture, but different officers, counsel, accountants, financial advisors, investment bankers or independent consultants may certify to different matters, respectively. OHS West:260379475.8 21 172 ARTICLE II THE BONDS SECTION 2.01 Authorization of Bonds. Bonds may be issued hereunder as fully registered bonds without coupons, in book -entry form or otherwise, from time to time as the issuance thereof is approved by the Commission. The maximum principal amount of Bonds which may be issued hereunder is not limited; subject, however, to any limitations contained in the Act and to the right of the Commission, which is hereby reserved, to limit the aggregate principal amount of Bonds which may be issued or Outstanding hereunder. The Bonds are designated generally as "Riverside County Transportation Commission Sales Tax Revenue Bonds" and shall include in the name "Limited Tax Bonds," each Series thereof to bear such additional designation as may be necessary or appropriate to distinguish such Series from every other Series of Bonds. The Bonds may be issued in such Series as from time to time shall be established and authorized by the Commission, subject to the covenants, provisions and conditions herein contained. SECTION 2.02 Terms of the Bonds. The Bonds of each Series shall bear interest, if any, at such rate or rates or determined in such manner and payable at such intervals as may be determined by the Commission at the time of issuance thereof pursuant to the Supplemental Indenture under which issued, not to exceed the Maximum Interest Rate, and shall mature and become payable on such date or dates and in such year or years as the Commission may determine by the Supplemental Indenture creating such Series. Principal of and interest on such Bonds shall be payable in such manner as may be specified in the Supplemental Indenture creating such Series. The Bonds of each Series shall be issued in such denominations as may be authorized by the Supplemental Indenture creating such Series. Unless otherwise provided in the Supplemental Indenture delivered in connection with such Series of Bonds, the Bonds of each Series shall be initially registered in the name of "Cede & Co.," as nominee of the Securities Depository and shall be evidenced by one bond certificate for each maturity of each Series of Bonds. Registered ownership of any Series of Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 2.10, or in the event the use of the Securities Depository is discontinued, in accordance with the provisions set forth in Section 2.05. SECTION 2.03 Form of Bonds. The Bonds of any Series shall be in such form or forms as may be specified in the Supplemental Indenture creating such Series. SECTION 2.04 Execution of Bonds. The Bonds shall be executed in the name and on behalf of the Commission by the facsimile or manual signature of the Chairperson of the Board or any Vice Chairperson of the Board and shall be countersigned by the facsimile or manual signature of the Auditor -Controller of the Commission, and shall have the official seal of the Commission attached or affixed thereon in manual or facsimile form. Unless otherwise provided in any Supplemental Indenture, the Bonds shall then be delivered to the Trustee for authentication by the Trustee. In case any of the officers who shall have signed or attested any of the Bonds shall cease to be such officer or officers of the Commission before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee or issued by the OHS West:260379475.8 22 173 • • Commission, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Commission as though those who signed and attested the same had continued to be such officers of the Commission, and also any Bond may be signed and attested on behalf of the Commission by such persons as at the actual date of execution of such Bond shall be the proper officers of the Commission although at the nominal date of such Bond any such person shall not have been such officer of the Commission. Except as may be otherwise be provided in a Supplemental Indenture establishing the terms and provisions of a Series of Bonds, only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form recited in the Supplemental Indenture creating such Series of Bonds, manually executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of authentication when manually executed by the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture. SECTION 2.05 Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the register required to be kept pursuant to the provisions of Section 2.07, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer, the Commission shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds, of the same Series, tenor, maturity and interest rate and a like aggregate principal amount; provided that, unless otherwise provided in any Supplemental Indenture, no registration of transfer may occur during the period established by the Trustee for selection of Bonds for redemption, or of any Bond or portion of a Bond so selected for redemption. The Trustee shall require the Bondholder requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. SECTION 2.06 Exchange of Bonds. Bonds may be exchanged at the Corporate Trust Office of the Trustee for a lice aggregate principal amount of Bonds of other authorized denominations of the same Series, tenor, maturity and interest rate; provided that, unless otherwise provided in any Supplemental Indenture, no exchange may occur during the period established by the Trustee for selection of Bonds for redemption, or of any Bond or portion of a Bond so selected for redemption. The Trustee shall require the Bondholder requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange. SECTION 2.07 Bond Register. Unless otherwise provided in a Supplemental Indenture delivered in connection with a Series of Bonds, the Trustee will keep or cause to be kept, at its Corporate Trust Office sufficient books for the registration and transfer of each Series of Bonds (the "Bond Register"), which shall at all times be open to inspection during normal business hours by the Commission and each Credit Provider upon reasonable prior notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it OHS West:260379415.8 23 174 may prescribe, register or transfer or cause to be registered or transferred, on such books, Bonds as hereinbefore provided. SECTION 2.08 Temporary Bonds. The Bonds may be issued in temporary form exchangeable for definitive Bonds when ready for delivery. Any temporary Bond may be printed, lithographed or typewritten, shall be of such denomination as may be determined by the Commission, shall be in registered form and may contain such reference to any of the provisions of this Indenture as may be appropriate. A temporary Bond may be in the form of a single Bond payable in installments, each on the date, in the amount and at the rate of interest established for the Bonds maturing on such date. Every temporary Bond shall be executed by the Commission and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Commission issues temporary Bonds the Commission will execute and deliver definitive Bonds as promptly thereafter as practicable, and thereupon the temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Corporate Trust Office of the Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations of the same Series, tenor and maturity or maturities. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder. SECTION 2.09 Bonds Mutilated; Lost; Destroyed or Stolen. If any Bond shall become mutilated, the Commission, at the expense of the Holder of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like Series, tenor, maturity and interest rate in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by the Trustee and delivered to, or upon the Order of, the Commission. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Commission and to the Trustee and, if such evidence be satisfactory to both and indemnity satisfactory to both shall be given, the Commission, at the expense of the Holder, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like Series, tenor, maturity and interest rate in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been called for redemption, instead of issuing a substitute Bond, the Trustee may pay the same without surrender thereof upon receipt of the aforementioned indemnity). The Commission may require payment of a sum not exceeding the actual cost of preparing each new Bond issued under this Section and of the expenses which may be incurred by the Commission and the Trustee in the premises. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Commission whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other Bonds secured by this Indenture. Neither the Commission nor the Trustee shall be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued hereunder or for the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and replacement Bond shall be treated as one and the same. OHS West:260379475.8 24 175 SECTION 2.10 Use of Securities Depository. Unless otherwise provided in a Supplemental Indenture delivered in connection with a Series of Bonds, notwithstanding any provision of this Indenture to the contrary: (A) The Bonds shall be delivered and registered as provided in Section 2.02. Registered ownership of any Series of Bonds, or any portion thereof, may not thereafter. be transferred except: (1) To any successor of the Securities Depository or its nominee, or to any substitute depository designated pursuant to clause (2) of this subsection (A) (each, a "substitute depository"); provided that any successor of the Securities Depository or substitute depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (2) To any substitute depository designated by the Commission upon (a) the resignation of the Securities Depository or its successor (or any substitute depository or its successor) from its functions as depository or (b) a determination by the Commission that the Securities Depository or its successor (or any substitute depository or its successor) is no longer able to carry out its functions as depository; provided that any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (3) To any Person as provided below, upon (a) the resignation of the Securities Depository or its successor (or substitute depository or its successor) from its functions as depository; provided that no substitute depository can be obtained or (b) a determination by the Commission that it is in the best interests of the Commission to remove the Securities Depository or its successor (or any substitute depository or its successor) from its functions as depository. (B) In the case of any transfer pursuant to clause (1) or clause (2) of subsection (A) above, upon receipt of the Outstanding Bonds by the Trustee, together with a Statement of the Commission to the Trustee, a single new Bond for each maturity of each Series of Bonds then Outstanding shall be executed and delivered in the aggregate principal amount of the Bonds of such Series then Outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such Statement of the Commission. In the case of any transfer pursuant to clause (3) of subsection (A) hereof, upon receipt of the Outstanding Bonds by the Trustee together with the Statement of the Commission to the Trustee, new Bonds of each Series then Outstanding shall be authorized and prepared by the Commission and authenticated and delivered by the Trustee in such authorized denominations and registered in the names of such Persons as are requested in such a Statement of the Commission, numbered in such manner as the Trustee shall determine, subject to the limitations of Section 2.02. (C) In the case of partial redemption or an advance refunding of any Series of the Bonds evidencing all or a portion of such amount Outstanding, the Securities Depository shall make an appropriate notation on such Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee. OHS West:26037947S.8 25 176 (D) The Commission and the Trustee shall be entitled to treat the Person in whose name any Bond is registered as the Bondholder thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the Commission; and the Commission and the Trustee shall have no responsibility for transmitting payments to, communicating with, notifying or otherwise dealing with any Beneficial Owners of the Bonds. Neither the Commission nor the Trustee will have any responsibility or obligations, legal or otherwise, to the Beneficial Owners or to any other party including the Securities Depository or its successor (or substitute depository or its successor), except for the Holder of any Bond. (E) So long as the Outstanding Bonds are registered in the name of Cede & Co. or its registered assign, the Commission and the Trustee shall cooperate with Cede & Co., as sole registered Bondholder, and its registered assigns in effecting payment of the principal of, redemption premium, if any, purchase price and interest on the Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due. ARTICLE III ISSUANCE OF BONDS SECTION 3.01 Issuance of Bonds. Whenever the Commission shall determine to issue a Series of Bonds hereunder; the Commission (i) shall authorize the execution of a Supplemental Indenture specifying the principal amount, and prescribing the forms of Bonds of such Series and providing the terms, conditions, distinctive designation, denominations, date, maturity date or dates, interest rate or rates (or the manner of determining the same), redemption provisions, tender provisions, if any, and place or places of payment of principal or Redemption Price, if any, of and interest on such Bonds, and any other provisions respecting the Bonds of such Series not inconsistent with the terms of this Indenture, (ii) shall execute such Supplemental Indenture and (iii) shall deliver such Supplemental Indenture to the Trustee for execution. SECTION 3.02 Issuance of Additional Bonds. Subsequent to the issuance of the 2008 Bonds, the Commission may by Supplemental Indenture establish one or more additional Series of Bonds, payable from Sales Tax Revenues and secured by the pledge made under this Indenture equally and ratably with the 2008 Bonds, and the Commission may issue, and the Trustee may authenticate and deliver to the purchasers thereof, Bonds of any Series so established, in such principal amount as shall be determined by the Commission, but only, with respect to each additional Series of Bonds issued subsequent to the 2008 Bonds issued hereunder; upon compliance by the Commission with the provisions of this Section 3.02, Section 3.03 and any additional requirements set forth in said Supplemental Indenture and subject to the specific conditions set. forth below, each of which is hereby made a condition precedent to the issuance of any such additional Series of Bonds. (A) No Event of Default shall have occurred and then be continuing. (B) Subject to the provisions of Section 5.05, in the event a Supplemental Indenture providing for the issuance of such Series shall require either (i) the establishment of a Bond OHS West:260379475.8 26 177 • • • Reserve Fund to provide additional security for such Series of Bonds or (ii) that the balance on deposit in an existing Bond Reserve Fund be increased, forthwith upon the receipt of the proceeds of the sale of such Series, to an amount at least equal to the Bond Reserve Requirement with respect to such Series of Bonds and all other Bonds secured by such Bond Reserve Fund to be considered Outstanding upon the issuance of such additional Series of Bonds, the Supplemental Indenture providing for the issuance of such additional Series of Bonds shall require deposit of the amount necessary. Said deposit shall be made as provided in the Supplemental Indenture providing for the issuance of such additional Series of Bonds and may be made from the proceeds of the sale of such Series of Bonds or from other funds of the Commission or from both such sources or may be made in the form of a Reserve Facility. (C) The aggregate principal amount of Bonds issued hereunder shall not exceed any limitation imposed by the Act or any other law or by any Supplemental Indenture. (D) The Commission shall place on file with the Trustee a Certificate of the Commission certifying that the amount of Sales Tax Revenues and 1988 Sales Tax Revenues collected during the Fiscal Year for which audited financial statements are available preceding the date on which such additional Series of Bonds will become Outstanding shall have been at least equal to 1.5 times Maximum Annual Debt Service on all Series of Bonds and Parity Obligations then Outstanding and the additional Series of Bonds then proposed to be issued, which Certificate shall also set forth the computations upon which such Certificate is based. (E) Principal payments of each additional Series of Bonds shall be due on June 1 or December 1 in each year in which principal is to be paid if and to the extent deemed practical in the reasonable judgment of the Commission with regard to the type of Bond to be issued, and, if the interest on such Series of Bonds is to be paid semiannually, such interest payments shall be due on June 1 and December 1 in each year to the extent deemed practical in the reasonable judgment of the Commission with regard to the type of Bond to be issued. Nothing in this Section or in this Indenture contained shall prevent or be construed to prevent the Supplemental Indenture providing for the issuance of an additional Series of Bonds from pledging or otherwise providing, in addition to the security given or intended to be given by this Indenture, additional security for the benefit of such additional Series of Bonds or any portion thereof. In the event additional assets or revenues are included within the definition of "Revenues" by a Supplemental Indenture, such additional assets or revenues shall be included in the calculations to be provided in subsection (D) above as if such additional assets or revenues had always been included in 'Revenues." SECTION 3.03 Proceedings for Issuance of Additional Bonds. Subsequent to the issuance of the 2008 Bonds, before any additional Series of Bonds shall be issued and delivered, the Commission shall file each of the documents identified below with the Trustee (upon which documents the Trustee may conclusively rely in determining whether the conditions precedent to the issuance of such Series of Bonds have been satisfied). (A) A Supplemental Indenture authorizing such Series executed by the Commission. OHS West:260379475.g 27 178 (B) A Certificate of the Commission certifying: (i) that no Event of Default has occurred and is then continuing; and (ii) that the requirements specified in Section 3.02(B) and Section 3.02(C) hereof have been satisfied by the Commission. (C) A Certificate of the Commission certifying (on the basis of computations made no later than the date of sale of such Series of Bonds) that the requirement of Section 3.02(D) is satisfied. (D) An Opinion of Bond Counsel to the effect that the Supplemental Indenture is being entered into in accordance with this Indenture and that such Series of Bonds, when duly executed by the Commission and authenticated and delivered by the Trustee, will be valid and binding obligations of the Commission. SECTION 3.04 Issuance of Refunding Bonds. (A) Refunding Bonds may be authorized and issued by the Commission without compliance with the provisions of Sections 3.02(D) or 3.03(C); provided that the Trustee shall have been provided with a Certificate of the Commission to the effect that the Commission has determined one of the following: (i) that Maximum Annual Debt Service on all Bonds Outstanding and all Parity Obligations outstanding following the issuance of such Refunding Bonds is less than or equal to Maximum Annual Debt Service on all Bonds Outstanding and all Parity Obligations outstanding prior to the issuance of such Refunding Bonds, or (ii) that the Commission expects a reduction in Debt Service on all Bonds Outstanding and all Parity Obligations outstanding to result from the refunding to be effected with the proceeds of such Refunding Bonds. Such Refunding Bonds may be issued in an aggregate principal amount sufficient (together with any additional funds available or to become available) to provide funds for the payment of all or a portion of the following: (1) the principal or Redemption Price of the Outstanding Bonds or outstanding Parity Obligations to be refunded; (2) all expenses incident to the calling, retiring or paying of such Outstanding Bonds or outstanding Parity Obligations and the Costs of Issuance of such Refunding Bonds; (3) any termination payment owed by the Commission to a Counterparty after offset for any payments made to the Commission from such Counterparty under any Interest Rate Swap Agreement that was entered into in connection with the Bonds or Parity Obligations to be refunded; (4) interest on all Outstanding Bonds or outstanding Parity Obligations to be refunded to the date such Bonds or Parity Obligations will be called for redemption or paid at maturity; (5) interest on the Refunding Bonds from the date thereof to the date of payment or redemption of the Bonds or Parity Obligations to be refunded; and (6) funding a Bond Reserve Fund for the Refunding Bonds, if required. OHS West:260379475.8 28 179 • • • (B) Before such Series of Refunding Bonds shall be issued and delivered pursuant to this Section 3.04, the Commission shall file each of the documents identified below with the Trustee (upon which documents the Trustee may conclusively rely in determining whether the conditions precedent to the issuance of such Series of Refunding Bonds have been satisfied). (1) A Supplemental Indenture authorizing such Series of Refunding Bonds executed by the Commission. (2) A Certificate of the Commission certifying: (i) that Maximum Annual Debt Service on all Bonds and Parity Obligations which will be outstanding following the issuance of such Series of Refunding Bonds is less than or equal to Maximum Annual Debt Service on all Bonds Outstanding and Panty Obligations outstanding prior to the issuance of such Refunding Bonds or that the Commission expects a reduction in Debt Service on all Bonds Outstanding and all Parity Obligations outstanding to result from the refunding to be effected with the proceeds of such Refunding Bonds; and (ii) that the requirements of Sections 3.02(A), (B), and (C) hereof are satisfied. (3) If any of the Bonds to be refunded are to be redeemed prior to their stated maturity dates, irrevocable instructions to the Trustee to give the applicable notice of redemption or a waiver of the notice of redemption signed by the Holders of all or the portion of the Bonds or Panty Obligations to be redeemed, or proof that such notice has been given by the Commission; provided, however, that in lieu of such instructions or waiver or proof of notice of redemption, the Commission may cause to be deposited with the Trustee all of the Bonds and Parity Obligations proposed to be redeemed (whether canceled or uncanceled) with irrevocable instructions to the Trustee to cancel said Bonds or Parity Obligations so to be redeemed upon the exchange and delivery of said Refunding Bonds; and provided further that no provision of this Indenture shall be construed to require the redemption of Bonds prior to their respective maturity dates in connection with the refunding thereof. (4) An Opinion of Bond Counsel to the effect that the Supplemental Indenture is being entered into in accordance with this Indenture and that such Series of Refunding Bonds, when duly executed by the Commission and authenticated and delivered by the Trustee, will be valid and binding obligations of the Commission. (5) The proceeds of the sale of the Refunding Bonds shall be applied by the Trustee according to the written direction of the Commission to the retirement of the Outstanding Bonds or Parity Obligations for the refunding of which said Refunding Bonds are to be issued. All Bonds or Parity Obligations purchased, redeemed or retired by use of funds received from the sale of Refunding Bonds, and all Bonds surrendered to the Trustee against the issuance of Refunding Bonds, shall be forthwith canceled and shall not be reissued. SECTION 3.05 Limitations on the Issuance of Obligations Payable from Sales Tax Revenues; Parity Obligations; Subordinate Obligations. Subsequent to the issuance of the 2008 Bonds, the Commission will not, so long as any Bonds are Outstanding, issue any obligations or OHS West260379475.8 29 180 securities, howsoever denominated, payable in whole or in part from Sales Tax Revenues except as set forth below. (A) Bonds authorized pursuant to Sections 3.01 and 3.02. (B) Refunding Bonds authorized pursuant to Section 3.04. (C) Parity Obligations, provided that the following conditions to the issuance or incurrence of such Parity Obligations are satisfied: (1) Such Parity Obligations have been duly and legally authorized by the Commission for any lawful purpose; (2) No Event of Default shall have occurred and then be continuing, as evidenced by the delivery of a Certificate of the Commission to that effect, which Certificate of the Commission shall be filed with the Trustee; (3) Such Parity Obligations are being issued or incurred either (i) for purposes of refunding in compliance with the requirements for the issuance of Refunding Bonds set forth in Section 3.04 or (ii) the Commission shall have placed on file with the Trustee a Certificate of the Commission, upon which the Trustee may conclusively rely certifying (on the basis of calculations made no later than the date of sale or incurrence of such Parity Obligations, as applicable) that the requirements set forth in Section 3.02(D) relating to the issuance of an additional Series of Bonds have been satisfied with respect to such Panty Obligations, which Certificate shall also set forth the computations upon which such Certificate is based; and (4) As and to the extent applicable, the Trustee shall be designated as paying agent or trustee for such Panty Obligations and the Commission shall deliver to the Trustee a transcript of the proceedings providing for the issuance of such Parity Obligations (but the Trustee shall not be responsible for the validity or sufficiency of such proceedings or such Parity Obligations). (D) Subordinate Obligations that are payable as to principal, premium, interest and reserve fund requirements, if any, only out of Sales Tax Revenues after the prior payment of all amounts then required to be paid hereunder from Sales Tax Revenues for principal, premium, interest and reserve fund requirements, if any, for all Bonds Outstanding, and all Parity Obligations outstanding, as the same become due and payable, and at the times and in the amounts as required in this Indenture and in the instrument or instruments pursuant to which any Parity Obligations were issued or incurred, provided that the following conditions to issuance or incurrence of such Subordinate Obligations are satisfied: (1) Such Subordinate Obligations have been duly and legally authorized by the Commission for any lawful purpose; (2) No Event of Default shall have occurred and then be continuing, as evidenced by the delivery to the Trustee of a Certificate of the Commission to that effect; and OHS West:260379475.8 30 • 181 • (3) As and to the extent applicable, the Trustee shall be designated as paying agent or trustee for such Subordinate Obligations and the Commission shall deliver to the Trustee a transcript of the proceedings providing for the issuance of such Subordinate Obligations (but the Trustee shall not be responsible for the validity or sufficiency of such proceedings or such Subordinate Obligations). Notwithstanding the foregoing, the Notes and the credit agreements supporting the Notes may continue to be issued and outstanding from time to time under the Notes Indenture without complying with the foregoing provisions of (D). (E) Termination payments and fees and expenses on Interest Rate Swap Agreements, Liquidity Provider or Credit Provider fees and expenses and other obligations that may be secured by a lien and charge on the Sales Tax Revenues subordinate to the lien and charge upon the Sales Tax Revenues that secures the Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations. (F) The Commission and the Trustee hereby acknowledge that the Initial Swaps have been entered into by the Commission and that the obligation of the Commission to make payments required under the Initial Swaps (excluding fees and expenses and termination payments under the Initial Swaps) constitutes a Parity Obligation hereunder. The obligation of the Commission to pay fees, expenses and termination payments under the Initial Swaps is secured by a lien and charge on the Sales Tax Revenues subordinate to the lien and charge upon the Sales Tax Revenues that secures the Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations. SECTION 3.06 Calculation of Maximum Annual Debt Service with Respect to Bonds and Parity Obligations. For purposes of this Article III, Maximum Annual Debt Service with respect to Bonds shall be determined no later than the date of delivery of such Bonds, and no earlier than the sixtieth (60th) day preceding the date of pricing or sale of such Bonds, utilizing the assumptions set forth in the definition of Debt Service. For purposes of this Article III, Maximum Annual Debt Service with respect to Parity Obligations shall be determined no later than the date of incurrence of such Parity Obligations utilizing the assumptions set forth in the definition of Debt Service; provided, however, that if a Parity Obligation is contingent upon funds being provided pursuant to such Parity Obligation to pay principal, or purchase price of, or interest on a Bond, such Parity Obligations shall not be considered outstanding until such payment is made thereunder. SECTION 3.07 Application of Proceeds. Proceeds of each Series of Bonds shall be applied as specified in the Supplemental Indenture pursuant to which such Series of Bonds is issued. ARTICLE IV REDEMPTION, TENDER AND PURCHASE OF BONDS SECTION 4.01 Terms of Redemption, Tender and Purchase. Each Series of Bonds may be made subject to redemption or mandatory or optional tender and purchase prior to their OHS West260379475.8 31 182 respective stated maturities, as a whole or in part, at such time or times, upon such terms and conditions and upon such notice and with such effect as may be provided in the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. SECTION 4.02 Notice of Redemption. Unless otherwise specified in a Supplemental Indenture establishing the terms and provisions of a Series of Bonds, each notice of redemption shall be mailed by the Trustee, not less than ten (10) nor more than ninety (90) days prior to the redemption date, to each Holder and each of the Repositories. A copy of such notice shall also be provided to each of the Notice Parties with respect to Series of Bonds to which such notice relates. Notice of redemption to the Holders, the Repositories and the applicable Notice Parties shall be given by first class mail. Each notice of redemption shall state the date of such notice, the date of issue of the Series of Bonds to which such notice relates, the redemption date, the Redemption Price, the place or places of redemption (including the name and appropriate address or addresses of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such maturity, the distinctive certificate numbers of the Bonds of such maturity, if any, to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of said Bonds the Redemption Price thereof or of said specified portion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the date fixed for redemption, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice. Neither the Commission nor the Trustee shall have any responsibility for any defect in the CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Commission nor the Trustee shall be liable for any inaccuracy in such CUSIP numbers. Failure by the Trustee to give notice to any Notice Party or any one or more of the Repositories or failure of any Holder, any Notice Party or any Repository to receive notice or any defect in any such notice shall not affect the sufficiency or validity of the proceedings for redemption. With respect to any notice of optional redemption of Bonds delivered pursuant to this Section 4.02 or any provision of any Supplemental Indenture, unless, upon the giving of such notice, such Bonds shall be deemed to have been paid within the meaning of Article X hereof, such notice shall state that such redemption shall be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of amounts sufficient to pay the principal of, and premium, if any, and interest on, such Bonds to be redeemed, and that if such amounts shall not have been so received said notice shall be of no force and effect and the Commission shall not be required to redeem such Bonds. In the event that such notice of redemption contains such a condition and such amounts are not so received, the redemption shall not be made and the Trustee shall within a reasonable time thereafter give notice to the Holders to the effect that such amounts were not so received and such redemption was not made, such notice to be given by the Trustee in the manner in which the notice of redemption was given. OHS West:260379475.8 32 • • 183 • • • Any notice given pursuant to this Section 4.02 may be rescinded by written notice given to the Trustee by the Conunission and the Trustee shall give notice of such rescission as soon thereafter as practicable in the same manner, and to the same Persons, as notice of such redemption was given pursuant to this Section 4.02. SECTION 4.03 Partial Redemption of Bonds. Upon surrender of any Bond redeemed in part only, the Commission shall execute (but need not prepare) and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Commission, a new Bond or. Bonds of authorized denominations, and of the same Series, maturity and interest rate, equal in aggregate principal amount to the unredeemed portion of the Bond surrendered. SECTION 4.04 Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the Redemption Price of, together with interest accrued to the redemption date on, the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption shall become due and payable at the Redemption Price specified in such notice together with interest accrued thereon to the redemption date, interest on the Bonds so called for redemption shall cease to accrue, said Bonds (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture and the Holders of said Bonds shall have no rights in respect thereof except to receive payment of said Redemption Price and accrued interest to the date fixed for redemption from funds held by the Trustee for such payment and such funds are hereby pledged to such payment. All Bonds redeemed pursuant to the provisions of this Article shall be canceled upon surrender thereof. ARTICLE V SALES TAX REVENUES SECTION 5.01 Pledge of Revenues; Revenue Fund. (A) As security for the payment of all amounts owing on the Bonds and Parity Obligations, there are irrevocably pledged to the Trustee: (i) all Revenues; and (ii) all amounts, including proceeds of the Bonds, held on deposit in the funds and accounts established hereunder (except for amounts held in the Rebate Fund, any Letter of Credit Account and any Purchase Fund), subject to the provision of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in this Indenture. The collateral identified above shall immediately be subject to this pledge, and this pledge shall constitute a first lien on and security interest in such collateral which shall immediately attach to the collateral and be effective, binding and enforceable against the Commission and all others asserting the rights therein, to the extent set forth, and in accordance with, this Indenture irrespective of whether those parties have notice of this pledge and without the need for any physical delivery, recordation, filing or further act. The pledge of Revenues and all amounts held on deposit in the funds and accounts established hereunder (except for amounts held in the Rebate Fund, any Letter of Credit Account and any Purchase Fund) herein made shall be irrevocable until all of the Bonds, all Panty Obligations and amounts owed in connection with the Bonds and Parity Obligations are no longer Outstanding. OHS West:260379475.8 33 184 All Bonds and Parity Obligations shall be of equal rank without preference, priority or distinction of any Bonds and Parity Obligations over any other Bonds and Parity Obligations. (B) As long as any Bonds are Outstanding or any Panty Obligations remain unpaid, the Commission hereby assigns and shall cause Sales Tax Revenues to be transmitted by the State Board of Equalization directly to the Trustee. The Trustee shall forthwith deposit in a trust fund, designated as the "Revenue Fund,' which fund the Trustee shall establish and maintain, all Sales Tax Revenues, when and as received by the Trustee. The Sales Tax Revenues shall be received and held in trust by the Trustee for the benefit of the Holders of the Bonds and the Parity Obligations and shall be disbursed, allocated and applied solely for the uses and purposes set forth in this Indenture. Investment income on amounts held by the Trustee hereunder (other than amounts held in the Rebate Fund or for which particular instructions, such as with respect to a Project Fund, a Letter of Credit Account or a Purchase Fund, are provided in a Supplemental Indenture), shall also be deposited in the Revenue Fund. All moneys at any time held in the Revenue Fund shall be held in trust for the benefit of the Holders of the Bonds and the holders of Parity Obligations and shall be disbursed, allocated and applied solely for the uses and purposes set forth in this Indenture. (C) The Bonds are limited obligations of the Commission and are payable as to both principal and interest, and any premium upon redemption thereof, exclusively from the Revenues and other funds pledged hereunder. SECTION 5.02 Allocation of Sales Tax Revenues. (A) So long as any Bonds are Outstanding and Parity Obligations, Subordinate Obligations, and all other amounts payable hereunder remain unpaid, the Trustee shall set aside in each month following receipt of the Sales Tax Revenues the moneys in the Revenue Fund in the following respective funds (each of which the Trustee shall establish, maintain and hold in trust for the benefit of the Holders of the Bonds and, as and to the extent applicable, the holders of Parity Obligations) in the following amounts, in the following order of priority, the requirements of each such fund (including the making up of any deficiencies in any such fund resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any deposit is made to any fund subsequent in priority; provided that on a parity with such deposits the Trustee may set aside or transfer amounts with respect to any outstanding Panty Obligations as provided in the proceedings for such Parity Obligations delivered to the Trustee pursuant to Section 3.05 (which shall be proportionate in the event such amounts are insufficient to provide for all deposits required as of any date to be made with respect to the Bonds and such Panty Obligations); provided further that payments on Interest Rate Swap Agreements that are payable on a parity with the Bonds shall be payable from the Interest Fund and the required deposits below shall be adjusted to include payments on such Interest Rate Swap Agreements in accordance with Section 5.10: (1) Interest Fund. Following receipt of the Sales Tax Revenues in each month, the Trustee shall set aside in the Interest Fund as soon as practicable in such month an amount equal to (a) one -sixth of the aggregate half -yearly amount of interest becoming due and payable on the Outstanding Current Interest Bonds (except for Bonds constituting Variable Rate Indebtedness which shall be governed by subparagraph (b) OIIS West:260379475.8 34 185 • • • below) during the next ensuing six (6) months (excluding any interest for which there are moneys deposited in the Interest Fund from the proceeds of any Series of Bonds or other source and reserved as capitalized interest to pay such interest during said next ensuing six (6) months), until the requisite half -yearly amount of interest on all such Outstanding Current Interest Bonds (except for Bonds constituting Variable Rate Indebtedness which shall be governed by subparagraph (b) below) is on deposit in such fund; provided that from the date of delivery of a Series of Current Interest Bonds until the first Interest Payment Date with respect to such Series of Bonds the amounts set aside in such fund with respect to such Series of Bonds shall be sufficient on a monthly pro rata basis to pay the aggregate amount of interest becoming due and payable on said Interest Payment Date with respect to such Series of Bonds, plus (b) the aggregate amount of interest to accrue during that month on Outstanding Variable Rate Indebtedness, calculated, if the actual rate of interest is not known, at the interest rate specified in writing by the Commission, or if the Commission shall not have specified an interest rate in writing, calculated at the maximum interest rate borne by such Variable Rate Indebtedness during the month prior to the month of deposit plus one hundred (100) basis points (provided, however, that the amount of such deposit into the Interest Fund for any month may be reduced by the amount by which the deposit in the prior month exceeded the actual amount of interest accrued and paid during that month on said Outstanding Variable Rate Indebtedness and provided further that the amount of such deposit into the Interest Fund for any month shall be increased by the amount by which the deposit in the prior month was less than the actual amount of interest accruing during that month on said Outstanding Variable Rate Indebtedness). No deposit need be made into the Interest Fund if the amount contained therein is at least equal to the interest to become due and payable on the Interest Payment Dates falling within the next six (6) months upon all of the Bonds issued hereunder and then Outstanding, and on June 1 and December 1 of each year any excess amounts in the Interest Fund not needed to pay interest on such date (and not held to pay interest on Bonds having Interest Payment Dates other than June 1 and December 1) shall be transferred to the Commission (but excluding, in each case, any moneys on deposit in the Interest Fund from the proceeds of any Series of Bonds or other source and reserved as capitalized interest to pay interest on any future Interest Payment Dates following such Interest Payment Dates). All Swap Revenues received with respect to Interest Rate Swap Agreements that are Parity Obligations shall be deposited in the Interest Fund and credited to the above required deposits. (2) Principal Fund; Sinking Accounts. Following receipt of the Sales Tax Revenues in each month, the Trustee shall deposit in the Principal Fund as soon as practicable in such month an amount equal to at least (a) one -sixth of the aggregate semiannual amount of Bond Obligation becoming due and payable on the Outstanding Serial Bonds of all Series having semiannual maturity dates within the next six (6) months, plus (b) one -twelfth of the aggregate yearly amount of Bond Obligation becoming due and payable on the Outstanding Serial Bonds of all Series having annual maturity dates within the next twelve (12) months, plus (c) one -sixth of the aggregate of the Mandatory Sinking Account Payments to be paid during the next six-month period into the respective Sinking Accounts for the Term Bonds of all Series for which Sinking Accounts have been created and for which semiannual mandatory redemption is required from said Sinking Accounts, plus (d) one -twelfth of the aggregate of the Mandatory OHS West:260374475.8 35 186 Sinking Account Payments to be paid during the next 12-month period into the respective Sinking Accounts for the Term Bonds of all Series for which Sinking Accounts shall have been created and for which annual mandatory redemption is required from such Sinking Accounts; provided that if the Commission certifies to the Trustee that any principal payments are expected to be refunded on or prior to their respective due dates or paid from amounts on deposit in a Bond Reserve Fund that would be in excess of the Bond Reserve Requirement applicable to such Bond Reserve Fund upon such payment, no amounts need be set aside towards such principal to be so refunded or paid. All of the aforesaid deposits made in connection with future Mandatory Sinking Account Payments shall be made without priority of any payment into any one such Sinking Account over any other such payment. In the event that the Sales Tax Revenues shall not be sufficient to make the required deposits so that moneys in the Principal Fund on any principal or mandatory redemption date are equal to the amount of Bond Obligation to become due and payable on the Outstanding Serial Bonds of all Series plus the Bond Obligation amount of and redemption premium on the Outstanding Term Bonds required to be redeemed or paid at maturity on such date, then such moneys shall be applied on a Proportionate Basis and in such proportion as said Serial Bonds and said Term Bonds shall bear to each other, after first deducting for such purposes from said Tenn Bonds any of said Tenn Bonds required to be redeemed annually as shall have been redeemed or purchased during the preceding 12-month period and any of said Tenn Bonds required to be redeemed semiannually as shall have been redeemed or purchased during the six-month period ending on such date or the immediately preceding six month period. In the event that the Sales Tax Revenues shall not be sufficient to pay in full all Mandatory Sinking Account Payments required to be paid at any one time into all such Sinking Accounts, then payments into all such Sinking Accounts shall be made on a Proportionate Basis, in proportion that the respective Mandatory Sinking Account Payments required to be made into each Sinking Account during the then current 12-month period bear to the aggregate of all of the Mandatory Sinking Account Payments required to be made into all such Sinking Accounts during such 12-month period. No deposit need be made into the Principal Fund so long as there shall be in such fund (i) moneys sufficient to pay the Bond Obligations of all Serial Bonds issued hereunder and then Outstanding and maturing by their terms within the next twelve (12) months plus (ii) the aggregate of all Mandatory Sinking Account Payments required to be made in such 12-month period, but less any amounts deposited into the Principal Fund during such 12-month period and theretofore paid from the Principal Fund to redeem or purchase Term Bonds during such 12-month period; provided that if the Commission certifies to the Trustee that any principal payments are expected to be refunded on or prior to their respective due dates or paid from amounts on deposit in a Bond. Reserve Fund that would be in excess of the Bond Reserve Requirement applicable to such Bond Reserve Fund upon such payment, no amounts need be on deposit with respect to such principal payments. At the beginning of each Fiscal Year and in any event not later than June 1 of each year, the Trustee shall request from the Commission a Certificate of the Commission setting forth the principal payments for which deposits will not be necessary pursuant to the preceding sentence and the reason therefor. On June 1 of each year or as OHS West:260379475.8 36 187 soon as practicable thereafter any excess amounts in the Principal Fund not needed to pay principal on such date (and not held to pay principal on Bonds having principal payment dates other than June 1) shall be transferred to the Commission. (3) Bond Reserve Fund. Upon the occurrence of any deficiency in any Bond Reserve Fund, the Trustee shall make such deposit to such Bond Reserve Fund as is required pursuant to Section 5.05(D), each such deposit to be made as soon as possible in each month, until the balance therein is at least equal to the applicable Bond Reserve Requirement. (4) Subordinate Obligations Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Subordinate Obligations Fund." As long as any Subordinate Obligations remain unpaid, any Revenues remaining in the Revenue Fund after the transfers described in (1), (2) and (3) above have been made shall be transferred on the same Business Day to the Notes Trustee. After the Notes Trustee has made the required deposit of Revenues under the Notes Indenture, the Notes Trustee shall transfer any remaining Revenues back to the Trustee. (5) Fees and Expenses Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Fees and Expenses Fund." At the direction of the Commission, after the transfers described in (1), (2), (3) and (4) above have been made, the Trustee shall deposit as soon as practicable in each month in the Fees and Expenses Fund (i) amounts necessary for payment of fees, expenses and similar charges (including fees, expenses and similar charges relating to any Liquidity Facility or Credit Enhancement for the Bonds or any Parity Obligations) owing in such month or the following month by the Commission in connection with the Bonds or any Panty Obligations and (ii) amounts necessary for payment of fees, expenses and similar charges owing in such month or the following month by the Commission in connection with Subordinate Obligations. The Commission shall inform the Trustee of such amounts, in writing, on or prior to the fast Business Day of each month. (B) Any Revenues remaining in the Revenue Fund after the foregoing transfers described in (1), (2), (3), (4) and (5) of subsection (A) above, except as the Commission shall otherwise direct in writing or as is otherwise provided in a Supplemental Indenture, shall be transferred to the Commission on the same Business Day or as soon as practicable thereafter. The Commission may use and apply the Revenues when received by it for any lawful purpose of the Commission, including the redemption of Bonds upon the terms and conditions set forth in the Supplemental Indenture relating to such Bonds and the purchase of Bonds as and when and at such prices as it may determine. (C) If, five (5) days prior to any principal payment date, Interest Payment Date or mandatory redemption date, the amounts on deposit in the Revenue Fund, the Interest Fund, the Principal Fund, including the Sinking Accounts therein, and, as and to the extent not required to satisfy the Bond Reserve Requirement, any Bond Reserve Fund established in connection with a Series of Bonds with respect to the payments to be made on such upcoming date are insufficient to make such payments, the Trustee shall immediately notify the Commission, in writing, of such deficiency and direct that the Commission transfer the amount of such deficiency to the Trustee OHS West•260379475.8 37 188 on or prior to such payment date. The Commission hereby covenants and agrees to transfer to the Trustee from any Revenues in its possession the amount of such deficiency on or prior to the principal, interest or mandatory redemption date referenced in such notice. SECTION 5.03 Application of Interest Fund. All amounts in the Interest Fund shall be used and withdrawn by the Trustee solely for the purposes of: (a) paying interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity pursuant to this Indenture), or for reimbursing the Credit Provider for a drawing for such purposes made on Credit Enhancement provided in the form of an irrevocable, direct -pay letter of credit, and (b) making periodic payments on Interest Rate Swap Agreements, as provided in Section 5.10. SECTION 5.04 Application of Principal Fund. (A) All amounts in the Principal Fund shall be used and withdrawn by the Trustee solely for the purposes of paying the Bond Obligation of the Bonds when due and payable, except that all amounts in the Sinking Accounts shall be used and withdrawn by the Trustee solely to purchase or redeem or pay at maturity Term Bonds, as provided herein, or for reimbursing the Credit Provider for a drawing for such purposes made on Credit Enhancement provided in the form of an irrevocable, direct -pay letter of credit. (B) The Trustee shall establish and maintain within the Principal Fund a separate account for the Term Bonds of each Series and maturity, designated as the " Sinking Account," inserting therein the Series and maturity designation of such Bonds. On or before the Business Day prior to any date upon which a Mandatory Sinking Account Payment is due, the Trustee shall transfer the amount of such Mandatory Sinking Account Payment (being the principal thereof, in the case of Current Interest Bonds, and the Accreted Value, in the case of Capital Appreciation Bonds) from the Principal Fund to the applicable Sinking Account. With respect to each Sinking Account, on each Mandatory Sinking Account Payment date established for such Sinking Account, the Trustee shall apply the Mandatory Sinking Account Payment required on that date to the redemption (or payment at maturity, as the case may be) of Term Bonds of such Series and maturity for which such Sinking Account was established, in the manner provided in this Indenture or the Supplemental Indenture pursuant to which such Series of Bonds was created; provided that, at any time prior to giving such notice of such redemption, the Trustee shall, upon receipt of a Request of the Commission, apply moneys in such Sinking Account to the purchase of Term Bonds of such Series and maturity at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as is directed by the Commission, except that the purchase price (excluding accrued interest, in the case of Current Interest Bonds) shall not exceed the principal amount or Accreted Value thereof. If, during the 12-month period (or six- month period with respect to Bonds having semi-annual Mandatory Sinking Account Payments) immediately preceding said Mandatory Sinking Account Payment date, the Trustee has purchased Term Bonds of such Series and maturity with moneys in such Sinking Account, or, during said period and prior to giving said notice of redemption, the Commission has deposited Term Bonds of such Series and maturity with the Trustee, or Term Bonds of such Series and maturity were at any time purchased or redeemed by the Trustee from the Redemption Fund and allocable to said Mandatory Sinking Account Payment, such Term Bonds so purchased or OHS West:260379475.8 38 • 189 • deposited or redeemed shall be applied, to the extent of the full principal amount thereof, to reduce said Mandatory Sinking Account Payment. All Term Bonds purchased or deposited pursuant to this subsection shall be cancelled by the Trustee and destroyed by the Trustee and a certificate of destruction shall be delivered to the Commission by the Trustee. Any amounts remaining in a Sinking Account on June 1 of each year following the redemption as of such date of the Term Bonds for which such account was established shall be withdrawn by the Trustee and transferred as soon as practicable to the Commission to be used for any lawful purpose. All Term Bonds purchased from a Sinking Account or deposited by the Commission with the Trustee in a twelve month period ending May 31 (or in a six-month period ending May 31 or September 30 with respect to Bonds having semi-annual Mandatory Sinking Account Payments) and prior to the giving of notice by the Trustee for redemption from Mandatory Sinking Account Payments for such period shall be allocated first to the next succeeding Mandatory Sinking Account Payment for such Series and maturity of Term Bonds, if any, occurring on the next June 1 or December 1, then as a credit against such future Mandatory Sinking Account Payments for such Series and maturity of Term Bonds as may be specified in a Request of the Commission. All Term Bonds redeemed by the Trustee from the Redemption Fund shall be credited to such future Mandatory Sinking Account Payments for such Series and maturity of Term Bonds as may be specified in a Request of the Commission. SECTION 5.05 Establishment, Funding and Application of Bond Reserve Funds. The Commission may at its sole discretion at the time of issuance of any Series of Bonds or at any time thereafter by Supplemental Indenture provide for the establishment of a Bond Reserve Fund as additional security fora Series of Bonds. Any Bond Reserve Fund so established by the Commission shall be available to secure one or more Series of Bonds as the Commission shall determine and shall specify in the Supplemental Indenture establishing such Bond Reserve Fund. Any Bond Reserve Fund established by the Commission shall be held by the Trustee and shall comply with the requirements set forth in this Section 5.05. (A) In lieu of making the Bond Reserve Requirement deposit applicable to one or more Series of Bonds in cash or in replacement of moneys then on deposit in any Bond Reserve Fund (which shall be transferred by the Trustee to the Commission), or in substitution of any Reserve Facility comprising part of the Bond Reserve Requirement relating to one or more Series of Bonds, the Commission may, at any time and from time to time, deliver to the Trustee an irrevocable letter of credit issued by a fmancial institution having unsecured debt obligations rated at the time of delivery of such letter of credit in one of the two highest Rating Categories of both Moody's and Standard & Poor's, in an amount, which, together with cash, Investment Securities or other Reserve Facilities, as described in Section 5.05(B), then on deposit in such Bond Reserve Fund, will equal the Bond Reserve Requirement relating to the Bonds to which such Bond Reserve Fund relates. Such letter of credit shall have a term no less than three (3) years or, if less, the final maturity of the Bonds in connection with which such letter of credit was obtained and shall provide by its terms that it may be drawn upon as provided in this Section 5.05. At least one (1) year prior to the stated expiration of such letter of credit, the Commission shall either (i) deliver a replacement letter of credit, (ii) deliver an extension of the letter of credit for at least one (1) additional year or, if less, the fmal maturity of the Bonds in connection with which such letter of credit was obtained, or (iii) deliver to the Trustee a Reserve Facility satisfying the requirements of Section 5.05(B). Upon delivery of such replacement Reserve Facility, the Trustee shall deliver the then -effective letter of credit to or upon the order of the OHS west260379475.e 39 190 Commission. If the Commission shall fail to deposit a replacement Reserve Facility with the Trustee; the Commission shall immediately commence to make monthly deposits with the Trustee so that an amount equal to the Bond Reserve Requirement relating to the Bonds to which such Bond Reserve Fund relates will be on deposit in such Bond Reserve Fund no later than the stated expiration date of the letter of credit. If an amount equal to the Bond Reserve Requirement relating to the Bonds to which such Bond Reserve Fund relates as of the date following the expiration of the letter of credit is not on deposit in such Bond Reserve Fund one (1) week prior to the expiration date of the letter of credit (excluding from such determination the letter of credit), the Trustee shall draw on the letter of credit to fund the deficiency resulting therefrom in such Bond Reserve Fund. (B) In lieu of making a Bond Reserve Requirement deposit in cash or in replacement of moneys then on deposit in a Bond Reserve Fund (which shall be transferred by the Trustee to the Commission) or in substitution of any Reserve Facility comprising part of a Bond Reserve Requirement for any Bonds, the Commission may, at any time and from time to time, deliver to the Trustee a surety bond or an insurance policy securing an amount which, together with moneys, Investment Securities, or other Reserve Facilities then on deposit in a Bond Reserve Fund, is no less than the Bond Reserve Requirement relating to the Bonds to which such Bond Reserve Fund relates. Such surety bond or insurance policy shall be issued by an insurance company whose unsecured debt obligations (or for which obligations secured by such insurance company's insurance policies) are rated at the time of delivery in one of the two highest Rating Categories of both Moody's and Standard & Poor's. Such surety bond or insurance policy shall have a term of no less than the fmal maturity of the Bonds in connection with which such surety bond or insurance policy is obtained. In the event that such surety bond or insurance policy for any reason lapses or expires, the Commission shall immediately implement (i) or (iii) of the preceding paragraph or make twelve equal monthly deposits to such Bond Reserve Fund so that the Bond Reserve Fund is replenished to the required level after a year. (C) Subject to Section 5.05(E), all amounts in any Bond Reserve Fund (including all amounts which may be obtained from a Reserve Facility on deposit in such Bond Reserve Fund) shall be used and withdrawn by the Trustee, as hereinafter provided: (i) for the purpose of making up any deficiency in the Interest Fund or the Principal Fund relating to the Bonds of the Series to which such Bond Reserve Fund relates; or (ii) together with any other moneys available therefor, (x) for the payment or redemption of all Bonds then Outstanding of the Series to which such Bond Reserve Fund relates, (y) for the defeasance or redemption of all or a portion of the Bonds then Outstanding of the Series to which such Bond Reserve Fund relates, provided, however, that if funds on deposit in any Bond Reserve Fund are applied to the defeasance or redemption of a portion of the Series of Bonds to which such Bond Reserve Fund relates, the amount on deposit in the Bond Reserve Fund immediately subsequent to such partial defeasance or redemption shall equal the Bond Reserve Requirement applicable to all Bonds of such Series Outstanding immediately subsequent to such partial defeasance or redemption, or (z) for the payment of the final principal and interest payment of the Bonds . of such Series. Unless otherwise directed in a Supplemental Indenture establishing the terms and provisions of a Series of Bonds, the Trustee shall apply amounts held in cash or Investment Securities in any Bond Reserve Fund prior to applying amounts held in the form of Reserve Facilities in any Bond Reserve Fund, and if there is more than one Reserve Facility being held on deposit in any Bond Reserve Fund, shall, on a pro rata basis with respect to the portion of a Bond Reserve Fund held OHS West:260379475.8 40 • 191 • in the form of a Reserve Facility (calculated by reference to the maximum amount of such Reserve Facility), draw under each Reserve Facility issued with respect to such Bond Reserve Fund, in a timely manner and pursuant to the terms of such Reserve Facility to the extent necessary in order to obtain sufficient funds on or prior to the date such funds are needed to pay the Bond Obligation of, Mandatory Sinking Account Payments with respect to, and interest on the Bonds of the Series to which such Bond Reserve Fund relates when due. In the event that the Trustee has notice that any payment of principal of or interest on a Bond has been recovered from a Holder pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee, pursuant to the terms of, and if so provided by, the terns of the Reserve Facility, if any, securing the Bonds of such Series, shall so notify the issuer thereof and draw on such Reserve Facility to the lesser of the extent required or the maximum amount of such Reserve Facility in order to pay to such Holders the principal and interest so recovered. (D) The Trustee shall notify the Commission of any deficiency in any Bond Reserve Fund (i) due to a withdrawal from such Bond Reserve Fund for purposes of making up any deficiency in the Interest Fund or the Principal Fund relating to the Bonds of the Series to which such Bond Reserve Fund relates or (ii) resulting from a valuation of Investment Securities held on deposit in such Bond Reserve Fund pursuant to Section 5.11 and shall request that the Commission replenish such deficiency or repay any and all obligations due and payable under the terms of any Reserve Facility comprising part of any Bond Reserve Requirement. Upon receipt of such notification from the Trustee, the Commission shall instruct the Trustee to commence setting aside in each month following receipt of Sales Tax Revenues for deposit in the applicable Bond Reserve Fund an amount equal to one -twelfth (1/12th) of the aggregate amount of each unreplenished prior withdrawal from such Bond Reserve Fund or decrease resulting from a valuation pursuant to Section 5.11 and shall further instruct the Trustee to transfer to each Reserve Facility Provider providing a Reserve Facility satisfying a portion of the Bond Reserve Requirement relating to the Bonds of the Series to which such Bond Reserve Fund relates, an amount equal to one -twelfth (1/12th) of the aggregate amount of any unreplenished prior withdrawal on such Reserve Facility, such amount to be transferred by the Trustee as promptly as possible after receipt of the Sales Tax Revenues each month, commencing with the month following the Commission's receipt of notification from the Trustee of withdrawal or decrease resulting from a valuation, as applicable, until the balance on deposit in such Bond Reserve Fund is at least equal to the Bond Reserve Requirement relating to the Bonds of the Series to which such Bond Reserve Fund relates. (E) Unless the Commission shall otherwise direct in writing, any amounts in any Bond Reserve Fund in excess of the Bond Reserve Requirement relating to the Bonds of the Series to which such Bond Reserve Fund relates shall be transferred by the Trustee to the Commission on the Business Day following June 1 of each year, provided that such amounts shall be transferred only from the portion of such Bond Reserve Fund held in the form of cash or Investment Securities. In addition, amounts on deposit in any Bond Reserve Fund shall be transferred by the Trustee to the Commission upon the defeasance, retirement or refunding of Bonds of the Series to which such Bond Reserve Fund relates or upon the replacement of cash on deposit in such Bond Reserve Fund with one or more Reserve Facilities in accordance with Section 5.05(A) or Section 5.05(B). The Bond Reserve Requirement shall only be calculated OHS West:260379475.8 41 192 upon the issuance or retirement of a Series of Bonds and upon the defeasance of all or a portion of a Series of Bonds. SECTION 5.06 Application of Subordinate Obligations Fund. All moneys in the Subordinate Obligations Fund shall be applied to the payment of principal of and interest on Subordinate Obligations in.accordance with Section 5.02(A)(4). SECTION 5.07 Application of Fees and Expenses Fund. All amounts in the Fees and Expenses Fund shall be used and withdrawn by the Trustee solely for the purpose of paying fees, expenses and similar charges owed by the Commission in connection with the Bonds or any Parity Obligations or Subordinate Obligations as such amounts shall become due and payable. SECTION 5.08 Application of Redemption Fund. The Trustee shall establish, maintain and hold in trust a special fund designated as the "Redemption Fund." All moneys deposited by the Commission with the Trustee for the purpose of optionally redeeming Bonds of any Series shall, unless otherwise directed by the Commission, be deposited in the Redemption Fund. All amounts deposited in the Redemption Fund shall be used and withdrawn by the Trustee solely for the purpose of redeeming Bonds of such Series and maturity as shall be. specified by the Commission in a Request to the Trustee, in the manner, at the times and upon the terms and conditions specified in the Supplemental Indenture pursuant to which the Series of Bonds was created; provided that, at any time prior to giving such notice of redemption, the Trustee shall, upon receipt of a Request of the Commission, apply such amounts to the purchase of Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding, in the case of Current Interest Bonds, accrued interest, which is payable from the Interest Fund) as is directed by the Commission, except that the purchase price (exclusive of any accrued interest) may not exceed the Redemption Price or Accreted Value then applicable to such Bonds. All Term Bonds purchased or redeemed from the Redemption Fund shall be allocated to Mandatory Sinking Account Payments applicable to such Series and maturity of Term Bonds as may be specified in a Request of the Commission. SECTION 5.09 Rebate Fund. (A) Upon receipt of funds to be applied to the Rebate Requirement, the Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder designated as the Rebate Fund. Within the Rebate Fund, the Trustee shall maintain such accounts as shalt be necessary in order to comply with the terms and requirements of each Tax Certificate as directed in writing by the Commission. Subject to the transfer provisions provided in paragraph (C) below, all money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement, for payment to the federal government of the United States of America, and neither the Trustee nor any Holder nor any other Person shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Indenture and by the applicable the Tax Certificates. The Commission hereby covenants to comply with the directions contained in each Tax Certificate and the Trustee hereby covenants to comply with all written instructions of the Commission delivered to the Trustee pursuant to each Tax Certificate (which instructions shall state the actual amounts to be deposited in or withdrawn from the Rebate Fund and shall not require the Trustee to make any calculations with respect thereto). The Trustee shall be deemed OHS West:260379475.8 42 193 • • • conclusively to have complied with the provisions of this Section 5.09(A) if it follows such instructions of the Commission, and the Trustee shall have no liability or responsibility to enforce compliance by the Commission with the terms of any Tax Certificate nor to make computations in connection • therewith. (B) Pursuant to each Tax Certificate, an amount shall be deposited in the Rebate Fund by the Commission so that the balance of the amount on deposit thereto shall be equal to the Rebate Requirement applicable to the Series of Bonds to which such Tax Certificate relates. Computations of each Rebate Requirement shall be furnished by or on behalf of the Commission to the Trustee in accordance with the applicable Tax Certificate. (C) The Trustee shall invest all amounts held in the Rebate Fund, pursuant to written instructions of the Commission, in Investment Securities, subject to the restrictions set forth in the applicable Tax Certificate. Money shall not be transferred from the Rebate Fund except as provided in paragraph (D) below. (D) Upon receipt of Rebate Instructions, the Trustee shall remit part or all of the balances in the Rebate Fund to the United States of America, as so directed. In addition, if the Rebate Instructions so direct, the Trustee will deposit moneys into or transfer moneys out of the Rebate Fund from or into such accounts or funds as directed by the Rebate Instructions. Any funds remaining in the Rebate Fund after redemption and payment of all of a Series of Bonds and payment and satisfaction of any Rebate Requirement applicable to such Series of Bonds, shall be withdrawn and remitted to the Commission in accordance with a Request of the Commission. (E) Notwithstanding any other provision of the Indenture, including in particular Article X thereof, the obligation to remit the Rebate Requirement applicable to each Series of Bonds to the federal government of the United States of America and to comply with all other requirements of this Section and each Tax Certificate shall survive the defeasance or payment in full of the Bonds. SECTION 5.10 Payment Provisions Applicable to Interest Rate Swap Agreements. The Commission and the Trustee hereby acknowledge that the Initial Swaps have been entered into by the Commission, that the obligation of the Commission to make payments required under the Initial Swaps (excluding fees and expenses and termination payments under the Initial Swaps) constitutes a Parity Obligation hereunder and shall be payable from the Interest Fund, and that the amounts received by the Commission, if any, pursuant to such Interest Rate Swap Agreement shall be applied to the deposits required hereunder. In the event the Commission shall enter into an Interest Rate Swap Agreement in connection with a Series of Bonds other than the Initial Swaps, the amounts received by the Commission, if any, pursuant to such Interest Rate Swap Agreement shall also be applied to the deposits required hereunder. If the Commission so designates in a Supplemental Indenture establishing the terms and provisions of such Series of Bonds (or if such Interest Rate Swap Agreement is entered into subsequent to the issuance of such Series of Bonds, if the Commission so designates in a Certificate of the Commission delivered to the Trustee concurrently with the execution of such Interest Rate Swap Agreement), amounts payable under such Interest Rate Swap Agreement (excluding termination payments and payments of fees and expenses incurred in connection with Interest Rate Swap Agreements OHS West:260379475.S 43 194 which shall in all cases be payable from, and secured by, Sales Tax Revenues on a subordinate basis to Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations) shall constitute Parity Obligations under this Indenture, and, in. such event, the Commission shall pay or cause to be paid to the Trustee for deposit in the Interest Fund, at the times and in the manner provided by Section 5.02, the amounts to be paid pursuant to such Interest Rate Swap Agreement, as if such amounts were additional interest due on the Series of Bonds to which such Interest Rate Swap Agreement relates, and the Trustee shall pay to the Counterparty to such Interest Rate Swap Agreement, to the extent required thereunder, from amounts deposited in the Interest Fund for the payment of interest on the Series of Bonds with respect to which such Interest Rate Swap Agreement was entered into. SECTION 5.11 Investment in Funds and Accounts. All moneys in any of the funds and accounts held by the Trustee and established pursuant to this Indenture shall be invested, as directed by the Commission, solely in Investment Securities. All Investment Securities shall, as directed by the Commission in writing or by telephone, promptly confirmed in writing, be acquired subject to the limitations set forth in Section 6.08, the limitations as to maturities hereinafter in this Section set forth and such additional limitations or requirements consistent with the foregoing as may be established by Request of the Commission. If and to the extent the Trustee does not receive investment instructions from the Commission with respect to the moneys in the funds and accounts held by the Trustee pursuant to this Indenture, such moneys shall be invested in Investment Securities described in clause (12) of the definition thereof and the Trustee shall thereupon request investment instructions from the Commission for such moneys. Moneys in any Bond Reserve Fund shall be invested in Investment Securities available on demand for the purpose of payment of the Bonds to which such Bond Reserve Fund relates as provided herein. Moneys in the remaining funds and accounts shall be invested in Investment Securities maturing or available on demand not later than the date on which it is estimated that such moneys will be required by the Trustee. Unless otherwise provided in a Supplemental Indenture establishing the terms and provisions of a Series of Bonds: (i) all interest, profits and other income received from the investment of moneys in the Interest Fund representing accrued interest or capitalized interest shall be retained in the Interest Fund; (ii) all interest, profits and other income received from the investment of moneys in a Bond Reserve Fund shall be retained in such Bond Reserve Fund to the extent of any deficiency therein, and otherwise shall be transferred to the Revenue Fund; (iii) all interest, profits and other income received from the investment of moneys in a Costs of Issuance Fund shall be transferred to the Revenue Fund; (iv) all interest, profits and other income received from the investment of moneys in a Project Fund shall be retained in such Project Fund, unless the Commission shall direct that such earnings be transferred to the Rebate Fund; (v) all interest, profits and other income received from the investment of moneys in the Rebate Fund shall be retained in the Rebate Fund, except as otherwise provided in Section 5.09, (vi) all interest, profits and other income received from the investment of moneys in any Purchase Fund shall be retained in such Purchase Fund; and (vii) all interest, profits and other income received from the investment of moneys in any other fund or account shall be transferred to the Revenue Fund. Notwithstanding anything to the contrary contained in this paragraph, an amount of interest received with respect to any Investment Security equal to the amount of accrued interest, OHS West:260379475.8 44 195 • if any, paid as part of the purchase price of such Investment Security shall be credited to the fund or account from which such accrued interest was paid. All Investment Securities credited to any Bond Reserve Fund shall be valued (at market value) as of June 1 and December 1 of each year (or the next succeeding Business Day if such day is not a Business Day), such market value to be determined by the Trustee in the manner then currently employed by the Trustee or in any other manner consistent with corporate trust industry standards. Notwithstanding anything to the contrary herein, in making any valuations of investments hereunder, the Trustee may utilize and rely on computerized securities pricing services that may be available to it, including those available through its regular accounting system. The Trustee may commingle any of the funds or accounts established pursuant to this Indenture (except the Rebate Fund and any Purchase Fund) into a separate fund or funds for investment purposes only, provided that all funds or accounts held by the Trustee hereunder shall be accounted for separately as required by this Indenture. The Trustee may act as principal or agent in the making or disposing of any investment and, with the prior written consent of the Commission may impose its customary charge therefor. The Trustee may sell at the best price obtainable, or present for redemption, any Investment Securities so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Investment Security is credited. The Trustee shall not be liable or responsible for any loss resulting from any investment made in accordance herewith. ARTICLE VI COVENANTS OF THE COMMISSION SECTION 6.01 Punctual Payments. The Commission will punctually pay or cause to be paid the principal or Redemption Price of and interest on all the Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, and shall punctually pay or cause to be paid all Mandatory Sinking Account Payments, but in each case only out of Revenues as provided in this Indenture. SECTION 6.02 Extension of Payment of Bonds. The Commission will not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any Bonds or claims for interest by the purchase or funding of such Bonds or claims for interest or by any other arrangement and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the Commission to issue bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of Bonds. OHS West260379475.8 45 196 SECTION 6.03 Waiver of Laws. The Commission will not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension of law now or at any time hereafter in force that may affect the covenants and agreements contained in this Indenture or in the Bonds, and all benefit or advantage of any such law or laws is hereby expressly waived by the Commission to the extent permitted by law. SECTION 6.04 Further Assurances. The Commission will make, execute and deliver any and all such instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Holders of the Bonds of the rights and benefits provided in this Indenture. SECTION 6.05 Against Encumbrances. The Commission will not create any pledge, lien or charge upon any of the Sales Tax Revenues having priority over or having parity with the lien of the Bonds except only as permitted in Section 3.05. SECTION 6.06 Accounting Records and Financial Statements. (A) The Commission will at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with generally accepted accounting principles, in which complete and accurate entries shall be made of all transactions relating to the Revenues. Such books of record and account shall be available for inspection by the Trustee at reasonable hours and under reasonable circumstances. (B) The Commission will furnish the Trustee, with copies to each Credit Provider and each Liquidity Provider, within two hundred ten (210) days after the end of each Fiscal Year or as soon thereafter as they can practically be furnished, the financial statements of the Commission for such Fiscal Year, together with the report and opinion of an independent certified public accountant stating that the fmancial statements have been prepared in accordance with generally accepted accounting principles and that such accountant's examination of the financial statements was performed in accordance with generally accepted auditing standards and a Certificate of an Authorized Representative stating that no event which constitutes an Event of Default or which with the giving of notice or the passage of time or both would constitute an Event of Default has occurred and is continuing as of the end of such Fiscal Year, or specifying the nature of such event and the actions taken and proposed to be taken by the Commission to cure such default. Thereafter, a copy of such financial statements will be furnished to any Holder upon written request to the Commission, which copy of the financial statements may, at the sole discretion of the Commission, be provided by means of posting such financial statements on an intemet site that provides access to the Holders. SECTION 6.07 Collection of Sales Tax Revenues. (A) The Commission covenants and agrees that it has duly levied a retail transactions and use tax in accordance with the Act, pursuant to and in accordance with the Ordinance, duly passed and adopted by the Commission. Said Ordinance has not and will not be amended, modified or altered so long as any of the Bonds are Outstanding in any manner which would reduce the amount of or timing of receipt of Sales Tax Revenues, and the Commission will OilS West:260379475.8 46 197 • continue to levy and collect such retail transactions and use tax to the full amount permitted by law. The Commission further covenants that it has entered into an agreement with the State Board of Equalization under and pursuant to which the State Board of Equalization will process and supervise collection of said retail transactions and use tax and will transmit Sales Tax Revenues directly to the Trustee. Said agreement will be continued in effect so long as any Bonds are Outstanding and shall not be amended, modified or altered without the written consent of the Trustee so long as any of the Bonds are Outstanding. The Commission will receive and hold in trust for (and remit immediately to) the Trustee any Sales Tax Revenues paid to the Commission by the State Board of Equalization. (B) Sales Tax Revenues received by the Trustee shall be transmitted to the Commission pursuant to Section 5.02; provided that, during the continuance of an Event of Default, any Sales Tax Revenues received by the Trustee shall be applied as set forth in Section 7.02. (C) The Commission covenants and agrees to separately account for all Revenues and to provide to the Trustee access to such accounting records at reasonable hours and under reasonable circumstances. (D) The Commission covenants that so long as the Bonds are Outstanding, it will not, to the best of its ability, suffer or permit any change, modification or alteration to be made to the Act which would materially and adversely affect the rights of Bondholders. SECTION 6.08 Tax Covenants. The Commission covenants that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the Bonds under Section 103 of the Code; provided that, prior to the issuance of any Series of Bonds, the Commission may exclude the application of the covenants contained in this Section 6.08 and Section 5.09 to such Series of Bonds. The Commission will not directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the Commission, or take or omit to take any action that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code. To that end, the Commission will comply with all requirements of the Tax Certificate relating to each Series of the Bonds. In the event that at any time the Commission is of the opinion that for purposes of this Section 6.08 it is necessary to restrict or limit the yield on the investment of any moneys held by the Trustee under this Indenture, the Commission shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. Without limiting the generality of the foregoing, the Commission agrees that there shall be paid from time to time all amounts required to be rebated to the federal government of the United States of America pursuant to Section 148(f) of the Code and any temporary, proposed or final Treasury Regulations as may be applicable to the Bonds from time to time. The Commission specifically covenants to pay or cause to be paid to the federal government of the United States of America the Rebate Requirement with respect to each Series of Bonds at the times and in the amounts determined under and as described in the Tax Certificate executed and delivered in connection with such Series of Bonds. OHS West:260379475.8 47 198 Notwithstanding any provision of this Section 6.08, Section 5.09 and any Tax Certificate, if the Commission shall receive an Opinion of Bond Counsel to the effect that any action required under this Section 6.08, Section 5.09 or any Tax Certificate is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, the Commission and the Trustee may rely conclusively on such opinion in complying with the provisions hereof, and the covenants hereunder shall be deemed to be modified to that extent. Notwithstanding any provisions of this Indenture, including particularly Article X, the covenants and obligations set forth in this Section 6.08 shall survive the defeasance of the Bonds or any Series thereof. SECTION 6.09 Continuing Disclosure. Upon the issuance of any Series of Bonds requiring an undertaking regarding continuing disclosure under Rule 15c2-12, the °Commission hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement executed and delivered in connection with such Series of Bonds. Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the provisions of any Continuing Disclosure Agreement shall not be considered an Event of Default; however, the Trustee shall, at the written request of any Participating Underwriter or of the Holders of at least twenty-five (25%) aggregate principal amount of any Series of Bonds then Outstanding (but only to the extent funds in an amount satisfactory to the Trustee have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges and fees of the Trustee whatsoever, including, without limitation, reasonable fees and expenses of its attorneys), or any Holder or beneficial owner may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Commission to comply with its obligations under this Section 6.09. SECTION 7.01 Default: ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Events of Default. The following events shall be Events of (A) default in the due and punctual payment of the principal or Redemption Price of any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise, or default in the redemption from any Sinking Account of any Bonds in the amounts and at the times provided therefor; (B) default in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable; (C) if the Commission shall fail to observe or perform any covenant, condition, agreement or provision in this Indenture on its part to be observed or performed, other than as referred to in subsection (A) or (B) of this Section, for a period of sixty (60) days after written OHS West:260379475.8 48 199 • • notice, specifying such failure and requesting that it be remedied, has been given to the Commission by the Trustee or by any Credit Provider; except that, if such failure can be remedied but not within such sixty (60) day period and if the Commission has taken all action reasonably possible to remedy such failure within such sixty (60) day period, such failure shall not become an Event of Default for so long as the Commission shall diligently proceed to remedy the same in accordance with and subject to any directions or limitations of time established by the Trustee; (D) if any payment default shall exist under any agreement goveming any Parity Obligations and such default shall continue beyond the grace period, if any, provided for with respect to such default; (E) if the Commission files a petition in voluntary bankruptcy for the composition of its affairs or for its corporate reorganization under any state or federal bankruptcy or insolvency law, or makes an assignment for the benefit of creditors, or admits in writing to its insolvency or inability to pay debts as they mature, or consents in writing to the appointment of a trustee or receiver for itself; (F) if a court of competent jurisdiction shall enter an order, judgment or decree declaring the Commission insolvent, or adjudging it bankrupt, or appointing a trustee or receiver of the Commission, or approving a petition filed against the Commission seeking reorganization of the Commission under any applicable law or statute of the United States of America or any state thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within sixty (60) days from the date of the entry thereof; (G) if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Commission or of the Revenues, and such custody or control shall not be terminated within sixty (60) days from the date of assumption of such custody or control; or (H) if the Legislature of the State shall repeal or amend all or any portion of the provisions of the Act relating to the retail transactions and use tax, being Sections 240300 to 240323, inclusive, of the Public Utilities Code of the State unless the Commission has reasonably determined that said repeal or amendment does not materially and adversely affect the rights of Bondholders. SEC 1'ION 7.02 Application of the Revenues and Other Funds After Default; No Acceleration. If an Event of Default shall occur and be continuing, the Commission shall immediately transfer to the Trustee all Revenues held by it and the Trustee shall apply all Revenues and any other funds then held or thereafter received by the Tmstee.under any of the provisions of this Indenture (excluding the Rebate Fund and any Purchase Fund and except as otherwise provided in this Indenture) as follows and in the following order: (1) to the payment of any expenses necessary in the opinion of the Trustee to protect the interests of the Holders of the Bonds and Parity Obligations, including the costs and expenses of the Trustee and the Bondholders in declaring such Event of Default, and payment of reasonable fees and expenses of the Trustee (including reasonable fees and disbursements of its OHS West:260379475.8 49 200 counsel and other agents) incurred in and about the performance of its powers and duties under this Indenture; (2) to the payment of the whole amount of Bond Obligation then due on the Bonds and Parity Obligations (upon presentation of the Bonds and Panty Obligations to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this Indenture (including Section 9.02), with interest on such Bond Obligation, at the rate or rates of interest borne by the respective Bonds and on Parity Obligations, to the payment to the persons entitled thereto of all installments of interest then due and the unpaid principal or Redemption Price of any Bonds and Panty Obligations which shall have become due, whether at maturity, by call for redemption or otherwise, in the order of their due dates, with interest on the overdue Bond Obligation and Parity Obligations at the rate borne by the respective Bonds and Parity Obligations, and, if the amount available shall not be sufficient to pay in full all the Bonds and Parity Obligations due on any date, together with such interest, then to the payment thereof ratably, according to the amounts of principal or Accreted Value (plus accrued interest) due on such date to the persons entitled thereto, without any discrimination or preference; (3) to the extent Revenues are available therefor, to be transferred to the trustee for the Subordinate Obligations in the amount necessary for payment of Subordinate Obligations; and (4) to the payment of all other obligations payable hereunder. Notwithstanding anything in this Indenture to the contrary, in no event are the Bonds subject to acceleration if an Event of Default occurs and is continuing. SECTION 7.03 Trustee to Represent Bondholders. The Trustee is hereby irrevocably appointed (and the successive respective Holders of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney -in -fact of the Holders of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Holders under the provisions of the Bonds, this Indenture, the Act and applicable provisions of any other law. Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bondholders, the Trustee in its discretion may, and, with respect to any Series of Bonds for which a Credit Enhancement has been provided, upon the written request of the Credit Provider providing such Credit Enhancement, or if such Credit Provider is then failing to make a payment required pursuant to such Credit Enhancement, upon the written request of the Holders of not less than a majority in aggregate amount of Bond Obligation of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall proceed to protect or enforce its rights or the rights of such Holders by such appropriate action, suit, mandamus or other proceedings as it shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in such Holders under this Indenture, the Act or any other law; and upon instituting such proceeding, the Trustee shall be entitled, as a matter of right, to the appointment of a OHS West:260379475.8 50 201 • • i receiver of the Sales Tax Revenues and other assets pledged under this Indenture, pending such proceedings; provided, however, that, with respect to any Series of Bonds for which a Credit Enhancement has been provided, the Trustee may only act with the consent of the Credit Provider providing such Credit Enhancement. All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the Holders of such Bonds, subject to the provisions of this Indenture (including Section 7.05). SECTION 7.04 Bondholders' Direction of Proceedings. Anything in this Indenture to the contrary (except provisions relating to the rights of a Credit Provider to direct proceedings as set forth in Section 7.10) notwithstanding, the Holders of a majority in aggregate amount of Bond Obligation of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee and upon furnishing the Trustee with indemnification satisfactory to it, to direct the method of conducting all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture, that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Bondholders or holders of Parity Obligations not parties to such direction. SECTION 7.05 Limitation on Bondholders' Right to Sue. No Holder of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture, the Act or any other applicable law with respect to such Bond, unless: (1) such Holder shall have given to the Trustee written notice of the occurrence of an Event of Default; (2) the Holders of not less than a majority in aggregate amount of Bond Obligation of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (3) such Holder or said Holders shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (4) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee; provided, however, that the written consent of a Credit Provider providing a Credit Enhancement with respect to a Series of Bonds shall be required if the Credit Enhancement with respect to such Series of Bonds is in full force and effect and if the Credit Provider providing such Credit Enhancement is not then failing to make a payment as required in connection therewith. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Holder of Bonds of any remedy hereunder or under law; it being understood and intended that no one or more Holders of Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the rights of any other Holders of Bonds, or to enforce any right under this Indenture, the Act or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such OHS West260379475.8 51 202 right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Holders of the Outstanding Bonds, subject to the provisions of this Indenture. SECTION 7.06 Absolute Obligation of the Commission. Nothing in Section 7.05 or in any other provision of this Indenture, or in the Bonds, contained shall affect or impair the obligation of the Commission, which is absolute and unconditional, to pay the principal or Redemption Price of and interest on the Bonds to the respective Holders of the Bonds at their respective dates of maturity, or upon call for redemption, as herein provided, but only out of the Revenues and other assets herein pledged therefor, or affect or impair the right of such Holders, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds. SECTION 7.07 Termination of Proceedings. In case any proceedings taken by the Trustee, any Credit Provider or any one or more Bondholders on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee, any Credit Provider or the Bondholders, then in every such case the Commission, the Trustee, each Credit Provider and the Bondholders, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Commission, the Trustee, each Credit Provider and the Bondholders shall continue as though no such proceedings had been taken. SECTION 7.08 Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee, to any Credit Provider or to the Holders of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise. SECTION 7.09 No Waiver of Default. No delay or omission of the Trustee, any Credit Provider or of any Holder of the Bonds to exercise any right or power arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by this Indenture to the Trustee, to any Credit Provider or to the Holders of the Bonds may be exercised from time to time and as often as may be deemed expedient. No waiver of any Event of Default hereunder, whether by Trustee or by any Credit Provider or by the Bondholders, shall extend to or shall affect any subsequent Event of Default or shall impair any rights or remedies consequent thereon. SECTION 7.10 Credit Provider Directs Remedies Upon Event of Default. Anything in the Indenture to the contrary notwithstanding, upon the occurrence and continuance of an Event of Default as defined herein, the Credit Provider then providing Credit Enhancement for any Series of Bonds shall be entitled to control and direct the enforcement of all rights and remedies granted to the Holders of the Bonds secured by such Credit Enhancement or granted to the Trustee for the benefit of the Holders of the Bonds secured by such Credit Enhancement, provided that the Credit Provider's consent shall not be required as otherwise provided herein if OHS West:260379475.8 52 203 • such Credit Provider is in default of any of its payment obligations as set forth in the Credit Enhancement provided by such Credit Provider. ARTICLE VIII THE TRUSTEE SECTION 8.01 Appointment, Duties Immunities and Liabilities of Trustee. (A) U.S. Bank National Association is hereby appointed as Trustee under this Indenture and hereby accepts the trust imposed upon it as Trustee hereunder and to perform all the functions and duties of the Trustee hereunder, subject to the terms and conditions set forth in this Indenture. The Trustee shall, prior to an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants shall be read into this Indenture against the Trustee. The Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (B) The Commission may remove the Trustee at any time unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Holders of not less than a majority in aggregate amount of Bond Obligation of the Bonds then Outstanding (or their attorneys duly authorized in writing) or if at any time the Trustee shall cease to be eligible in accordance with subsection (E) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such removal to the Trustee and each Credit Provider then providing a Credit Enhancement for any Series of Bonds, and thereupon shall appoint a successor Trustee by an instrument in writing. (C) The Trustee may at any time resign by giving written notice of such resignation to the Commission and each Credit Provider then insuring any Series of Bonds and by giving the Bondholders notice of such resignation by mail at the addresses shown on the registration books maintained by the Trustee. Upon receiving such notice of resignation, the Commission shall promptly appoint a successor Trustee by an instrument in writing. (D) Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed and have accepted appointment within forty-five (45) days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Bondholder (on behalf of himself and all other Bondholders) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture, shall signify its acceptance of such OHS West:260379475.8 53 204 appointment by executing and delivering to the Commission, each Credit Provider then insuring any Series of Bonds and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Request of the Commission or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the Commission shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the Commission shall give notice of the succession of such Trustee to the trusts hereunder by mail to the Bondholders at the addresses shown on the registration books maintained by the Trustee. If the Commission fails to mail such notice within fifteen (15) days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Commission. (E) Any Trustee appointed under the provisions of this Section in succession to the Trustee shall be a trust company or bank having the powers of a trust company having (or, if such trust company or bank is a member of a bank holding company system, the related bank holding company shall have) a combined capital and surplus of at least one hundred million dollars ($100,000,000), and subject to supervision or examination by federal or state authority. If such bank or trust company or bank holding company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this subsection the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (E), the Trustee shall resign immediately in the manner and with the effect specified in this Section. SECTION 8.02 Accounting Records and Monthly Statements. The Trustee shall keep proper books of record and accounts containing complete and correct entries of all transactions relating to the receipt, investment, disbursement, allocation and application of the moneys related to the Bonds, including proceeds of each Series of Bonds and moneys derived from, pledged to, or to be used to make payments on each Series of Bonds. Such records shall specify the account or fund to which each deposit and each investment (or portion thereof) held by the Trustee is allocated and shall set forth, in the case of each investment security, (a) its purchase price, (b) identifying information, including par amount, coupon rate, and payment dates, (c) the amount received at maturity or its sale price, as the case may be, including accrued interest, (d) the amounts and dates of any payments made with respect thereto, and (e) the dates of acquisition and disposition or maturity. The Trustee shall furnish the Commission with a monthly statement which shall include a summary of all deposits and all investment transactions related to each Series of Bonds then Outstanding, such statement to be provided to the OBS West:260379475.8 54 205 • Commission no later than the fifth (5th) Business Day of the month following the month to which such statement relates, the first such monthly statement to be provided by the fifth (5th) Business Day of the month immediately following the month in which the 2008 Bonds are delivered by the Trustee pursuant to the provisions of this Indenture. SECTION 8.03 Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under subsection (E) of Section 8.01, shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. SECTION 8.04 Liability of Trustee. (A) The recitals of facts herein and in the Bonds contained shall be taken as statements of the Commission, and the Trustee assumes no responsibility for the correctness of the same (other than the certificate of authentication of the Trustee on each Bond), and makes no representations as to the validity or sufficiency of this Indenture, or of the Bonds, as to the sufficiency of the Revenues or the priority of the lien of this Indenture thereon, or as to the financial or technical feasibility of any portion of the Project and shall not incur any responsibility in respect of any such matter, other than in connection with the duties or obligations expressly herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence, willful misconduct or breach of the express terms and conditions hereof. The Trustee and its directors, officers, employees or agents may in good faith buy, sell, own, hold and deal in any of the Bonds and may join in any action which any Holder of a Bond may be entitled to take, with like effect as if the Trustee was not the Trustee under this Indenture. The Trustee may in good faith hold any other form of indebtedness of the Commission, own, accept or negotiate any drafts, bills of exchange, acceptances or obligations of the Commission and make disbursements for the Commission and enter into any commercial or business arrangement therewith, without limitation. (B) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder. (C) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture. OHS West260374475.8 55 206 (D) The Trustee shall be under no obligation to exercise any of the rights or powers. vested in it by this Indenture at the request, order or direction of any Credit Provider or any of the Bondholders pursuant to the provisions of this Indenture, including, without limitation, the provisions of Article VII hereof, unless such Credit Provider or such Bondholders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby; provided, however, that no security or indemnity shall be requested or required for the Trustee to deliver a notice to obtain funds under the Credit Enhancement delivered in connection with any Series of Bonds in order to pay principal of and interest on such Series of Bonds. (E) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder or in the exercise of its rights or powers. (F) The Trustee shall not be deemed to have knowledge of, and shall not be required to take any action with respect to, any Event of Default (other than an Event of Default described in subsections (A) or (B) of Section 7.01) or event that would, with the giving of notice, the passage of time or both, constitute an Event of Default, unless the Trustee shall have actual knowledge of such event or shall have been notified of such event by the Commission, any Credit Provider then providing a Credit Enhancement for a Series of Bonds or the Holders of twenty-five percent (25%) of the Bond Obligation Outstanding. Without limiting the generality of the foregoing, the Trustee shall not be required to ascertain, monitor or inquire as to the performance or observance by the Commission of the terms, conditions, covenants or agreements set forth in Article VI hereof (including, without limitation, the covenants of the Commission set forth in Section 5.09 and 6.08 hereof, other than the covenants of the Commission to make payments with respect to the Bonds when due as set forth in Section 6.01 and to file with the Trustee when due, such reports and certifications as the Commission is required to file with the Trustee hereunder. (G) No permissive power, right or remedy conferred upon the Trustee hereunder shall be construed to impose a duty to exercise such power, right or remedy. (H) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, requisition, bond, debenture, coupon or other paper or document but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Commission, personally or by agent or attorney. (I) The Trustee shall not be responsible for: (1) the application or handling by the Commission of any Revenues or other moneys transferred to or pursuant to any Requisition or Request of the Commission in accordance with the terms and conditions hereof; OHS West260379475.8 56 • • 207 (2) the application and handling by the Commission of any other fund or account designated to be held by the Commission hereunder, (3) any error or omission by the Commission in making any computation or giving any instruction pursuant to Section 5.09 and Section 6.08 and may rely conclusively on the Rebate Instructions and any computations or instructions furnished to it by the Commission in connection with the requirements of Section 5.09, Section 6.08 and each Tax Certificate; (4) the construction, operation or maintenance of any portion of the Project by the Commission. (J) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article VIII. (K) The Trustee agrees to accept and act upon written instructions and/or directions provided by Electronic Means pursuant hereto, provided, however, that: (i) subsequent to such facsimile transmission of written instructions and/or directions the Trustee shall forthwith receive the originally executed instructions and/or directions, and (ii) such originally executed instructions and/or directions shall be signed on behalf of the Commission by an Authorized Representative and shall be signed on behalf of any other party by a person authorized to sign for the party delivering such instructions and/or directions, which person shall provide such documentation as the Trustee shall request in order to evidence such authorization. SECTION 8.05 Right of Trustee to Rely on Documents and Opinions. The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, including, without limitation, counsel of or to the Commission, and may request an opinion of counsel, with regard to legal questions, including, without limitation, legal questions relating to proposed modifications or amendments of this Indenture, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, including, without limitation, matters relating to proposed modifications or amendments of this Indenture, the Trustee may request a Certificate of the Commission and such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by such Certificate of the Commission, and such Certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. The Trustee may also rely conclusively on any report, statement, requisition, facsimile transmission, electronic mail or OHS West:260379475.8 57 208 certification of any certified public accountant, investment banker, financial consultant, or other expert selected by the Commission or selected by the Trustee with due care in connection with matters required to be proven or ascertained in connection with its administration of the trusts created hereby. SECTION 8.06 Compensation and Indemnification of Trustee. The Commission covenants to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it in the exercise and performance of any of the powers and duties hereunder of the Trustee, and the Commission will pay or reimburse the Trustee upon its request for all expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence, default or willful misconduct. The Commission, to the extent permitted by law, shall indemnify, defend and hold harmless the Trustee against any loss, damages, liability or expense incurred without negligence or bad faith on the part of the Trustee, arising out of or in connection with the acceptance or administration of the trusts created hereby, including costs and expenses (including attorneys' fees) of defending itself against any claim or liability in connection with the exercise or performance of any of its powers hereunder. The rights of the Trustee and the obligations of the Commission under this Section 8.06 shall survive the discharge of the Bonds and this Indenture and the resignation or removal of the Trustee. ARTICLE IX MODIFICATION OR AMENDMENT OF THIS INDENTURE SECTION 9.01 Amendments Permitted. (A) (1) This Indenture and the rights and obligations of the Commission, the Holders of the Bonds and the Trustee may be modified or amended from time to time and at any time by a Supplemental Indenture, which the Commission and the Trustee may enter into when the written consent of the Holders of a majority in aggregate amount of Bond Obligation of the Bonds (or, if such Supplemental Indenture is only applicable to a Series of Bonds, such Series of Bonds) then Outstanding shall have been filed with the Trustee; provided that if such modification or amendment will, by its terms, not take effect so long as any Bonds of any particular maturity remain Outstanding, the consent of the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Bonds Outstanding under this Section. (2) No such modification or amendment shall (a) extend the maturity of any Bond, or reduce the amount of principal thereof, or extend the time of payment or reduce the amount of any Mandatory Sinking Account Payment provided for the payment of any Bond, or reduce the rate of interest thereon, or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, without the consent of the Holder of each Bond so affected, or (b) reduce the aforesaid percentage of Bond Obligation the consent of the Holders of which is required to effect any such modification or amendment, or permit the creation of any lien on the Revenues and other assets pledged under this Indenture prior to or on OHS West260379475.8 58 209 • • • a parity with the lien created by this Indenture, or deprive the Holders of the Bonds of the lien created by this Indenture on such Revenues and other assets (in each case, except as expressly provided in this Indenture), without the consent of the Holders of all of the Bonds then Outstanding. It shall not be necessary for the consent of the Bondholders to approve the particular form of any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution and delivery by the Commission and the Trustee of any Supplemental Indenture pursuant to this Section 9.01(A), the Trustee shall mail a notice, setting forth in general terms the substance of such Supplemental Indenture to the Holders of the Bonds at the addresses shown on the registration books of the Trustee. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture. (B) This Indenture and the rights and obligations of the Commission, of the Trustee and of the Holders of the Bonds may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the Commission and the Trustee may enter into without the consent of any Bondholders, but only to the extent permitted by Act and only forany one or more of the following purposes: (1) to add to the covenants and agreements of the Commission in this Indenture contained other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Commission; (2) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in this Indenture, or in regard to matters or questions arising under this Indenture, as the Commission may deem necessary or desirable, and which shall not materially and adversely affect the interests of the Holders of the Bonds; (3) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially and adversely affect the interests of the Holders of the Bonds; (4) to provide for the issuance of an additional Series of Bonds pursuant to the provisions of Article III hereof; (5) to make modifications or adjustments necessary, appropriate or desirable to provide for the issuance or incurrence, as applicable, of Capital Appreciation Bonds, Parity Obligations, Subordinate Obligations or Variable Rate Indebtedness, with such interest rate, payment, maturity and other terms as the Commission may deem desirable; subject to the provisions of Section 3.02, Section 3.03 and Section 3.05; (6) to make modifications or adjustments necessary, appropriate or desirable to provide for change from one interest rate mode to another in connection with any Series of Bonds; OHS West:260379475.8 59 210 (7) to make modifications or adjustments necessary, appropriate or desirable to accommodate Credit Enhancements, Liquidity Facilities and Reserve Facilities; (8) to make modifications or adjustments necessary, appropriate or desirable to provide for the appointment of an auction agent, a broker -dealer, a remarketing agent, a tender agent and/or a paying agent in connection with any Series of Bonds; (9) to modify the auction provisions applicable to any Series of Bonds in accordance with the terms and provisions set forth in the Supplemental Indenture establishing the terms and provisions of such Series of Bonds; (10) to provide for any additional covenants or agreements necessary to maintain the tax-exempt status of interest on any Series of Bonds; (11) if the Commission agrees in a Supplemental Indenture to maintain the exclusion of interest on a Series of Bonds from gross income for purposes of federal income taxation, to make such provisions as are necessary or appropriate to ensure such exclusion; (12) to provide for the issuance of Bonds in book -entry form or bearer form and/or to modify or eliminate the book -entry registration system for any Series of Bonds; (13) to modify, alter, amend or supplement this Indenture in any other respect, including amendments that would otherwise be described in Section 9.01(A), if the effective date of such amendments is a date on which all Bonds affected thereby are subject to mandatory tender for purchase pursuant to the provisions of this Indenture or if notice of the proposed amendments is given to Holders of the affected Bonds at least thirty (30) days before the proposed effective date of such amendments and, on or before such effective date, such Holders have the right to demand purchase of their Bonds pursuant to the provisions of this Indenture or if all Bonds affected thereby are in an auction mode and a successful auction is held following notice of such amendment; and (14) for any other purpose that does not materially and adversely affect the interests of the Holders of the Bonds. Any Supplemental Indenture entered into pursuant to this Section shall be deemed not to materially adversely affect the interest of the Holders so long as (i) all Bonds are secured by a Credit Enhancement and (ii) each Credit Provider shall have given its written consent to such Supplemental Indenture as provided in Section 9.01(A). SECTION 9.02 Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to this Article, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Commission, the Trustee and all Holders of Bonds Outstanding shall thereafter be determined, exercised and enforcedhereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. OHS West:260379475.8 60 211 SECTION 9.03 Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after any Supplemental Indenture becomes effective pursuant to this Article may, and if the Trustee so determines shall, bear a notation by endorsement or otherwise in form approved by the Commission and the Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the Holder of any Bond. Outstanding at the time of such execution and presentation of his Bond for such purpose at the Corporate Trust Office or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation shall be made on such Bond. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Commission and the Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by the Commission and authenticated by the Trustee, and upon demand of the Holders of any Bonds then Outstanding shall be exchanged at the Corporate Trust Office, without cost to any Bondholder, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate principal amounts of the same Series, tenor and maturity. SECTION 9.04 Amendment of Particular Bonds. The provisions of this Article shall not prevent any Bondholder from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. ARTICLE X DEFEASANCE SECTION 10.01 Discharge of Indenture. Bonds of any Series or a portion thereof may be paid by the Commission in any of the following ways: (A) by paying or causing to be paid the Bond Obligations of and interest on such Outstanding Bonds, as and when they become due and payable; (B) by depositing with the Trustee, an escrow agent or other fiduciary, in trust, at or before maturity, money or securities in the necessary amount (as provided in Section 10.03) to pay or redeem such Outstanding Bonds; or (C) by delivering to the Trustee, for cancellation by it, such Outstanding Bonds. If the Commission shall pay all Series for which any Bonds are Outstanding and also pay or cause to be paid all other sums payable hereunder by the Commission, then and in that case, at the election of the Commission (evidenced by a Certificate of the Commission, filed with the Trustee, signifying the intention of the Commission to discharge all such indebtedness and this Indenture), and notwithstanding that any Bonds shall not have been surrendered for payment, this Indenture and the pledge of Sales Tax Revenues and other assets made under this Indenture and all covenants, agreements and other obligations of the Commission under this Indenture shall cease, terminate, become void and be completely discharged and satisfied. In such event, upon Request of the Commission, the Trustee shall cause an accounting for such period or periods as may be requested by the Commission to be prepared and filed with the Commission and shall execute and deliver to the Commission all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over, transfer, assign or OHS West260379475.3 61 212 deliver to the Commission all moneys or securities or other property held by it pursuant to this Indenture which, as evidenced by a verification report, upon which the Trustee may conclusively rely, from an independent certified public accountant, a firm of independent certified public accountants or other independent consulting firm, are not required for the payment or redemption of Bonds not theretofore surrendered for such payment or redemption. SECTION 10.02 Discharge of Liability on Bonds. Upon the deposit with the Trustee, escrow agent or other fiduciary, in trust, at or before maturity, of money or securities in the necessary amount (as provided in Section 10.03) to pay or redeem any Outstanding Bond (whether upon or prior to its maturity or the redemption date of such Bond), provided that, if such Bond is to be redeemed prior to maturity, notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice, then all liability of the Commission in respect of such Bond shall cease, terminate and be completely discharged, provided that the Holder thereof shall thereafter be entitled to the payment of the principal of and premium, if any, and interest on the Bonds, and the Commission shall remain liable for such payment, but only out of such money or securities deposited with the Trustee as aforesaid for their payment. If the Bonds being discharged are Variable Rate Indebtedness, (i) the Bonds shall be redeemed at the first possible redemption date or purchase date applicable to such Bonds and to the extent the rate of interest payable on such Bonds prior to such redemption or purchase date is not known, such rate of interest shall be assumed to be the maximum rate payable thereon or (ii) the Trustee shall receive a confirmation from the Rating Agency then rating the Bonds that the defeasance will not result in the reduction or withdrawal of the then -current ratings on the Bonds. The Commission may at any time surrender to the Trustee for cancellation by it any Bonds previously issued and delivered, which the Commission may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired. Notwithstanding anything in this Section 10.02 to the contrary, if the principal of or interest on a Series of Bonds shall be paid by a Credit Provider pursuant to the Credit Enhancement issued in connection with such Series of Bonds, the obligations of the Commission shall not be deemed to be satisfied or considered paid by the Commission by virtue of such payments, and the right, title and interest of the Commission herein and the obligations of the Commission hereunder shall not be discharged and shall continue to existand to run to the benefit of such Credit Provider, and such Credit Provider shall be subrogated to the rights of the Holders of the Bonds of such Series. SECTION 10.03 Deposit of Money or Securities. Whenever in this Indenture it is provided or permitted that there be deposited with or held in trust money or securities in the necessary amount to pay or redeem any Bonds, the money or securities so to be deposited or held may include money or securities held by the Trustee in the funds and accounts established pursuant to this Indenture and shall be: (A) lawful money of the United States of America in an amount equal to the principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of OHS West:260379475.8 62 213 • • • Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount to be deposited or held shall be the principal amount or Redemption Price of such Bonds and all unpaid interest thereon to the redemption date; or (B) Defeasance Securities the principal of and interest on which when due will, in the opinion of an independent certified public accountant, a firm of independent certified public accountants or other independent consulting firm delivered to the Trustee (as confirmed by a verification report upon which verification report the Trustee may conclusively rely), provide money sufficient to pay the principal or Redemption Price of and all unpaid interest to maturity, or to the redemption date, as the case may be, on the Bonds to be paid or redeemed, as such principal or Redemption Price and interest become due, provided that, in the case of Bonds which are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice; provided, in each case, that the Trustee shall have been irrevocably instructed (by the terms of this Indenture or by Request of the Commission) to apply such money to the payment of such principal or Redemption Price and interest with respect to such Bonds. SECTION 10.04 Payment of Bonds After Discharge of Indenture. Any moneys held by the Trustee in trust for the payment of the principal, Redemption Price, or interest on any Bond and remaining unclaimed for one (1) year after such principal, Redemption Price, or interest has become due and payable (whether at maturity or upon call for redemption as provided in this Indenture), if such moneys were so held at such date, or one (1) year after the date of deposit of such principal, Redemption Price or interest on any Bond if such moneys were deposited after the date when such Bond became due and payable, shall be repaid to the Commission free from the trusts created by this Indenture, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the Commission as aforesaid, the Trustee may (at the cost of the Commission) first mail to the Holders of any Bonds remaining unpaid at the addresses shown on the registration books maintained by the Trustee a notice, in such form as may be deemed appropriate by the Trustee, with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the Commission of the moneys held for the payment thereof. All moneys held by or on behalf of the Trustee for the payment of principal or Accreted Value of or interest or premium on Bonds, whether at redemption or maturity, shall be held in trust for the account of the Holders thereof and the Trustee shall not be required to pay Holders any interest on, or be liable to the Holders or any other person (other than the Commission) for interest earned on, moneys so held. Any interest earned thereon shall belong to the Commission and shall be deposited upon receipt by the Trustee into the Revenue Fund. ARTICLE XI MISCELLANEOUS SECTION 11.01 Liability of Commission Limited to Sales Tax Revenues. Notwithstanding anything in this Indenture or in the Bonds contained, the Commission shall not OHS West:260379475.8 63 214 be required to advance any moneys derived from any source other than the Sales Tax Revenues and other assets pledged hereunder for any of the purposes in this Indenture mentioned, whether for the payment of the principal or Redemption Price of or interest on the Bonds or for any other purpose of this Indenture. SECTION 11.02 Successor Is Deemed Included in All References to Predecessor. Whenever in this Indenture either the Commission or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Commission or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. SECTION 11.03 Limitation of Rights. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any Person other than the Commission, the Trustee, each Credit Provider, each Liquidity Provider, each Reserve Facility Provider, the Holders of the Bonds and the holders of any Parity Obligations, including each Counterparty, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Commission, the Trustee, each Credit Provider, each Liquidity Provider, each Reserve Facility Provider, the Holders of the Bonds and the holders of any Parity Obligations, including each Counterparty. Each Credit Provider and each Liquidity Provider is an express third party beneficiary of this Indenture. SECTION 11.04 Waiver of Notice. Whenever in this Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 11.05 Destruction or Delivery of Canceled Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Commission of any Bonds, the Trustee may, in its sole discretion, in lieu of such cancellation and delivery, destroy such Bonds, and deliver a certificate of such destruction to the Commission. SECTION 11.06 Severability of Invalid Provisions. If any one or more of the provisions contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provisions or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Commission hereby declares that it would have adopted this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable. OHS West:260379475.8 64 • • • 215 • SECTION 11.07 Notice to Commission and Trustee. Any notice to or demand may be served or presented, and such demand may be made and shall be deemed to have been sufficiently given or served for all purposes by being deposited, first-class mail postage prepaid, in a post office letter box, addressed, as the case may be, to the parties as listed below. Any such communication may also be sent by Electronic Means, receipt of which shall be confirmed. Trustee: Commission: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Corporate Trust Services Telephone: (213) 615-6002 Fax: (213) 615-6199 Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92502 Attention: Chief Financial Officer Telephone: (951) 787-7141 Fax: (951) 787-7920 SECTION 11.08 Evidence of Rights of Bondholders. Any request, consent or other instrument required or permitted by this indenture to be signed and executed by Bondholders may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Bondholders in person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or the holding by any Person of Bonds transferable by delivery, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the Commission if made in the manner provided in this Section. The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer. The ownership of Bonds shall be proved by the bond registration books held by the Trustee. The Trustee may establish a record date as of which to measure consent of the Holders in order to determine whether the requisite consents are received. Any request, consent, or other instrument or writing of the Holder of any Bond shall bind every future Holder of the same Bond and the Holder of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Commission in accordance therewith or reliance thereon. SECTION 11.09 Disqualified Bonds. In determining whether the Holders of the requisite aggregate Bond Obligation of Bonds have concurred in any demand, request, direction, OHS West260379475.6 65 216 consent or waiver under this Indenture, Bonds that are owned or held by or for the account of the Commission, or by any other obligor on the Bonds, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Commission or any other obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Bonds and that the pledgee is not a person directly or indirectly controlled by, or under direct or indirect common control with, the Commission. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. SECTION 11.10 Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal, Redemption Price or purchase price due on any date with respect to particular Bonds (or portions of Bonds in the case of registered Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Holders of the Bonds entitled thereto, subject, however, to the provisions of Section 10.04. SECTION 11.11 Funds and Accounts. Any fund required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such fimds shall at all times be maintained in accordance with customary standards of the corporate trust industry, to the extent practicable, and with due regard for the protection of the security of the Bonds and the rights of every holder thereof. SECTION 11.12 Limitations on Rights of Credit Providers, Liquidity Providers, Reserve Facility Providers. A Supplemental Indenture establishing the terms and provisions of a Series of Bonds may provide that any Credit Provider, Liquidity Provider or Reserve Facility Provider may exercise any right under this Indenture given to the Holders of the Bonds to which such Credit Enhancement, Liquidity Facility or Reserve Facility relates. All provisions under this Indenture authorizing the exercise of rights by a Credit Provider, a Liquidity Provider or a Reserve Facility Provider with respect to consents, approvals, directions, waivers, appointments, requests or other actions, shall be deemed not to require or permit such consents, approvals, directions, waivers, appointments, requests or other actions and shall be read as if the Credit Provider, Liquidity Provider or Reserve Facility Provider were not mentioned therein (i) during any period during which there is a default by such Credit Provider, Liquidity Provider or Reserve Facility Provider under the applicable Credit Enhancement, Liquidity Facility or Reserve Facility or (ii) after the applicable Credit Enhancement, Liquidity Facility or Reserve Facility shall at any time for any reason cease to be valid and binding on the provider thereof, or shall be declared to be null and void by final, non -appealable judgment of a court of competent jurisdiction, or after the Credit Enhancement, Liquidity Facility or Reserve Facility has been rescinded, repudiated by the provider thereof or terminated, or after a receiver, conservator or liquidator has been appointed for the provider thereof. All provisions relating to the rights of a Credit Provider, Liquidity Provider or Reserve Facility Provider shall be of no further force and effect if all amounts owing to such Credit Provider, Liquidity Provider or Reserve Facility Provider shall have been paid pursuant to the terms of the applicable Credit Enhancement, Liquidity Facility or OHS West:260379475.8 66 217 • • Reserve Facility and such Credit Enhancement, Liquidity Facility or Reserve Facility shall no longer be in effect. SECTION 11.13 Article and Section Headings and References. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Indenture. All references herein to "Articles, "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof; and words of the masculine gender shall mean and include words of the feminine and neuter genders. SECTION 11.14 Waiver of Personal Liability. No Board member, officer, agent or employee of the Commission or the Trustee shall be individually or personally liable for the payment of the principal or Redemption Price of or interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein contained shall relieve any such Board member, officer, agent or employee of the Commission or the Trustee from the performance of any of any official duty provided by law or by this Indenture. SECTION 11.15 Governing Law. This Indenture shall be construed and governed in accordance with the laws of the State of California. SECTION 11.16 Business Day. Except as specifically set forth in this Indenture or a Supplemental Indenture, transfers which would otherwise become due on any day which is not a Business Day shall become due or shall be made on the next succeeding Business Day with the same effect as if made on such prior date. SECTION 11.17 Effective Date of Indenture. This Indenture shall take effect upon its execution and delivery. SECTION 11.18 Execution in Counterparts. This Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. OHS West260379475.8 67 218 IN WITNESS WHEREOF, the parties hereto have executed this Indenture by their officers thereunto duly authorized as of the day and year first written above. (Seal) ATTEST: Clerk of the Riverside County Transportation Commission APPROVED AS TO FORM: By: General Counsel OHS West:260379475.8 68 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Executive Director U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 219 1 ! i ! ATTACHMENT 5 OH&S Draft 5/6/08 FIRST SUPPLEMENTAL INDENTURE between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of June 1, 2008 Relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) 2008 SERIES A (Supplementing the Indenture Dated as of June 1, 2008) OHS West:260379565.9 220 • • • ARTICLE XII DEFINITIONS Section 12.01. Defmitions 1 Section 12.02. Rules of Construction 7 ARTICLE XIII FINDINGS, DETERMINATIONS AND DIRECTIONS Section 13.01. Findings and Determinations 7 Section 13.02. Recital in Bonds 7 Section 13.03. Effect of Findings and Recital 8 ARTICLE XIV AUTHORIZATION OF 2008 BONDS Section 14.01. Principal Amount, Designation and Series 8 Section 14.02. Purpose and Application of Proceeds 8 Section 14.03. Form, Denomination, Numbers and Letters 9 Section 14.04. Date, Maturities and Interest Rates 9 Section 14.05. Interest Rates on 2008 Bonds I0 ARTICLE XV REDEMPTION AND PURCHASE OF 2008 BONDS Section 15.01. Optional Redemption of 2008 Bonds 20 Section 15.02. Mandatory Redemption of 2008 Bonds From Mandatory Sinking Account Payments 22 Section 15.03. Purchase In Lieu of Redemption 23 Section 15.04. Holder's Option to Tender 2008 Bonds for Purchase 23 Section 15.05. Mandatory Tender of 2008 Bonds for Purchase 24 Section 15.06. Delivery of Tendered 2008 Bonds 25 Section 15.07. 2008 Bonds Deemed Purchased 26 Section 15.08. Deposit of 2008 Bonds 26 Section 15.09. Remarketing of Tendered 2008 Bonds 27 Section 15.10. Deposits into Accounts in the 2008 Bonds Purchase Fund 29 Section 15.11. Disbursements from the 2008 Bonds Purchase Fund 30 Section 15.12. Delivery of 2008 Bonds 31 Section 15.13. 2008 Liquidity Facilities; Liquidity Facility Bonds 32 Section 15.14. Alternate Liquidity Facilities 34 Section 15.15. Remarketing Agents for the 2008 Bonds 35 ARTICLE XVI PURCHASE OF 2008 BONDS AT DIRECTION OF COMMISSION Section 16.01. Mandatory Tender for Purchase of 2008 Bonds at Direction of Commission 36 Section 16.02. Delivery of Tendered 2008 Bonds 37 Section 16.03. 2008 Bonds Deemed Purchased 37 Section 16.04. Deposit of 2008 Bonds 38 Section 16.05. Payment of Optional Purchase Price of 2008 Bonds 38 OHS West:260379565.9 221 Section 16.06. 2008 Bonds Owned by Commission 39 ARTICLE XVII ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF Section 17.01. Section 17.02. Section 17.03. Section 17.04. Section 18.01. Section 18.02. Section 18.03. Section 18.04. Section 18.05. Section 18.06. Section 18.07. Section 18.08. EXHIBIT A EXHIBIT B Funds and Accounts 39 2008 Costs of Issuance Fund 39' Funding and Application of the 2008 Bonds Reserve Fund; Bond Reserve Requirement for the 2008 Bonds 40 2008 Bonds Purchase Fund 40 ARTICLE XVIII MISCELLANEOUS Severability 41 Parties Interested Herein 41 Headings Not Binding 41 Notice Addresses 41 Notices to Rating Agencies 42 Indenture to Remain in Effect 42 Effective Date of First Supplemental Indenture 42 Execution in Counterparts 42 FORM OF 2008 BOND NOTICE ADDRESSES OHS West:260379565.9 11 222 • • FIRST SUPPLEMENTAL INDENTURE THIS FIRST SUPPLEMENTAL INDENTURE, dated as of June 1, 2008 (this "First Supplemental Indenture"), between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly established and existing under the laws of the State of California (the "Commission") and U.S. BANK NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the "Trustee"): WITNESSETII: WHEREAS, this First Supplemental Indenture is supplemental to the Indenture, dated as of June 1, 2008 (as supplemented and amended from time to time pursuant to its terms, the "Indenture"), between the Commission and the Trustee; WHEREAS, the Indenture provides that the Commission may issue Bonds from time to time as authorized by a Supplemental Indenture, which Bonds are to be payable from Revenues and from such other sources as may be specified with respect to a particular Series of Bonds in the Supplemental Indenture authorizing such Series; and WHEREAS, the Commission desires to provide at this time for the issuance of Bonds to be designated "Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A" (the "2008 Bonds") for the purpose of refunding $110,005,000 principal amount of the Commission's Notes and to pay accrued interest thereon, to fund interest on the 2008 Bonds to December 2009, to fund a reserve fund and to pay costs of issuance, all as provided in this First Supplemental Indenture; NOW, THEREFORE, the parties hereto hereby agree as follows: ARTICLE XII DEFINITIONS Section 12.01. Definitions. (a) Definitions. Unless the context otherwise requires, or as otherwise provided in subsection (b) of this Section or in Appendix A to this First Supplemental Indenture, all terms which are defined in Section 1.02 of the Indenture shall have the same meanings in this First Supplemental Indenture. (b) Additional Defmitions. Unless the context otherwise requires, the following terms shall, for all purposes of this First Supplemental Indenture, have the following meanings: "Authorized Denominations" means, with respect to the 2008 Bonds: (i) during a Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period, $100,000 and any integral multiple of $5,000 in excess thereof and (ii) during a Long -Term Rate Period or the Fixed Rate Period, $5,000 and any integral multiple thereof; provided, however, that if as a result of a OHS West:260379565.9 223 Conversion of the 2008 Bonds from a Long -Term Rate Period to another Interest Rate Determination Method, it is not possible to deliver all the 2008 Bonds required or permitted to be Outstanding in a denomination permitted above, the 2008 Bonds may be delivered, to the extent necessary, in different denominations in any integral multiple of $5,000. "Calendar Week" means the period of seven (7) days from and including Thursday of any week to and including Wednesday of the next following week. "Commercial Paper Rate" means the interest rate established from time to time pursuant to Section 14.05(a)(iii). "Commercial Paper Rate Period" means each period during which the 2008 Bonds bear interest at a Commercial Paper Rate determined pursuant to Section 14.05(a)(iii). "Commercial Paper Tender Bonds" shall have the meaning set forth in Section 15.09(a). "Conversion means conversion of the 2008 Bonds from one Interest Rate Determination Method to another, which may be made from time to time in accordance with the terms of Section 14.05(b). "Conversion Date" means the date Conversion of the 2008 Bonds becomes effective in accordance with Section 14.05(b) (or, with respect to notices, time periods and requirements in connection with the proceedings for such Conversion, the day on which it is proposed that such Conversion occur). "Conversion Notice" shall have the meaning set forth in Section 14.05(b). "Daily Put Bonds" shall have the meaning set forth in Section 15.09(a). "Daily Rate" means the interest rate established from time to time pursuant to Section 14.05(a)(i). "Daily Rate Index" means, on any Business Day, the SIFMA Swap Index or, if the SIFMA Swap Index is no longer published, an index or rate agreed upon by the Commission and the Remarketing Agent; provided, however, that if the Remarketing Agent Advises the Trustee and the Commission that the use of the SIFMA Swap Index would not result or no longer results in a market rate of interest on the Bonds, 'Daily Rate Index" shall mean, subject to a Favorable Opinion of Bond Counsel, an index agreed to by the Commission and the Remarketing Agent that would result in a market rate of interest on the Bonds. The Daily Index Rate shall in no event exceed the Maximum Interest Rate. "Daily Rate Period" means any period during which the 2008 Bonds bear interest at the Daily Rate. "Expiration" (and other forms of "expire") means, when used with respect to a 2008 Credit Enhancement or 2008 Liquidity Facility, the expiration of such 2008 Credit Enhancement or 2008 Liquidity Facility in accordance with its terms. OHS West:260379565.9 - 2 224 • • • "Favorable Opinion of Bond Counsel" means, with respect to any action requiring such an opinion, an Opinion of Bond Counsel to the effect that such action will not, in and of itself, adversely affect the Tax -Exempt status of interest on the Bonds or such portion thereof as shall be affected thereby. "First Supplemental Indenture" means this First Supplemental Indenture, between the Commission and the Trustee, as amended and supplemented from time to time. "Fixed Rate" means the fixed rate borne by the 2008 Bonds from the Fixed Rate Conversion Date, which rate shall be established in accordance with Section 14.05(a)(v). "Fixed Rate Computation Date" means any Business Day during the period from and including the date of receipt of a Conversion Notice relating to a Conversion to a Fixed Rate to and including the Business Day next preceding the proposed Fixed Rate Conversion Date. "Fixed Rate Conversion Date" means the Conversion Date on which the interest rate on the 2008 Bonds shall be converted to a Fixed Rate. "Fixed Rate Period" means the period from and including the Fixed Rate Conversion Date to and including the maturity date or earlier date of redemption of the 2008 Bonds. "Interest Payment Date" means (a) with respect to the 2008 Bonds: (i) in the Daily Rate Period or the Weekly Rate Period, the first Business Day of each calendar month; (ii) in the Commercial Paper Rate Period, the day immediately succeeding the last day of each Commercial Paper Rate Period; (iii) each Conversion Date; and (iv) in the Long -Term Rate Period or the Fixed Rate Period, each Semi -Annual Interest Payment Date; and (b) in all events, the final maturity date, redemption date or Optional Purchase Date of each 2008 Bond. "Interest Rate Determination Method" means any of the methods of determining the interest rate on the 2008 Bonds from time to time as described in Section 14.05(a). "Issue Date" means, with respect to the 2008 Bonds, the date on which the 2008 Bonds are first delivered to the purchasers thereof. "London Banking Day" means any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency) in the City of London, United Kingdom. "Long -Term Rate" means the rate of interest on the 2008 Bonds established in accordance with Section 14.05(a)(iv). "Long -Term Rate Computation Date" means any Business Day during the period from and including the date of receipt of a Conversion Notice relating to a Conversion to a Long -Term Rate to and including the Business Day next preceding the proposed Long -Term Rate Conversion Date. OHS West:260379565.9 3 225 "Long -Term Rate Conversion Date" means: (i) the Conversion Date on which the interest rate on the 2008 Bonds shall be converted to a Long -Term Rate; and (ii) the date on which a new Long -Term Rate Period and Long -Term Rate are to be established. "Long -Term Rate Continuation Notice" shall have the meaning given such term in Section 14.05(a)(iv)(B). "Long -Term Rate Period" means any period during which the 2008 Bonds bear interest at the Long -Term Rate. "Mandatory Tender Bonds" has the meaning specified in Section 15.09(c). "Optional Purchase Date" means each date on which the 2008 Bonds would be subject to optional redemption and therefore are subject to purchase at the option of the Commission pursuant to Article XVI. "Optional Purchase Price" means, with respect to the 2008 Bonds to be purchased pursuant to Article XVI on any Optional Purchase Date, the principal amount thereof, plus accrued interest to such Optional Purchase Date, plus an amount equal to the premium, if any, that would be payable upon the redemption, at the option of the Commission exercised on such Optional Purchase Date, of such 2008 Bonds. "Par Call Date" has the meaning assigned in Section 15.01(a)(5). "Participant" means, with respect to a Securities Depository, each participant listed in such Securities Depository's book -entry system as having an interest in the 2008 Bonds. "Purchase Date" means any date on which any 2008 Bond is purchased pursuant to Section 15.04 or Section 15.05. "Purchase Price" means, with respect to any 2008 Bond tendered or deemed tendered to the Trustee for purchase pursuant to Section 15.04 or Section 15.05, an amount equal to 100% of the principal amount thereof. In addition, if the Purchase Date is not an Interest Payment Date, the Purchase Price for each 2008 Bond tendered or deemed tendered shall be increased to include accrued interest thereon to but not including the Purchase Date; provided, however, if such Purchase Date occurs before an Interest Payment Date, but after the Record Date applicable to such Interest Payment Date, then the Purchase Price shall not include accrued interest, which shall be paid to the Holder as of the applicable Record Date. "Rate" means, with respect to the 2008 Bonds, the interest rate applicable as provided in this First Supplemental Indenture. "Rate Index" means the Daily Rate Index, the Weekly Rate Index, or both, as the context may require. "Rate Period" means any Daily Rate Period, Weekly Rate Period, Commercial Paper Rate Period, Long -Term Rate Period or Fixed Rate Period. OHS West:260379565.9 4 226 • • • "Record Date" means (a) for any Interest Payment Date in respect of any Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period, the Business Day next preceding such Interest Payment Date; (b) for any Interest Payment Date in respect of any Long -Term Rate Period or Fixed Rate Period, the fifteenth (15th) day (whether or not a Business Day) of the month preceding the month in which such Interest Payment Date occurs. "Redemption Date" means the date fixed for redemption of any 2008 Bond subject to redemption in any notice of redemption given in accordance with the terms of the Indenture. "Redemption Price" means, with respect to any 2008 Bond or a portion thereof, 100% of the principal amount thereof to be redeemed, plus the applicable premium, if any, payable upon redemption thereof pursuant to such Bond or this First Supplemental Indenture. "Remarketing Agent" means the one or more banks, trust companies or members of the National Association of Securities Dealers, Inc. meeting the qualifications set forth in Section 15.15 and appointed by an Authorized Representative to serve as a Remarketing Agent for any 2008 Bonds. "Remarketing Agreement" means any agreement or agreements entered into by and between the Commission and a Remarketing Agent for 2008 Bonds. "Semi -Annual Interest Payment Date" means June 1 or December 1. "Spread Premium" has the meaning specified in Section 15.01(a)(5). "Tax -Exempt" means, with respect to interest on any obligations of a state or local government, that such interest is excluded from the gross income of the holders thereof (other than any holder who is a "substantial user" of facilities financed with such obligations or a "related person" within the meaning of Section 147(a) of the Code) for federal income tax purposes, whether or not such interest is includable as an item of tax preference or otherwise includable directly or indirectly for purposes of calculating other tax liabilities, including any alternative minimum tax or environmental tax under the Code. "Tax -Exempt Securities" means bonds, notes or other securities the interest on which is Tax -Exempt. "Termination" (and other forms of "terminate") means, when used with respect to any 2008 Credit Enhancement or 2008 Liquidity Facility, the replacement, removal, surrender or other termination of such 2008 Credit Enhancement or 2008 Liquidity Facility, other than an Expiration or an extension or renewal thereof; provided, however, that Termination does not include immediate suspension or automatic termination events. "Treasury Rate" means the interest rate applicable to 13-week United States Treasury bills determined by the Remarketing Agent on the basis of the average per annum discount rate at which such 13-week Treasury bills shall have been sold at the most recent Treasury auction. OHS West260379565.9 5 227 • "2008 Bonds" means the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A, authorized by Article XIV of this Indenture. "2008 Bonds Purchase Fund" means the fund by that name established pursuant to Section 17.01(d). "2008 Bonds Reserve Fund" means the fund by that name established pursuant to Section 17.01(b). "2008 Bonds Reserve Requirement" means, as of any date of calculation, an amount equal to the least of (i) ten percent (10%) of the principal amount of the 2008 Bonds (or if the amount of original issue discount or original issue premium applicable to the 2008 Bonds exceeds two percent (2%), ten percent (10%) of the issue price of the 2008 Bonds), (ii) one hundred twenty-five percent (125%) of average Annual Debt Service on the Outstanding 2008 Bonds, and (iii) Maximum Annual Debt Service on the Outstanding 2008 Bonds. "2008 Bonds Tax Certificate" means the Tax Certificate executed on behalf of the Commission in connection with the issuance of the 2008 Bonds. "2008 Commission Account" means the account by that name within the 2008 Bonds Purchase Fund established pursuant to Section 17.01(c). "2008 Costs of Issuance Fund" means the fund by that name established pursuant to Section 17.01(a). "2008 Credit Enhancement" means any Credit Enhancement provided with respect to the 2008 Bonds. "2008 Credit Provider" means the Credit Provider issuing a 2008 Credit Enhancement. "2008 Liquidity Facility" means any Liquidity Facility provided with respect to the 2008 Bonds pursuant to Section 15.14 or any Alternate Liquidity Facility provided with respect to the 2008 Bonds pursuant to Section 15.14. "2008 Liquidity Facility Bonds" means Liquidity Facility Bonds consisting of any 2008 Bonds purchased with moneys drawn under (or otherwise obtained pursuant to the terms of) a 2008 Liquidity Facility as provided in Section 15.11(a), but excluding any Bonds no longer considered to be 2008 Liquidity Facility Bonds in accordance with the terms of the applicable 2008 Liquidity Facility and Section 15.13(e). "2008 Liquidity Facility Purchase Account" means the account by that name within the 2008 Bonds Purchase Fund established pursuant to Section 17.01(c). "2008 Liquidity Provider" means the issuer of the 2008 Liquidity Facility or any successor Liquidity Provider providing liquidity for the Purchase Price of the 2008 Bonds pursuant to a 2008 Liquidity Facility. OHS West:260379565.9 6 228 • • "2008 Remarketing Account" means the account by that name within the 2008 Bonds Purchase Fund established pursuant to Section 17.01(c). "Variable Rate" means any of the Daily Rate, the Weekly Rate, the Commercial Paper Rate or the Long -Term Rate, as applicable. "Variable Rate Demand Bonds" means the 2008 Bonds bearing interest at a Daily Rate or a Weekly Rate. "Weekly Put Bonds" shall have the meaning set forth in Section 15.09(b). "Weekly Rate" means the variable interest rate on the 2008 Bonds established in accordance with Section 14.05(a)(ii). "Weekly Rate Index" means, on any Business Day, the SIFMA Swap Index or, if the SIFMA Swap Index is no longer published, an index or rate agreed upon by the Commission and the Remarketing Agent; provided, however, that if the Remarketing Agent Advises the Trustee and the Commission that the use of the SIFMA Swap Index would not result or no longer results in a market rate of interest on the Bonds, "Weekly Rate Index" shall mean, subject to a Favorable. Opinion of Bond Counsel, an index agreed to by the Commission and the Remarketing Agent that would result in a market rate of interest on the Bonds. The Weekly Rate Index shall in no event exceed the Maximum Interest Rate. "Weekly Rate Period" means each period during which the 2008 Bonds bear interest at Weekly Rates. Section 12.02. Rules of Construction. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including public bodies, as well as natural persons. Defined terms shall include any variant of the terms set forth in this Article XII. The terms "hereby," "hereof," "hereto," "herein," "hereunder," and any similar terms, as used in this First Supplemental Indenture, refer to the Indenture. ARTICLE XIII FINDINGS, DETERMINATIONS AND DIRECTIONS Section 13.01. Findings and Determinations. The Commission hereby finds and determines that the 2008 Bonds shall be issued pursuant to Section 3.01 and upon the issuance of the 2008 Bonds, any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the issuance thereof, will exist, will have happened and will have been performed, in due time, form and manner, as required by the Constitution and statutes of the State. Section 13.02. Recital in Bonds. There shall be included in each of the defmitive 2008 Bonds, and also in each of the temporary 2008 Bonds, if any are issued, a certification and recital OHS West:260379565.9 7 229 that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by that 2008 Bond, and in the issuing of that 2008 Bond, exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State and the Act, and that said 2008 Bond, together with all other indebtedness of the Commission payable out of Revenues, is within every debt and other limit prescribed by the Constitution and statutes of the State and the Act, and that such certification and recital shall be in such form as is set forth in the form of the 2008 Bond attached hereto as Exhibit A. Section 13.03. Effect of Findings and Recital. From and after the issuance of the 2008 Bonds, the findings and determinations herein shall be conclusive evidence of the existence of the facts so found and determined in any action or proceeding in any court in which the validity of the 2008 Bonds is at issue. ARTICLE XIV AUTHORIZATION OF 2008 BONDS Section 14.01. Principal Amount, Designation and Series. Pursuant to the provisions of this Indenture and the provisions of the Act, a Series of Bonds entitled to the benefit, protection and security of such provisions is hereby authorized in the aggregate principal amount of $ . Such Bonds shall be designated as, and shall be distinguished from the Bonds of all other Series by the title, "Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A." At any time after the execution and delivery of this Supplemental Indenture, the Commission may execute and, upon the order of the Commission, the Trustee shall authenticate and deliver the 2008 Bonds in the aggregate principal amount set forth above. Section 14.02. Purpose and Application of Proceeds. The 2008 Bonds are issued for the purpose of refunding $110,005,000 principal amount of the Commission's Notes and to pay accrued interest thereon. In addition, a portion of the proceeds will be applied to pay capitalized interest on the Bonds through December 1, 2009, to fund the 2008 Bond Reserve Requirement and to pay Costs of Issuance of the 2008 Bonds. The net proceeds from the sale of the 2008 Bonds in the amount of $ shall be received by the Trustee, and the Trustee shall deposit or transfer such funds as follows: (a) $ of such proceeds shall be deposited in the 2008 Costs of Issuance Fund; (b) $ of such proceeds shall be deposited in the Interest Fund and used to pay capitalized interest on the 2008 Bonds through December 1, 2009; (c) $ of such proceeds shall be deposited in the 2008 Bonds Reserve Fund in satisfaction of the 2008 Bonds Reserve Requirement; and (d) $ of such proceeds shall be transferred to the Notes Trustee for deposit upon the order of the Commission. OHS West:260379565.9 8 230 • Section 14.03. Form, Denomination, Numbers and Letters. The 2008 Bonds shall be issued as fully registered bonds without coupons in book -entry form and in Authorized Denominations and shall be numbered from one upward in consecutive numerical order preceded by the letter "R" prefixed to the number. Each 2008 Bond and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A, which form is hereby approved and adopted as the form of the 2008 Bonds and as the form of the certificate of authentication as such form shall be completed based on the terms of the 2008 Bonds set forth herein. Section 14.04. Date, Maturities and Interest Rates. The 2008 Bonds shall be dated their Issue Date. The 2008 Bonds shall be issued in the aggregate principal amount of $ and shall mature and be payable on June 1, 2029. The 2008 Bonds shall be issued as Variable Rate Bonds and each 2008 Bond shall bear interest at the rate or rates determined in accordance with Section 14.05. Each 2008 Bond shall initially bear interest at a Long -Term Rate of _ percent ( %) per annum with a Long -Term Rate Period ending December I, 2009, and the initial Interest Payment Date shall be December 1, 2008. On December 1, 2009, the 2008 Bonds shall be subject to mandatory purchase and conversion to another Interest Rate Determination Method pursuant to Section 14.05(b). Prior to December 1, 2009, the 2008 Bonds shall not be subject to conversion to another Interest Rate Determination Method. The 2008 Bonds shall not be subject to redemption until the end of the initial Long -Term Rate Period, December 1, 2009. Interest on each 2008 Bond shall be payable on each Interest Payment Date until the principal sum has been paid; provided, however, that if at the maturity date of the 2008 Bond (or if the same is redeemable and shall be duly called for redemption, then at the date fixed for redemption) funds are available for the payment or redemption thereof, in full accordance with terms of the Indenture, such 2008 Bond shall then cease to bear interest. Each 2008 Bond shall bear interest from the latest of: (i) its Issue Date; (ii) the most recent Interest Payment Date to which interest has been paid thereon or duly provided for, or (iii) if the date of authentication of such Bond is after a Record Date but prior to the immediately succeeding Interest Payment Date, the Interest Payment Date immediately succeeding such date of authentication. Fach 2008 Bond shall be payable as provided in Section 2.10, including Section 2.10(E), or, in the event the use of the Securities Depository is discontinued, the principal of each 2008 Bond shall be payable in lawful money of the United States of America upon surrender thereof at the Principal Office of the Trustee, and the interest on each 2008 Bond shall be payable in lawful money of the United States of America by the Trustee to the Holder thereof as of the close of business on the Record Date, such interest to be paid by the Trustee to such Holder in immediately available funds (by wire transfer or by deposit to the account of the Holder if such account is maintained with the Trustee), according to the instructions given by such Holder to the Trustee or, in the event no such instructions have been given, by check mailed by first class mail to the Holder at such Holder's address as it appears as of the Record Date on the bond registration books kept by the Trustee. OHS West260379565.9 9 231 Section 14.05. Interest Rates on 2008 Bonds. Except for 2008 Liquidity Facility Bonds, which shall bear interest at the rate or rates (but not in excess of the Maximum Interest Rate), and be payable at the times, specified in the applicable 2008 Liquidity Facility, the 2008 Bonds shall be Current Interest Bonds and, until converted to a Fixed Rate, the 2008 Bonds shall constitute Variable Rate Indebtedness and shall bear interest at a Variable Rate determined as provided in this First Supplemental Indenture. The 2008 Bonds shall bear interest as provided herein from and including the Issue Date to but excluding the date of payment in full of the 2008 Bonds (such interest to be computed on the basis of a 365/366-day year and actual days elapsed during any Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period; and to be computed on the basis of a 360-day year of twelve (12) 30-day months during any Long -Term Rate Period). Interest shall accrue on the 2008 Bonds from one Interest Payment Date to, but not including, the next Interest Payment Date. Upon Conversion of the 2008 Bonds to a Fixed Rate, the 2008 Bonds shall bear interest from and including the Conversion Date to the date of payment in full of the 2008 Bonds (computed on the basis of a 360-day year of twelve (12) 30-day months). The interest rates on the 2008 Bonds shall be determined as provided in Section 14.05(a); provided, that no Rate as so determined shall exceed the Maximum Interest Rate in effect on the date of determination thereof. At any one time, each 2008 Bond shall have the same Interest Rate Determination Method and (except 2008 Bonds that are 2008 Liquidity Facility Bonds, 2008 Bonds during a Commercial Paper Rate Period, and 2008 Bonds of different maturities bearing interest at a Fixed Rate) shall bear interest at the same interest rate. Upon issuance, the 2008 Bonds shall bear interest at a Long -Term Rate. 14.05(a) Interest Rate Determination Method. 14.05(a)(i) Daily Rate. Upon a successful Conversion of the 2008 Bonds to bear interest at the Daily Rate pursuant to Section 14.05(b) and until the 2008 Bonds are successfully converted to another Interest Rate Determination Method pursuant to said Section 14.05(b), the 2008 Bonds shall bear interest at a Daily Rate. During each Daily Rate Period for the 2008 Bonds, the Remarketing Agent shall set a Daily Rate for the 2008 Bonds by 9:30 a.m., New York City time, on each Business Day, which Daily Rate shall be the rate of interest which, if borne by the 2008 Bonds in the Daily Rate Period, would, in the judgment of the Remarketing Agent, having due regard for the prevailing fmancial market conditions for Tax - Exempt Securities that are of the same general nature as the 2008 Bonds, or Tax -Exempt Securities that are competitive as to credit and maturity (or period for tender) with the credit and maturity (or period for tender) of the 2008 Bonds for which the Daily Rate is to be determined, be the lowest interest rate that would enable such Remarketing Agent to place the 2008 Bonds at a price equal to 100% of the aggregate principal amount of the 2008 Bonds (plus accrued interest, if any) on such Business Day. The Daily Rate for any non -Business Day will be the rate for the last Business Day on which a Daily Rate was set. OHS West:260379565.9 10 232 • 14.05(a)(ii) Weekly Rate. Upon a successful Conversion of the 2008 Bonds to bear interest at the Weekly Rate pursuant to Section 14.05(b) and until the 2008 Bonds are. successfully converted to another Interest Rate Determination Method pursuant to Section 14.05(b), the 2008 Bonds shall bear interest at a Weekly Rate. During each Weekly Rate Period, the Remarketing Agent shall set a Weekly Rate for the 2008 Bonds, by 5:00 p.m., New York City time, on each Wednesday (or the immediately succeeding Business Day, if such, Wednesday is not a Business Day) for the next Calendar Week; provided, that, the Weekly Rate for the first Calendar Week (or portion thereof) following a Conversion Date resulting in a change in the Interest Rate Determination Method to a Weekly Rate shall be set by such Remarketing Agent on the Business Day immediately preceding such Conversion Date. Each Weekly Rate shall be the rate of interest that, if borne by the 2008 Bonds in the Weekly Rate Period, would, in the judgment of the Remarketing Agent, having due regard for the prevailing financial market conditions for Tax -Exempt Securities that are of the same general nature as the 2008 Bonds for which the Weekly Rate is to be determined, or Tax -Exempt Securities that are competitive as to credit and maturity (or period for tender) with the credit and maturity (or period for tender) of the 2008 Bonds for which the Weekly Rate is to be determined, be the lowest interest rate that would enable the Remarketing Agent to place the 2008 Bonds at a price equal to 100% of the aggregate principal amount of the 2008 Bonds (plus accrued interest, if any) on the first day of such Weekly Rate Period. 14.05(a)(iii) Commercial Paper Rate. Upon a successful Conversion of the 2008 Bonds to bear interest at the Commercial Paper Rate pursuant to Section 14.05(b), and until. the 2008 Bonds are successfully converted to another Interest Rate Determination Method pursuant to said Section 14.05(b), the 2008 Bonds shall bear interest at the applicable Commercial Paper Rate or Rates. The Remarketing Agent shall select the Commercial Paper Rate Period for each 2008 Bond on a Business Day selected by the Remarketing Agent not more than five (5) Business Days prior to the first day of such Commercial Paper Rate Period and not later than 12:30p.m., New York City time, on the first day of such Commercial Paper Rate Period. Each Commercial Paper Rate Period shall be a period of not less than one (1) nor more than 270 days determined by the Remarketing Agent with the intention of yielding the lowest overall interest expense on the 2008 Bonds, taking into account (A) all other Commercial Paper Rate Periods for the 2008 Bonds, (B) general economic and market conditions relevant to the 2008 Bonds and (C) such other facts, circumstances and conditions as such Remarketing Agent determines to be relevant. Notwithstanding the foregoing, no Commercial Paper Rate Period for any 2008 Bond shall be selected with a last day later than the fifth (5th) Business Day prior to the expiration date of any 2008 Liquidity Facility then in effect with respect to such 2008 Bond while bearing interest at the Commercial Paper Rate. The last day of each Commercial Paper Rate Period shall be a day immediately preceding a Business Day. If the Interest Rate Determination Method with respect to the 2008 Bonds is being converted from a Commercial Paper Rate to a new Interest Rate Determination Method, after receipt of the Conversion Notice delivered pursuant to Section 14.05(b), the Remarketing Agent shall determine the Commercial Paper Rate Periods with respect to the 2008 Bonds in such manner that, as soon as possible, all Commercial Paper Rate Periods with respect to the 2008 Bonds shall end on the same date, which date shall be the last day of the then -current Commercial Paper Rate Periods and, upon the establishment of such Commercial Paper Rate Periods, the day next succeeding the last day of all such Commercial Paper Rate Periods shall be the Conversion Date for the new Interest Rate Determination Method. The Remarketing Agent, promptly upon the determination of the last OHS West:260379565.9 11 233 day of such Commercial Paper Rate Periods prior to Conversion to a new Interest Rate Determination Method, shall give written notice of such last day and such Conversion Date to the Notice Parties. The Remarketing Agent shall set a Commercial Paper Rate for each 2008 Bond bearing interest at the Commercial Paper Rate not -later than 12:30 p.m., New York City time, on the first day of each Commercial Paper Rate Period for the 2008 Bonds. The Commercial Paper Rate applicable to each 2008 Bond bearing interest at the Commercial Paper Rate will be the rate determined by the Remarketing Agent to be the lowest interest rate that would enable such Remarketing Agent to place such 2008 Bond on the first day of the applicable Commercial Paper Rate Period at a price equal to 100% of the aggregate principal amount of such Bond. 14.05(a)(iv)(A) Long -Term Rate. The 2008 Bonds are issued in a Long - Term Rate Period with a term ending December 1, 2009, and until the establishment of a new Long -Term Rate Period and a new Long -Term Rate for the 2008 Bonds then bearing interest at a Long -Term Rate, or until the 2008 Bonds are successfully converted to another Interest Rate Determination Method pursuant to Section 14.05(b) or Section 14.05(a)(iv)(F), the 2008 Bonds shall bear interest at the Long -Tenn Rate specified in Section 14.04 for the Long -Term Rate Period specified therein. The Commission shall select the duration of each Long -Term Rate Period for the 2008 Bonds and shall include the duration of the Long -Term Rate Period in the Conversion Notice given with respect to such Long -Term Rate Period pursuant to Section 14.05(b) or the Long -Term Rate Continuation Notice given with respect to any new Long -Term Rate and Long -Term Rate Period for the 2008 Bonds then bearing interest at a Long - Term Rate. Each Long -Term Rate Period shall continence on the Long -Term Rate Conversion Date and end on a Business Day selected by the Commission which is a minimum of 180 days after the Long -Term Rate Conversion Date, but in no event later than the maturity date of the 2008 Bonds. With respect to each Long -Term Rate Period, the Remarketing Agent will set the Long -Term Rate for the 2008 Bonds by 5:00 p.m., New York City time, on the applicable Long - Term Rate Computation Date. Subject to the provisions of Section 14.05(a)(iv)(G), each Long - Term Rate shall be the rate of interest that, if borne by the 2008 Bonds in such Long -Term Rate Period, would, in the judgment of the Remarketing Agent, having due regard for the prevailing financial market conditions for Tax -Exempt Securities that are of the same general nature as the 2008 Bonds for which the Long -Term Rate is to be determined, or Tax -Exempt Securities that are competitive as to credit and maturity (or period for tender) with the credit and maturity (or period for tender) of the 2008 Bonds for which the Long -Term Rate is to be determined, be the lowest interest rate that would enable such Remarketing Agent to place the 2008 Bonds at a price equal to 100% of the aggregate principal amount of the 2008 Bonds on the first day of such Long -Term Rate Period. 14.05(a)(iv)(B) Long -Term Rate Continuation. As of the day following the last day of a Long -Term Rate Period for the 2008 Bonds, unless the Commission has given a Conversion Notice with respect to the Conversion of the 2008 Bonds to another Interest Rate Determination Method pursuant to Section 14.05(b), the Commission may establish a new Long - Term Rate Period and Long -Term Rate for the 2008 Bonds with such right to be exercised by delivery of a written notice of an Authorized Representative containing the contents specified in Section 14.05(a)(iv)(D) (a "Long -Term Rate Continuation Notice") to the Notice Parties no less than twenty (20) days prior to the effective date of the new Long -Term Rate Period. OHS West:260379565.9 12 • 234 • • The Long -Term Rate Continuation Notice must be accompanied by an Opinion of Bond Counsel stating that the new Long -Term Rate Period is authorized and permitted under this First Supplemental Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on the 2008 Bonds. 14.05(a)(iv)(C) Limitations. Any establishment of a new Long -Term Rate and Long -Term Rate Period for the 2008 Bonds pursuant to Section 14.05(a)(iv)(B) above must comply with the following: - the first day of such new Long -Term Rate Period must be an Interest Payment Date on which the 2008 Bonds are subject to mandatory tender pursuant to the applicable provisions of Section 15.05; - the first day of such new Long -Term Rate Period must be a Business Day; and - no new Long -Term Rate shall become effective unless the Opinion of Bond Counsel referred to in Section 14.05(a)(iv)(B) is redelivered on (and as of) the first day of the new Long -Term Rate Period and all Outstanding 2008 Bonds are successfully remarketed in the new Long -Term Rate Period at the new Long -Term Rate on the first day of the new Long - Term Rate Period. 14.05(a)(iv)(D) Contents of Long -Tenn Rate Continuation Notice. The Commission's Long -Term Rate Continuation Notice must specify: (i) the proposed Long -Term Rate Period; (ii) whether any 2008 Credit Enhancement or 2008 Liquidity Facility then in effect will remain in effect during the proposed Long -Term Rate Period; and (iii) if new 2008 Credit Enhancement or a new 2008 Liquidity Facility will be provided to be effective during the proposed Long -Term Rate Period, the form of such 2008 Credit Enhancement or 2008 Liquidity Facility and the identity of the 2008 Credit Provider or 2008 Liquidity Provider. 14.05(a)(iv)(E) Notice to Holders. Upon receipt of a Long -Tenn Rate Continuation Notice from an Authorized Representative, as soon as possible, but in any event not less than fifteen (15) days prior to the first day of the proposed Long -Term Rate Period, the Trustee shall give notice by first-class mail to the Holders of the 2008 Bonds which notice shall state in substance: - that a new Long -Term Rate Period and Long -Term Rate is to be established for the 2008 Bonds on the applicable Long -Term Rate Conversion Date if the conditions specified in this First Supplemental Indenture are satisfied on or before such date; — that all 2008 Bonds are subject to mandatory tender for purchase on the first day of the new Long -Term Rate Period (whether or not the proposed new Long -Term Rate Period becomes effective on such date, unless there is no Liquidity Facility for the existing Long -Term Rate Period and the proposed new Long -Term Rate Period does not become effective, in which case the mandatory tender will he cancelled) at the Purchase Price, which shall be specified therein; OHS West:260379565.9 the first day of the new Long -Term Rate Period; 13 235 - that the Commission has delivered to the Trustee an Opinion of Bond Counsel to the effect that the new Long -Term Rate Period is authorized and permitted under this First Supplemental Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on the 2008 Bonds; - that a new Long -Term Rate Period and Long -Term Rate for the 2008 Bonds shall not be established unless the Favorable Opinion of Bond Counsel referred to above is redelivered to the Trustee on (and as of) the first day of the new Long -Term Rate Period and all 2008 Bonds are successfully remarketed in the new Long -Term Rate Period and at the new Long -Term Rate on the first day thereof; and - the CUSIP numbers or other identification information of the 2008 Bonds; - that, to the extent that there shall be on deposit with the Trustee on the first day of the new Long -Term Rate Period an amount of money sufficient to pay the Purchase Price thereof, all 2008 Bonds not delivered to the Trustee on or prior to such date shall be deemed to have been properly tendered for purchase and shall cease to constitute or represent a right on behalf of the Holder thereof to the payment of principal thereof or interest thereon and shall represent and constitute only the right to payment of the Purchase Price on deposit with the Trustee, without interest accruing thereon after such date. 14.05(a)(iv)(F) End of Long -Term Rate. In the event the Commission has not given a Long -Term Rate Continuation Notice or a Conversion Notice with respect to 2008 Bonds bearing interest at a Long -Term Rate at the time required by Section 14.05(a)(iv)(B) or Section 14.05(b), as applicable, or if the conditions to the effectiveness of (i) a new Long -Term Rate Period and new Long -Term Rate set forth in Section 14.05(a)(iv)(C) or (ii) Conversion to a new Interest Rate Determination Method set forth in Section 14.05(b)(ii)(D), as applicable, are not satisfied, then on the day following the last day of the current Long -Term Rate Period, a Weekly Rate Period shall automatically commence for the 2008 Bonds; provided, however, that the 2008 Bonds shall not be subject to optional tender and shall bear interest at a rate of eleven percent (11%) per arum until such time as the 2008 Bonds are successfully remarketed at an Interest Rate Determination Method in accordance with the provisions hereof, provided that notice of Conversion may be given five (5) Business Days prior to the Conversion Date. 14.05(a)(iv)(G) Sale at Premium or Discount. Notwithstanding the provisions of Section 14.05(a)(iv)(A) or 14.05(a)(v)(A), the Long -Term Rate or Fixed Rate, as the case may be, shall be the rate of interest per arum determined by the Remarketing Agent to be the interest rate which, if borne by the 2008 Bonds, would enable the Remarketing Agent to sell such 2008 Bonds at a price (without regard to accrued interest) which will result in the lowest net interest cost for the 2008 Bonds, after taking into account any premium or discount at which the 2008 Bonds are sold by the Remarketing Agent, provided that: — the Remarketing Agent certifies to the Trustee and the Commission that the sale of the 2008 Bonds at the interest rate and premium or discount specified by the Remarketing Agent is expected to result in the lowest net interest cost for such 2008 Bonds on the Long -Term Rate or Fixed Rate Conversion Date; OHS West:260379565.9 14 • 236 • • - the Commission consents in writing to the sale of the 2008 Bonds by the Remarketing Agent at such premium or discount; - in the case of 2008 Bonds to be sold at a discount, either (a) a 2008 Liquidity Facility is in effect with respect to such 2008 Bonds and provides for the purchase of such 2008 Bonds at such discount, or (b) the Commission agrees to transfer to the Remarketing Agent on the Conversion Date, in immediately available funds for deposit in the 2008 Commission Account, an amount equal to such discount; - in the case of 2008 Bonds to be sold at a premium, the Remarketing Agent shall transfer to the Trustee an amount equal to such premium, which amount shall either be used to pay costs associated with the Conversion or deposited in the Revenue Fund as specified by the Commission; and — on or before the date of the determination of the Long -Term Rate or Fixed Rate, the Commission delivers to the Trustee and the Remarketing Agent a letter of Bond Counsel to the effect that Bond Counsel expects to be able to give a Favorable Opinion of Bond Counsel on the Conversion Date; and - on or before the Conversion Date, a Favorable Opinion of Bond Counsel shall have been received by the Trustee and confirmed to the Commission and the Remarketing Agent. 14.05(a)(v) Fixed Rate. 14.05(a)(v)(A) The Interest Rate Determination Method for the 2008 Bonds may be converted from any Variable Rate to a Fixed Rate in accordance with the provisions of Section 14.05(b). After such Conversion, the 2008 Bonds shall bear interest at the Fixed Rate and shall not be subject to Conversion to another Interest Rate Determination Method. Subject to the provisions of Section 14.05(a)(iv)(G), the interest rate to be borne by the 2008 Bonds of each maturity from the Fixed Rate Conversion Date shall be the rate determined by the applicable Remarketing Agent on the Fixed Rate Computation Date to be the rate that, if borne by the 2008 Bonds, would, in the judgment of the Remarketing Agent having due regard for prevailing market conditions for Tax -Exempt Securities that are comparable to the 2008 Bonds, be the lowest interest rate that would enable such Remarketing Agent to place the 2008 Bonds of such maturity for which the Fixed Rate is to be determined at a price equal to 100% of the aggregate principal amount of such 2008 Bonds on the Fixed Rate Conversion Date. 14.05(a)(v)(B) If the Commission obtains a Favorable Opinion of Bond Counsel with respect to such actions: (i) in determining the Fixed Rate for any 2008 Bond, the applicable Remarketing Agent, subject to the approval of an Authorized Representative, may also determine on or before the Business Day next preceding the determination of the Fixed Rate for such 2008 Bonds, redemption dates and redemption premiums, if any, to be paid upon the optional redemption of such 2008 Bonds which differ from such redemption dates and premiums as are set forth in Section 15.01(a)(4), such redemption dates and redemption premiums, if any, to be, in the best judgment of the Remarketing Agent, consistent with then -current market conditions; and (ii) the Remarketing Agent, subject to the approval of an Authorized OHS West:260379565.9 15 237 Representative, may also determine, on or before the Business Day next preceding the determination of the Fixed Rate for such 2008 Bonds, with respect to any 2008 Bond constituting a Term Bond, a new maturity date for any portion of such 2008 Bond; provided, however, that such new maturity date shall be a June 1 prior to the original maturity date; and provided further that such 2008 Bond shall continue to be subject to mandatory redemption from Mandatory Sinking Account Payments established for such 2008 Bond unless, on any Mandatory Sinking Account Payment due date for such 2008 Bond, such Mandatory Sinking Account Payment is applied to the payment of that portion of such 2008 Bond which now matures on such Mandatory Sinking Account Payment due date. 14.05(a)(vi) Failure to Determine Rate for Certain Rate Periods. 14.05(a)(vi)(A) If, for any reason, the Daily Rate or the Weekly Rate on any 2008 Bond is not established as provided herein by the Remarketing Agent pursuant to Sections 14.05(a)(i) or (ii) or no Remarketing Agent shall be serving as such hereunder for such 2008 Bonds or any Rate so established is held to be invalid or unenforceable with respect to any such Rate Period, then the interest rate for such Rate Period shall be 100% of the applicable Rate Index on the date such Daily Rate or Weekly Rate was (or would have been) determined as provided above. 14.05(a)(vi)(B) If, for any reason, the Remarketing Agent fails to set the length of any Commercial Paper Rate Period or to establish any Commercial Paper Rate for any 2008 Bond or a court holds any Commercial Paper Rate Period or Commercial Paper Rate for any 2008 Bond to be invalid or unenforceable, a Commercial Paper Rate Period for such 2008 Bond shall last through the next day immediately preceding a Business Day (or until the earlier stated maturity thereof) and the interest rate applicable to such 2008 Bond shall be 100% of the Daily Rate Index on the fast day of such Rate Period. 14.05(a)(vii) Notice of Rates. In a timely fashion following the determination of any Rate, the Remarketing Agent establishing such Rate shall give written notice or notice by Electronic Means thereof to the Commission and the Trustee. Such notice shall also include details as to the principal amount of the 2008 Bonds and the Interest Rate Determination Method at the time applicable. Promptly upon receipt of notice from a Remarketing Agent of any Fixed Rate, the Trustee shall give the Holder of each 2008 Bond being converted to a Fixed Rate notice of the Fixed Rate. 14.05(a)(viii) Absence of Remarketing Agent; Binding Determination. If no Remarketing Agent shall be serving hereunder with respect to the 2008 Bonds (other than 2008 Bonds in a Fixed Rate Period), the determination of the applicable Rate Index shall be made by the Trustee at the direction of the Commission. The determination of any Rate or Rate Index by a Remarketing Agent or, as aforesaid, the Trustee, at the direction of the Commission, with respect to any 2008 Bond, shall be conclusive and binding upon the Commission, the Trustee, the Remarketing Agent, each 2008 Credit Provider, each 2008 Liquidity Provider and the Holder of such 2008 Bond. 14.05(a)(ix) No Liability. In determining the interest rate that any 2008 Bond shall bear as provided in this Section 14.05, neither the Remarketing Agent nor the Trustee shall OHS West:260379565.9 16 • 238 • • have any liability to the Commission or the Holder of such 2008 Bond, except for its negligence or willful misconduct. 14.05(b) Conversion of Interest Rate Determination Method. 14.05(b)(i) Right of Conversion. The Interest Rate Determination Method for the 2008 Bonds is subject to Conversion from time to time by the Commission, with such right to be exercised by delivery of a written notice of an Authorized Representative containing the contents specified in Section 14.05(b)(iii) (each such notice being a "Conversion Notice") to the Notice Parties as follows (except as otherwise provided in Section 14.04(a)(iv)(F)): (1) at least two (2) Business Days prior to the fifteenth (15th) day preceding the effective date of such proposed Conversion, in the event of a Conversion to a Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period; and (2) at least three (3) Business Days prior to the fifteenth (15th) day preceding the effective date of such proposed Conversion, in the event of a Conversion to a Long- Term Rate or a Fixed Rate. Each Authorized Representative is hereby authorized to execute and deliver a Conversion Notice to change the Interest Rate Determination Method at such times or times as the officer executing the Conversion Notice determines to be in the best interests of the Commission, such determination to be conclusively evidenced by such execution. The Conversion Notice must be accompanied by an Opinion of Bond Counsel stating that the Conversion is authorized and permitted under this Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on any of the 2008 Bonds. 14.05(b)(ii) Limitations. Any Conversion pursuant to this Section 14.05(b) must comply with the following: 14.05(b)(ii)(A) the Conversion Date must be a date on which the 2008 Bonds are subject to mandatory tender pursuant to the applicable provisions of Section 15.05; 14.05(b)(ii)(B) the Conversion Date must be a Business Day and, if the Conversion is from the Commercial Paper Rate, shall be a date determined in accordance with Section 14.05(a)(iii); 14.05(b)(ii)(C) the 2008 Liquidity Facility for the 2008 Bonds after a Conversion to a Variable Rate (other than a Long -Term Rate) must cover principal plus accrued interest (computed at the Maximum Interest Rate then in effect on the basis of a 365-day year and actual days elapsed or a 360 day year of twelve 30-day months, as applicable) for the maximum number of days between Interest Payment Dates permitted under that Interest Rate Determination Method, plus such additional number of days, if any, as shall be required by each Rating Agency then rating the 2008 Bonds; provided that if the number of days of interest coverage provided by the applicable 2008 Liquidity Facility is being changed from the number OHS West260379565.9 17 239 of days previously in place, the Trustee shall have also received a Rating Confirmation from each of the Rating Agencies then rating the 2008 Bonds; 14.05(b)(ii)(D) no Conversion shall become effective unless the Favorable Opinion of Bond Counsel referred to in Section 14.05(b)(i) is redelivered on (and as of) the Conversion Date and all Outstanding 2008 Bonds are successfully purchased or deemed purchased and remarketed in the new Interest Rate Determination Method on the Conversion Date; and 14.05(b)(ii)(E) upon Conversion of 2008 Bonds to a Fixed Rate Period or a Long -Tenn Rate Period without a Liquidity Facility, an Authorized Representative may provide in the Conversion Notice to the applicable 2008 Liquidity Provider a request for termination of the 2008 Liquidity Facility with respect to the 2008 Bonds to be effective upon such Conversion. 14.05(b)(iii) Contents of Conversion Notice. The Conversion Notice must specify: (A) the proposed Conversion Date; (B) the new Interest Rate Determination Method to take effect; (C) if the Conversion is to a Long -Term Rate, the Long -Term Rate Period; (D) whether any 2008 Credit Enhancement or 2008 Liquidity Facility then in effect will remain in effect after the proposed Conversion; (E) if new 2008 Credit Enhancement or a new 2008 Liquidity Facility will be provided to be effective upon such Conversion, the form of such 2008 Credit Enhancement or 2008 Liquidity Facility and the identity of the 2008 Credit Provider or 2008 Liquidity Provider; and (F) if the Conversion is to a Long -Term Rate Period or Fixed Rate Period, the redemption_ dates and redemption prices applicable to such Long -Term Rate Period or Fixed Rate Period. 14.05(b)(iv) Notice to Holders. Upon receipt of a Conversion Notice from an Authorized Representative, as soon as possible, but in any event not less than fifteen (15) days prior to the proposed Conversion Date, the Trustee shall give notice by first-class mail to the Holders of 2008 Bonds, which notice shall state in substance: 14.05(b)(iv)(A) that the Interest Rate Determination Method for the 2008 Bonds shall be converted to the specified Variable Rate or the Fixed Rate, as the case may be, on the applicable Conversion Date if the conditions specified in this First Supplemental Indenture are satisfied on or before such date; 14.05(b)(iv)(B) the applicable Conversion Date; 14.05(b)(iv)(C) that the Commission has delivered to the Trustee an Opinion of Bond Counsel to the effect that the Conversion is authorized and permitted under this Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on any of the 2008 Bonds; 14.05(b)(iv)(D) that the Interest Rate Determination Method for the 2008 Bonds shall not be converted unless the Favorable Opinion of Bond Counsel referred to above is redelivered to the Trustee on (and as of) the Conversion Date and all 2008 Bonds are successfully purchased and remarketed in the new Interest Rate Determination Method on the Conversion Date; OHS West:260379565.9 18 • 240 • • 14.05(b)(iv)(E) the CUSIP numbers or other identification information of such 2008 Bonds; 14.05(b)(iv)(F) that all 2008 Bonds are subject to mandatory tender for purchase on the Conversion Date (whether or not the proposed Conversion becomes effective on such date, unless converting from a Long -Term Rate Period for which there is no Liquidity Facility and the proposed Conversion does not become effective, in which case the mandatory tender will be cancelled) at the applicable Purchase Price, which Purchase Price shall be specified in the notice; and 14.05(b)(iv)(G) that, to the extent that there shall be on deposit with the Trustee on the applicable Conversion Date an amount of money sufficient to pay the Purchase Price thereof, all 2008 Bonds to be converted on the Conversion Date not delivered to the Trustee on or prior to the Conversion Date shall be deemed to have been properly tendered for purchase and shall cease to constitute or represent a right on behalf of the Holder thereof to the payment of principal thereof or interest thereon and shall represent and constitute only the right to payment of the Purchase Price on deposit with the Trustee, without interest accruing thereon after the Conversion Date. 14.05(b)(v) Failure of Conditions to be Met. If the Commission fails to deliver the Favorable Opinion of Bond Counsel required by Section 14.05(b)(ii)(D) to the Trustee on or before the Conversion Date or if the Trustee receives written notice to the effect that the Remarketing Agent has not successfully remarketed all of the Outstanding 2008 Bonds at the new Interest Rate Determination Method, the Interest Rate Determination Method shall not be converted, but the 2008 Bonds shall be deemed to have been tendered for purchase on the Conversion Date specified in the Conversion Notice (except if converting from a Long -Term Rate Period for which there is no Liquidity Facility) and shall be purchased on the Conversion Date specified in the Conversion Notice and, except as otherwise provided in Section 14.05(a)(iv)(F), the 2008 Bonds shall continue to bear interest at the Interest Rate Determination Method in effect prior to the proposed Conversion Date specified in the Conversion Notice; provided, however, that notwithstanding anything to the contrary provided in this Section 14.05, the rate of interest on the 2008 Bonds shall be determined on the proposed Conversion Date and, if sufficient funds are not available for the purchase of such 2008 Bonds, the provisions of Section 15.11(d) shall apply. In such event, the Commission and the Holders of the 2008 Bonds shall be restored (except as aforesaid with respect to the purchase of the 2008 Bonds) to their former positions and rights hereunder with respect to the 2008 Bonds, and all rights of the Commission hereunder shall continue as if no such proceedings for the Conversion of the Interest Rate Determination Method on the 2008 Bonds had taken place. The Trustee shall immediately notify by Electronic Means the Notice Parties of each such failed Conversion. 14.05(b)(vi) Notice Failure No Bar. Failure of a Holder of a 2008 Bond to receive the notice described in Section 14.05(b)(iv), or any defect therein, shall not affect the validity of any Rate or any continuation of or change in the Interest Rate Determination Method for any of the 2008 Bonds or extend the period for tendering any of the 2008 Bonds for purchase, OHS West:260379565.9 19 241 and the Trustee shall not be liable to any Holder of a 2008 Bond by reason of the failure of such Holder to receive such notice or any defect therein. 14.05(b)(vii) No Conversion During Continuance of Event of Default. No Conversion shall occur under this Section 14.05(b) if at the time of such Conversion an Event of Default shall have occurred and be continuing. The Trustee and the Remarketing Agent may conclusively rely upon a certificate of an Authorized Representative that no such default exists. 14.05(b)(viii) Notice to Remarketing Agent. The Commission may not elect a change in the Interest Rate Determination Method for the 2008 Bonds without written notice to the Remarketing Agent for the 2008 Bonds. 14.05(b)(ix) Rescission of Election. Notwithstanding anything herein to the contrary, the Commission may rescind any Conversion Notice given pursuant to this Section 14.05(b) prior to the proposed Conversion Date set forth in the Conversion Notice by giving written notice thereof to the Notice Parties two or more Business Days prior to such proposed Conversion Date. If the Trustee receives notice of such rescission prior to the time the Trustee has given notice to the Holders of the 2008 Bonds pursuant to Section 14.05(b)(iv), then, the Conversion Notice previously delivered by the Commission shall be of no force and effect. If the Trustee receives notice from the Commission of rescission of the Conversion Notice after the Trustee has given notice to the Holders of the 2008 Bonds pursuant to Section 14.05(b)(iv), then the 2008 Bonds shall continue to be subject to mandatory tender for purchase on the Conversion Date specified in the Conversion Notice (unless, prior to the proposed Conversion Date, the 2008 Bonds were in a Long -Term Rate Period for which there was no Liquidity Facility), and the Rate Period for the 2008 Bonds shall automatically adjust to, or continue as, a Weekly Rate Period on the Conversion Date specified in the Conversion Notice. No Opinion of Bond Counsel shall be required in connection with any automatic adjustment to a Weekly Rate Period. 14.05(c) Conversion of 2008 Liquidity Facility Bonds. Notwithstanding anything to the contrary contained in the Indenture, if all of the Outstanding 2008 Bonds are 2008 Liquidity Facility Bonds, the 2008 Bonds may be converted to a Fixed Rate on such Conversion Date as shall be acceptable to the applicable 2008 Liquidity Provider, the Trustee, the Remarketing Agent and the Commission, provided that on such Conversion Date the Commission shall deliver to the Trustee an Opinion of Bond Counsel stating that the Conversion is authorized and permitted under the Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on any 2008 Bonds. ARTICLE XV REDEMPTION AND PURCHASE OF 2008 BONDS Section 15.01. Optional Redemption of 2008 Bonds. (a) Optional Redemption of 2008 Bonds. (1) Commercial Paper Rate Period. 2008 Bonds .bearing interest at the Commercial Paper Rate are subject to redemption, at the option of the Commission, in whole or OHS West260379565.9 20 242 • in part, on the day following the end of any Commercial Paper Rate Period, at a redemption price equal to the principal amount thereof, plus accrued interest, if any, without premium. (2) Daily Rate Period and Weekly Rate Period. 2008 Bonds bearing interest at a Daily Rate or a Weekly Rate are subject to redemption, at the option of the Commission, in whole or in part, in Authorized Denominations on any Business Day, at a redemption price equal to the principal amount thereof, plus accrued interest, if any, without premium. (3) Long -Term Rate Period. 2008 Bonds bearing interest at the Long -Term Rate are subject to redemption, at the option of the Commission, in whole or in part, in Authorized Denominations, on the day following the last day of any Long -Term Rate Period and on such other dates as shall have been specified in the Conversion Notice with respect to the Long -Term Rate Period, delivered with a Favorable Opinion of Bond Counsel, at a redemption price equal to the principal amount thereof, plus accrued interest, if any, without premium. (4) Fixed Rate Period. Unless the Commission obtains a Favorable Opinion of Bond Counsel and changes redemption provisions as provided in Section 14.05(a)(v)(B), 2008 Bonds bearing interest at a Fixed Rate are subject to redemption in whole or in part (and if in part, in such order of maturity and Mandatory Sinking Account Payment dates as the Commission shall specify and within a maturity or Mandatory Sinking Account Payment date by lot or by such other method as the Trustee determines to be fair and reasonable and in Authorized Denominations), at the option of the Commission, on any date, at such times and at such redemption prices as follows: (a) If, on the Fixed Rate Conversion Date, the remaining term of the 2008 Bonds is greater than eight years, then the 2008 Bonds will not be subject to optional redemption until the fast June 1 or December 1 (whichever is earlier) to follow the eighth (8th) anniversary of the conversion to a Fixed Rate. On such first June 1 or December 1, the 2008 Bonds will be subject to redemption at 102% of the principal amount thereof, plus accrued interest, if any, to the date of redemption, which redemption price will decline by one percent (1%) per annum on each succeeding anniversary of such first June 1 or December 1 until reaching a redemption price of 100% of the principal amount thereof, plus accrued interest, if any, to the date of redemption, and thereafter at a redemption price of 100% of the principal amount thereof, plus accrued interest, if any, to the date of redemption. (b) If, on the Fixed Rate Conversion Date, the remaining term of the 2008 Bonds is less than eight years, then the 2008 Bonds will not be subject to optional redemption following Conversion. (b) Selection of Bonds for Optional Redemption. (1) 2008 Bonds. The Commission shall designate which maturities of 2008 Bonds are to be called for optional redemption pursuant to Section 15.01(a), provided that 2008 Liquidity Facility Bonds shall be redeemed prior to any other 2008 Bonds. If less than all 2008 Bonds maturing by their terms on any one date are to be redeemed at any one time, the Trustee shall select the 2008 Bonds of such maturity date to be redeemed in any manner that it deems OHS West:260379565.9 21 243 appropriate and fair and shall promptly notify the Commission in writing of the numbers of the 2008 Bonds so selected for redemption. For purposes of such selection, 2008 Bonds shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. In the event Term Bonds are designated for redemption, the Commission may designate the Mandatory Sinking Account Payments under Section 15.02(a), or portions thereof, that are to be reduced as allocated to such redemption. (c) Sufficient Funds Required for Optional Redemption. Any optional redemption of 2008 Bonds and notice thereof may be conditional and rescinded and cancelled pursuant to the provisions of Section 4.02 if for any reason on the date fixed for redemption moneys are not available in the Redemption Fund or otherwise held in trust for such purpose in an amount sufficient to pay in full on said date the principal of, interest, and any premium due on the 2008 Bonds called for redemption. (d) Notice of Optional Redemption; Rescission. Any notice of optional redemption of the 2008 Bonds shall be delivered in accordance with Section 4.02 and may rescinded as provided in Section 4.02. Section 15.02. Mandatory Redemption of 2008 Bonds From Mandatory Sinking Account Payments. (a) Mandatory Redemption of 2008 Bonds. Except as otherwise provided in Section 14.05(a)(v)(B), 2008 Bonds are Term Bonds and are subject to mandatory redemption from Mandatory Sinking Account Payments for such 2008 Bonds, on each date a Mandatory Sinking Account Payment for such 2008 Bonds is due, and in the principal amount equal to the Mandatory Sinking Account Payment due on such date at a Redemption Price equal to the principal amount thereof, plus accrued interest to the redemption date, without premium. Mandatory Sinking Account Payments for the 2008 Bonds that are Term Bonds shall be due in such amounts and on such dates as follows: Redemption Date (June 1) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 t Final Maturity OHS West:260379565.9 2008 Mandatory Sinking Account Payment 22 Bonds Redemption Date (June 1) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Mandatory Sinking Account Payment • • 244 • (b) Selection of Bonds for Mandatory Sinking Account Redemption. If less than all 2008 Bonds maturing by their terms on any one date are to be redeemed at any one time with Mandatory Sinking Account Payments, the Trustee shall select the 2008 Bonds of such maturity date to be redeemed by lot in any manner that it deems appropriate, provided that 2008 Liquidity Facility Bonds shall be redeemed prior to any other 2008 Bonds, and the Trustee shall promptly notify the Commission in writing of the numbers of the 2008 Bonds so selected for redemption. For purposes of such selection, 2008 Bonds shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. Section 15.03. Purchase In Lieu of Redemption. The Commission reserves the right at all times to purchase any of its 2008 Bonds on the open market. In lieu of mandatory redemption, the Commission may surrender to the Trustee for cancellation 2008 Bonds purchased on the open market, and such 2008 Bonds shall be cancelled by the Trustee. If any 2008 Bonds are so cancelled, the Commission may designate the Mandatory Sinking Account Payments or portions thereof within the 2008 Bonds so purchased that are to be reduced as a result of such cancellation. Section 15.04. Holder's Option to Tender 2008 Bonds for Purchase. (a) During any Daily Rate Period, any 2008 Bond or (subject to subsection (c) of this Section) a portion thereof, may be tendered for purchase on any Business Day at the applicable Purchase Price, payable in immediately available funds, upon (A) delivery by the Holder or Beneficial Owner of such 2008 Bond to the Remarketing Agent and to the Trustee at its Principal Office of an irrevocable written notice or notice by Electronic Means by 11:00 a.m. (New York City time) on the Purchase Date, which states the principal amount of such 2008 Bond to be tendered for purchase and the Purchase Date, and (B) delivery of such 2008 Bond to the Trustee on the Purchase Date in accordance with Section 15.06. The Trustee shall keep a written record of the notice described in clause (A) of this subsection (a). (b) Except as otherwise provided in Section 14.05(a)(iv)(F), during any Weekly Rate Period, any 2008 Bond or (subject to subsection (c) of this Section) a portion thereof, may be tendered for purchase on any Business Day at the applicable Purchase Price, payable in accordance with Section 15.11 in immediately available funds, upon (A) delivery by the Holder or Beneficial Owner of such 2008 Bond to the Remarketing Agent and to the Trustee at its Principal Office of an irrevocable written notice or notice by Electronic Means by 5:00 p.m. (New York City time) on any Business Day at least seven (7) days prior to the Purchase Date, which states the principal amount of such 2008 Bond to be tendered for purchase and the Purchase Date, and (B) delivery of such 2008 Bond to the Trustee on the Purchase Date in accordance with Section 15.06. The Trustee shall keep a written record of the notice described in clause (A) of this subsection (b). (c) If any 2008 Bond is to be purchased in part pursuant to subsection (a) or subsection (b) of this Section, the amount so purchased and the amount not so purchased must each be an Authorized Denomination. (d) Any instrument delivered to the Trustee in accordance with this Section shall be irrevocable with respect to the purchase for which such instrument was delivered and shall OHS West:260379565.9 23 245 be binding upon the Securities Depository and any subsequent Holder or Beneficial Owner of the 2008 Bond to which it relates, including any 2008 Bond issued in exchange therefor or upon the registration of transfer thereof, and as of the date of such instrument, the Holder or Beneficial Owner of the 2008 Bonds specified therein shall not have any right to optionally tender for purchase such 2008 Bonds prior to the date of purchase specified in such notice. The Commission, the Remarketing Agent and the Trustee may conclusively assume that any person (other than a Holder) providing notice of optional tender pursuant to subsection (a) or subsection (b) of this Section is the Beneficial Owner of the 2008 Bond to which such notice relates, and none of the Commission, the Remarketing Agent or the Trustee shall assume any liability in accepting such notice from any person whom it reasonably believes to be a Beneficial Owner of 2008 Bonds. Section 15.05. Mandatory Tender of 2008 Bonds for Purchase. (a) The 2008 Bonds shall be subject to mandatory tender for purchase at the applicable Purchase Price, at the following times and upon the occurrence of any of the events stated below: (1) on the Conversion Date for such 2008 Bonds to a new Interest Rate Determination Method specified in a Conversion Notice (whether or not the proposed Conversion becomes effective on such date, unless converting from a Long -Term Rate Period for which there is no Liquidity Facility and the proposed Conversion does not occur, in which case the mandatory tender will be cancelled); (2) with respect to 2008 Bonds bearing interest at a Daily Rate, a Weekly Rate or a Commercial Paper Rate: (A) on the fifth (5th) Business Day preceding (i) the scheduled Expiration of a 2008 Liquidity Facility or (ii) the Termination of a 2008 Liquidity Facility, at the election of the Commission as permitted by such 2008 Liquidity Facility; and (B) on the date of the provision of an Alternate Liquidity Facility for such 2008 Bonds pursuant to Section 15.14 and the resultant Termination of the existing 2008 Liquidity Facility; provided, however, that, notwithstanding any other provision of this Indenture to the contrary, no mandatory tender for purchase shall be required pursuant to this subsection if a Rating Confirmation shall be delivered by each Rating Agency then rating the 2008 Bonds on the date of the provision of the Alternate Liquidity Facility pursuant to Section 15.14 and the resultant Termination of the existing 2008 Liquidity Facility; (3) with respect to each 2008 Bond bearing interest at a Commercial Paper Rate, on each Interest Payment Date immediately following each Commercial Paper Rate Period for such 2008 Bond; (4) with respect to each 2008 Bond bearing interest at a Long -Tenn Rate, on the Interest Payment Date immediately following each Long -Term Rate Period for such 2008 Bond; (5) with respect to each 2008 Bond bearing interest at a Weekly Rate or a Daily Rate, on any Business Day; and OHS West:260379565.9 24 246 • (6) with respect to 2008 Bonds bearing interest at a Daily Rate, a Weekly Rate or a Commercial Paper Rate, upon receipt by the Trustee of written notice from the 2.008 Liquidity Provider for such 2008 Bonds that an event of default or an event of termination (other than an immediate termination or suspension) has occurred under the 2008 Liquidity Facility with the effect that the obligations of such 2008 Liquidity Provider to purchase such 2008 Bonds or otherwise provide for the Purchase Price of such 2008 Bonds under such 2008 Liquidity. Facility shall terminate on the date specified in such notice, in which event such 2008 Bonds shall be subject to purchase on a Business Day selected by the Trustee which date shall be not more than five (5) Business Days after receipt of such notice, but in no event later than the Business Day preceding the termination date specified in the notice received from such 2008 Liquidity Provider; (b) Notice of mandatory tender for purchase on the Conversion Date shall be given by the Trustee to the Holders as provided in Section 14.05(b)(iv). (c) The Trustee shall give notice by first class mail to the Holders of 2008 Bonds of each Termination of a 2008 Liquidity Facility and each Expiration of a 2008 Liquidity Facility making 2008 Bonds subject to mandatory tender pursuant to Section 15.05(a)(2), which notice shall (i) state the date of such Termination, substitution or Expiration; (ii) state that unless a Rating Confirmation is received with respect to the substitution (in which event no mandatory tender for purchase shall occur), such 2008 Bonds shall be subject to mandatory tender for purchase on the specified Purchase Date at the applicable Purchase Price (which shall be specified in such notice); and (iii) be mailed by the Trustee not later than the fifteenth (15th) day prior to such Termination, substitution or expiration. (d) No notice need be given to the Holders of any 2008 Bond bearing interest at a Commercial Paper Rate of the mandatory tender for purchase of such 2008 Bond on an Interest Payment Date for such 2008 Bond. (e) Upon the expiration of the then current Long -Term Rate Period for the 2008 Bonds, the Trustee shall give notice by first class mail to the Holder of such 2008 Bonds at the address shown on the bond registration books maintained by the Trustee not later than the fifteenth (15th) day prior to the date on which such 2008 Bonds are subject to mandatory tender for purchase pursuant to Section 15.05(a)(4), which notice shall state that such 2008 Bonds are subject to mandatory tender on the specified Purchase Date at the applicable Purchase Price (which shall be specified in such notice). (f) The Trustee shall give notice by first class mail within two (2) Business Days of receipt of a notice from a 2008 Liquidity Provider pursuant to Section 15.05(a)(5), to the Holders of the 2008 Bonds at their addresses shown on the bond registration books maintained by the Trustee which notice shall: (1) state such 2008 Bonds are subject to mandatory tender for purchase pursuant to Section 15.05(a)(5) at the applicable Purchase Price (which shall be specified in such notice); and (2) state the Purchase Date. Section 15.06. Delivery of Tendered 2008 Bonds. With respect to any 2008 Bond that is registered in book -entry form with a Securities Depository, delivery of such 2008 Bond to the Trustee in connection with any optional or mandatory tender for purchase pursuant to OHS West:260379565.9 25 247 Section 15.04 or 15.05 shall be effected by the making of, or the irrevocable authorization to make, appropriate entries on the books of the Securities Depository for such 2008 Bond or any Participant of such Securities Depository to reflect the transfer of the beneficial ownership interest in such 2008 Bond to the account of the Trustee, or to the account of a Participant of such Securities Depository acting on behalf of the Trustee. With respect to any 2008 Bond that is not registered in book -entry form with a Securities Depository, delivery of such 2008 Bond to the Trustee in connection with any optional or mandatory tender for purchase pursuant to Section 15.04 or 15.05 shall be effected by physical delivery of such 2008 Bond to the Trustee at its Principal Office, by 1:00 p.m. (New York City time) on the Purchase Date, accompanied by an instrument of transfer thereof, in a form satisfactory to the Trustee, executed in blank by the Holder thereof with the signature of such Holder guaranteed in accordance with the guidelines set forth by one of the nationally recognized medallion signature programs. Section 15.07. 2008 Bonds Deemed Purchased. (a) If moneys sufficient to pay the Purchase Price of 2008 Bonds to be purchased pursuant to Section 15,04 or 15.05 shall be held by the Trustee on the applicable Purchase Date, such 2008 Bonds shall be deemed to have been purchased for all purposes of the Indenture, irrespective of whether or not such 2008 Bonds shall have been delivered to the Trustee or transferred on the books of a Securities Depository for such 2008 Bonds, and neither the former Holder or Beneficial Owner of such 2008 Bonds nor any other person shall have any claim thereon, under the Indenture or otherwise, for any amount other than the Purchase Price thereof. (b) In the event of non -delivery of any 2008 Bond to be purchased pursuant to Section 15.04 or 15.05, the Trustee shall segregate and hold uninvested the moneys for the Purchase Price of such 2008 Bond in trust, without liability for interest thereon, for the benefit of the former Holders or Beneficial Owners of such 2008 Bond, who shall, except as provided in the following sentence, thereafter be restricted exclusively to such moneys for the satisfaction of any claim for the Purchase Price of such 2008 Bond. Any moneys that the Trustee shall segregate and hold in trust for the payment of the Purchase Price of any 2008 Bond and remaining unclaimed for two (2) years after the date of purchase shall be paid automatically to the Commission. After the payment of such unclaimed moneys to the Commission, the former Holder or Beneficial Owner of such 2008 Bond shall look only to the Commission for the payment thereof. Section 15.08. Deposit of 2008 Bonds. The Trustee agrees to accept and hold all 2008 Bonds delivered to it pursuant to Section 15.04 or 15.05 in trust for the benefit of the respective Holders or Beneficial Owners which shall have so delivered such 2008 Bonds until the Purchase Price of such 2008 Bonds shall have been delivered to or for the account of or to the order of such Holders or Beneficial Owners pursuant to Section 15.11. Any 2008 Bonds registered for transfer to new purchasers and delivered to the Trustee as described in Section 15.12 shall be held in trust by the Trustee for the benefit of such new purchasers until delivery to such new purchasers. OHS West:260379565.9 26 248 • • Section 15.09. Remarketing of Tendered 2008 Bonds. (a) Daily Put or Commercial Paper Tender Bonds. (i) Not later than 11:15 a.m. (New York City time) on each Business Day on which the Trustee receives a notice from a Holder or Beneficial Owner of a 2008 Bond to be tendered pursuant to Section 15.04(a) (the "Daily Put Bonds"), and on each day any 2008 Bonds bearing interest at a Commercial Paper Rate are subject to mandatory tender pursuant to Section 15.05(a)(3) (the "Commercial Paper Tender Bonds"), the Trustee shall give notice by Electronic Means to the Remarketing Agent and the Commission, specifying the principal amount of 2008 Bonds for which it has received such notice and the names of the Holder or Holders thereof. The Remarketing Agent shall thereupon offer for sale and use its best efforts to find purchasers for such Daily Put Bonds or Commercial Paper Tender Bonds, other than 2008 Liquidity Facility Bonds, which shall be remarketed pursuant to Section 15.13. (ii) Not later than 11:30 a.m. (New York City time) on the Purchase Date described in subparagraph (i) above, the Trustee shall give notice by Electronic Means to the Remarketing Agent and the Commission of the accrued amount of interest payable with respect to the Daily Put Bonds or Commercial Paper Tender Bonds, as applicable, as of such Purchase Date and confirming the aggregate principal amount of the Daily Put Bonds or Commercial Paper Tender Bonds. (iii) Not later than 12:00 noon (New York City time) on any Purchase Date for Daily Put Bonds or Commercial Paper Tender Bonds, the Remarketing Agent shall give notice by Electronic Means to the Commission and the Trustee of the principal amount of any Daily Put Bonds or Commercial Paper Tender Bonds, as applicable, which have not been remarketed in accordance with the applicable Remarketing Agreement and its commitment to deliver funds from the Daily Put Bonds or Commercial Paper Tender Bonds that have been remarketed to the Trustee by 2:00 p.m. (New York City time) on such day pursuant to Section 15.10. (iv) If a Remarketing Agent's notice pursuant to subparagraph (iii) above indicates that such Remarketing Agent has on hand less remarketing proceeds than are needed to purchase all the Daily Put Bonds or Commercial Paper Tender Bonds to be purchased on any Purchase Date, the Trustee shall demand payment under the applicable 2008 Liquidity Facility then in effect with respect to the tendered 2008 Bonds in sufficient time (as set forth by the terms of the 2008 Liquidity Facility) so as to provide by 2:30 p.m. (New York City time) on such Purchase Date an amount sufficient, together with the remarketing proceeds to be available for such purchase, calculated solely on the basis of the notice given by the Remarketing Agent pursuant to subparagraph (iii) above, to pay the Purchase Price of the Daily Put Bonds or Commercial Paper Tender Bonds, as applicable. The Trustee shall immediately after such demand for payment give notice by Electronic Means to the Commission of the amount, if any, of such demand. (b) Weekly Put Bonds. (i) Not later than 10:30 a.m. (New York City time) on each Business Day succeeding a day on which the Trustee receives a notice from a Holder or Beneficial Owner of 011S West:260379565.9 27 249 2008 Bonds to be tendered pursuant to Section 15.04(b) (the "Weekly Put Bonds"), the Trustee shall give notice by Electronic Means to the Remarketing Agent and the Commission, specifying the principal amount of 2008 Bonds for which it has received such notice, the names of the Holder or Holders thereof and the Purchase Date. The Remarketing Agent shall thereupon offer for sale and use its best efforts to fmd purchasers for such Weekly Put Bonds, other than 2008 Liquidity Facility Bonds, which shall be remarketed pursuant to Section 15.13. (ii) Not later than 11:00 a.m. (New York City time) on the Business Day immediately preceding the Purchase Date described in subparagraph (i) above, the Trustee shall give notice by Electronic Means to the Remarketing Agent and the Commission of the accrued amount of interest payable with respect to the Weekly Put Bonds as of such Purchase Date and confirming the aggregate principal amount of the Weekly Put Bonds. (iii) Not later than 11:30 a.m. (New York City time) on any Purchase Date for Weekly Put Bonds, the Remarketing Agent shall give notice by Electronic Means to the Commission and the Trustee of the principal amount of Weekly Put Bonds that have not been remarketed in accordance with the applicable Remarketing Agreement and its commitment to deliver funds from the Weekly Put Bonds that have been remarketed to the Trustee by 2:00 p.m. (New York City time) on the Purchase Date pursuant to Section 15.10. (iv) If a Remarketing Agent's notice pursuant to subparagraph (iii) above indicates that such Remarketing Agent has on hand less remarketing proceeds than are needed to purchase all the Weekly Put Bonds to be purchased on any Purchase Date, the Trustee shall demand payment under the applicable 2008 Liquidity Facility then in effect with respect to the Weekly Put Bonds in sufficient time (as set forth by the terms of the 2008 Liquidity Facility) so as to provide by 2:30 p.m. (New York City time) on such Purchase Date an amount sufficient, together with the remarketing proceeds to be available for such purchase, calculated solely on the basis of the notice given by the Remarketing Agent pursuant to subparagraph (iii) above, to pay the Purchase Price of the Weekly Put Bonds. The Trustee shall immediately after such demand for payment give notice by Electronic Means to the Commission of the amount, if any, of such demand. (c) Mandatory Tender Bonds. (i) Not later than 9:30 a.m. (New York City time) on each Purchase Date occurring pursuant to Section 15.05 with the exception of subsection 15.05(a)(3), the Trustee shall give notice by EIectronic Means to the Remarketing Agent and the Commission specifying the principal amount of all Outstanding 2008 Bonds that are subject to mandatory tender (the "Mandatory Tender Bonds") on such Purchase Date pursuant to any subsection of Section 15.05 except subsection 15.05(a)(3) and the names of the registered Holder or Holders thereof. The Remarketing Agent shall thereupon offer for sale and use its best efforts to find purchasers for such Mandatory Tender Bonds (if there is still an obligation to remarket), other than 2008 Liquidity Facility Bonds, which shall be remarketed pursuant to Section 15.13. (ii) Not later than 10:00 a.m. (New York City time) on each Purchase Date described in subparagraph (i) above, the Trustee shall give notice by Electronic Means to the Remarketing Agent and the Commission of the accrued amount of interest payable with respect OHS West:260379565.9 28 • 250 • to the Mandatory Tender Bonds as of the Purchase Date and confirming the aggregate principal amount of the Mandatory Tender Bonds. (iii) Not later than 11:30 a.m. (New York City time) on any Purchase Date with respect to Mandatory Tender Bonds, the Remarketing Agent shall give notice by Electronic Means to the Trustee and the Commission of the principal amount of Mandatory Tender Bonds that have not been remarketed in accordance with the Remarketing Agreement and its written commitment to deliver funds from the Mandatory Tender Bonds that have been remarketed to the Trustee by 2:00 p.m. (New York City time) on the Purchase Date pursuant to Section 15.10. (iv) If a Remarketing Agent's notice pursuant to subparagraph (iii) above indicates that such Remarketing Agent has on hand less remarketing proceeds than are needed to purchase all the Mandatory Tender Bonds to be purchased on such Purchase Date, the Trustee shall demand payment under the applicable 2008 Liquidity Facility then in effect with respect to the Mandatory Tender Bonds in sufficient time (as set forth by the terms of the 2008 Liquidity Facility) so as to provide by 2:30 p.m. (New York City time) on such Purchase Date an amount sufficient, together with the remarketing proceeds to be available for such purchase, calculated solely on the basis of the notice given by the Remarketing Agent pursuant to subparagraph (iii) above, to pay the Purchase Price of the Mandatory Tender Bonds. The Trustee shall immediately after such demand for payment give notice to the Commission of the amount, if any, of such demand. (d) Optional Commission Deposit. If a Remarketing Agent's notice pursuant to subparagraph (a)(iii), (b)(iii) or (c)(iii) above indicates that such Remarketing Agent has remarketed less than all the Daily Put Bonds, Commercial Paper Tender Bonds, Weekly Put Bonds, or Mandatory Tender Bonds to be purchased on any Purchase Date and the Trustee does not receive sufficient funds from, or has received notice from a 2008 Liquidity Provider that it will not provide sufficient funds from, draws on the applicable 2008 Liquidity Facility to pay the Purchase Price of all such 2008 Bonds that have not been remarketed by 2:00 p.m. (New York City time) on the Purchase Date, the Trustee shall immediately (but in no event later than 2:30 p.m. (New York City time)) give notice by Electronic Means to the Commission specifying the principal amount and the Purchase Price of such 2008 Bonds for which moneys will not be available in the 2008 Bonds Purchase Fund and requesting the Commission to deposit with the Trustee as soon as possible on such Purchase Date, preferably by 3:00 p.m. (New York City time), an amount sufficient to pay that portion of the Purchase Price for which moneys will not be available in the 2008 Bonds Purchase Fund, such notice to be confirmed immediately by Electronic Means to the Commission. Such deposit by the Commission shall be at the sole option of the Commission. (e) Limitation. If a 2008 Liquidity Facility is in effect with respect to the 2008 Bonds, the Remarketing Agent shall not remarket any tendered 2008 Bonds to the Commission or any affiliate of the Commission. Each Remarketing Agent shall remarket the 2008 Bonds, as provided herein, at not less than the Purchase Price thereof, except for 2008 Liquidity Facility Bonds, which shall be remarketed pursuant to Section 15.13. Section 15.10. Deposits into Accounts in the 2008 Bonds Purchase Fund. OHS West:2603795659 29 251 (a) The terms of any sale by a Remarketing Agent of any 2008 Bond tendered or deemed tendered for purchase pursuant to Section 15.04 or 15.05 shall provide for the payment of the Purchase Price for such tendered or deemed tendered 2008 Bond by such Remarketing Agent to the Trustee for deposit in the 2008 Remarketing Account of the 2008 Bonds Purchase Fund in immediately available funds at or before 2:00 p.m. (New York City time) on the Purchase Date. Each Remarketing Agent shall cause to be paid to the Trustee on each Purchase Date for tendered or deemed tendered 2008 Bonds all amounts representing proceeds of the remarketing of such 2008 Bonds, based upon the notice given by such Remarketing Agent pursuant to Section 15.09(a)(iii), 15.09(b)(iii), 15.09(c)(iii), as the case may be. All such amounts shall be deposited in the 2008 Remarketing Account. (b) The Trustee shall deposit in the 2008 Liquidity Facility Purchase Account all amounts received under a 2008 Liquidity Facility pursuant to Section 15.09(a)(iv), 15.09(b)(iv) or 15.09(c)(iv), as the case may be, and related to the 2008 Bonds. (c) Upon receipt of any notice from the Trustee pursuant to Section 15.09(d) that insufficient funds will be on deposit in the 2008 Bonds Purchase Fund to pay the full Purchase Price of all 2008 Bonds to be purchased on the Purchase Date, the Commission shall, at its sole option, deliver or cause to be delivered to the Trustee immediately available funds in an amount equal to such deficiency prior to 3:00 p.m. (New York City time) on the Purchase Date. All such funds shall be deposited in the 2008 Commission Account. (d) All funds received from the Commission pursuant to Section 15.09(d) shall be deposited in the 2008 Commission Account. (e) The Trustee shall hold amounts in the 2008 Bonds Purchase Fund uninvested. Section 15.11. Disbursements from the 2008 Bonds Purchase Fund. (a) Application of Moneys. Moneys in the 2008 Bonds Purchase Fund (other than the proceeds of any remarketing of 2008 Liquidity Facility Bonds, which shall be paid to the 2008 Liquidity Provider on the remarketing date) shall be applied at or before 3:00 p.m. (New York City time) to the purchase of 2008 Bonds as provided herein by the Trustee, on each Purchase Date, as follows: First — Moneys constituting funds in the 2008 Remarketing Account shall be used by the Trustee on any Purchase Date to purchase 2008 Bonds tendered or deemed tendered for purchase pursuant to Section 15.04 or 15.05 at the Purchase Price thereof. Second — In the event such moneys in the 2008 Remarketing Account on the Purchase Date are insufficient to purchase all 2008 Bonds, moneys in the 2008 Liquidity Facility Purchase Account on such Purchase Date shall be used by the Trustee at that time to purchase such remaining 2008 Bonds at the Purchase Price thereof. Thud - If the amount of money in the 2008 Remarketing Account and 2008 Liquidity Facility Purchase Account on the Purchase Date is insufficient to pay in full the Purchase Price of all 2008 Bonds tendered or deemed tendered for purchase pursuant to Section 15.04 or 15.05 on such Purchase Date, moneys in the 2008 Commission Account on OHS West:260379565.9 30 252 • such Purchase Date, if any, shall be used by the Trustee at that time to purchase such remaining 2008 Bonds at the Purchase Price thereof. Notwithstanding anything to the contrary in this Section, if the 2008 Bonds tendered or deemed tendered for purchase pursuant to Section 15.04 or 15.05 are registered in book -entry form, payment of the Purchase Price of such 2008 Bonds shall be made in accordance with the rules and procedures of the Securities Depository. (b) Nondeliveries. The Trustee shall, as to any 2008 Bonds that are not registered in book -entry form and that have not been delivered to it as required by Section 15.06, (i) notify the Remarketing Agent in writing of such nondelivery and (ii) place a stop transfer against an appropriate amount of 2008 Bonds registered in the name of the Holder of such 2008 Bonds on the bond registration books maintained by the Trustee. The Trustee shall place and maintain such stop transfer commencing with the lowest serial number 2008 Bond registered in the name of such Holder until stop transfers have been placed against an appropriate amount of 2008 Bonds until the appropriate 2008 Bonds are delivered to the Trustee as required by Section 15.06. Upon such delivery, the Trustee shall make any necessary adjustments to such bond registration books. (c) Prior Commission Purchase. Notwithstanding anything contained herein to the contrary, while any 2008 Liquidity Facility is in effect with respect to the 2008 Bonds, the Trustee shall, at the request of the Commission, use funds on deposit in the 2008 Commission Account prior to funds in the 2008 Liquidity Facility Purchase Account to pay any portion of the Purchase Price of the tendered 2008 Bonds. In addition, 2008 Bonds purchased with funds from the 2008 Liquidity Facility Purchase Account may be purchased from the 2008 Liquidity Provider by the Commission. (d) Insufficient Funds. If sufficient funds are not available for the purchase of all 2008 Bonds tendered or deemed tendered and required to be purchased on any Purchase Date, all 2008 Bonds shall (except if the conditions described in Section 14.05(a)(iv)(F) apply, in which case the 2008 Bonds shall bear interest at eleven percent (11 %) per annum as provided in such Section) bear interest at the lesser of the SIFMA Swap Index plus three percent (3%) and the Maximum Interest Rate from the date of such failed purchase until all such 2008 Bonds are purchased as required in accordance with this Indenture, and all tendered 2008 Bonds shall be returned to their respective Holders. Notwithstanding any other provision of this Indenture, such failed purchase and return shall not constitute an Event of Default. Thereafter, the Trustee shall continue to take all such action available to it to obtain remarketing proceeds from the Remarketing Agent and sufficient other funds from the Liquidity Provider, if any, for such 2008 Bonds. Section 15.12. Delivery of 2008 Bonds. (a) If the 2008 Bonds are not registered in book -entry form, a principal amount of 2008 Bonds equal to the amount of 2008 Bonds successfully remarketed by each Remarketing Agent shall be delivered to the Trustee for registration or transfer to such persons as shall be designated by the Remarketing Agent. Such 2008 Bonds shall be held available at the office of the Trustee and shall be picked up at a location designated by the OHS West:260379565.9 31 253 Trustee to the applicable Remarketing Agent at or after 1:00 p.m. (New York City time) on the Purchase Date against delivery of funds for deposit into the 2008 Remarketing Account of the 2008 Bonds Purchase Fund equal to the Purchase Price of the 2008 Bonds that have been remarketed. If the 2008 Bonds are registered in book -entry form, transfer of ownership of the remarketed 2008 Bonds shall be effected in accordance with the procedures of the. Securities Depository against delivery of funds for deposit into the 2008 Remarketing Account of the 2008 Bonds Purchase Fund equal to the Purchase Price of the 2008 Bonds that have been remarketed. (b) Any 2008 Bonds purchased with funds in any 2008 Liquidity Facility Purchase Account of the 2008 Bonds Purchase Fund shall be delivered and held in accordance with Section 15.13. Any 2008 Bonds purchased with funds in any 2008 Commission Account of the 2008 Bonds Purchase Fund shall be delivered and held in accordance with the instructions of the Commission furnished to the Trustee. Such 2008 Bonds shall be held available for registration of transfer and delivery by the Trustee in such manner as may be agreed between the Trustee and the 2008 Liquidity Provider or the Commission, as the case may be. Section 15.13. 2008 Liquidity Facilities; Liquidity Facility Bonds. (a) Unless all the Outstanding 2008 Bonds are 2008 Liquidity Facility Bonds or are in a Long -Tenn Rate Period or a Fixed Rate Period, the Commission shall provide, or cause to be provided, to the Trustee a 2008 Liquidity Facility. The Commission shall not reduce the amount of a 2008 Liquidity Facility or permit a substitution of a 2008 Liquidity Provider thereunder without obtaining a Rating Confirmation with respect to such action unless such action is considered a substitution of a 2008 Liquidity Facility subjecting the 2008 Bonds affected thereby to mandatory purchase pursuant to Section 15.05(a)(2). The Commission shall have the right at any time to provide, pursuant to Section 15.14, an Alternate Liquidity Facility for any 2008 Liquidity Facility then in effect. if there shall have been delivered to the Trustee (i) an Alternate Liquidity Facility meeting the requirements of Section 15.14 and (ii) the opinions and documents required by Section 15.14, then the Trustee shall accept such Alternate Liquidity Facility and, if so directed by the Commission, on or after the effective date of such Alternate Liquidity Facility promptly surrender the 2008 Liquidity Facility being so substituted in accordance with the respective terms thereof for cancellation; provided the Trustee shall not surrender any 2008 Liquidity Facility until all draws or requests to purchase 2008 Bonds made under such 2008 Liquidity Facility have been honored in accordance with the terms thereof, including all draws required to be made in connection with such substitution. In the event that the Commission elects to provide an Alternate Liquidity Facility with respect to the 2008 Bonds, the 2008 Bonds shall be subject to the mandatory tender provisions of Section 15.05(a)(2). Notwithstanding the foregoing, if at any time there shall cease to be 2008 Bonds Outstanding or if all the Outstanding 2008 Bonds have been converted to a Fixed Rate Period or a Long -Tenn Rate Period, or a 2008 Liquidity Facility shall be terminated pursuant to its terms, the Trustee shall promptly surrender such 2008 Liquidity Facility in accordance with its terms for cancellation. The Trustee shall comply with the procedures set forth in each 2008 Liquidity Facility relating to the termination thereof. OHS West:260379565.9 32 • 254 • • (b) In the event that a 2008 Liquidity Facility is in effect; the Trustee shall make a demand for payment under such 2008 Liquidity Facility, subject to and in accordance with its terms, in order to receive payment thereunder on each Purchase Date for such 2008 Bonds as provided in Section 15.09(a)(iv), Section 15.09(b)(iv) or Section 15.09(c)(iv), as applicable. (c) Each such demand for payment shall be made pursuant to and in accordance with this Indenture: The Trustee shall give notice of each such demand for payment to the Commission at the time of each such demand. The proceeds of each such demand shall be deposited in the 2008 Liquidity Facility Purchase Account within the 2008 Bonds Purchase Fund and used in the order of priority established by Section 15.11. At the time of making any demand under a 2008 Liquidity Facility pursuant to Section 15.13(b), the Trustee shall direct the 2008 Liquidity Provider to pay the proceeds of such demand directly to the Trustee for deposit in the 2008 Liquidity Facility Purchase Account. The Trustee shall comply with all provisions of each 2008 Liquidity Facility in order to realize upon any demand for payment thereunder, and will not demand payment under any 2008 Liquidity Facility of any amounts for payment of: (i) 2008 Liquidity Facility Bonds; or (ii) 2008 Bonds held by the Commission or any affiliate of the Commission or any nominee of the Commission unless such 2008 Liquidity Facility specifically permits such demand. (d) Any 2008 Bonds purchased with payments made under a 2008 Liquidity Facility pursuant to Section 15:13(b) shall constitute 2008 Liquidity Facility Bonds and shall be registered in the name of, or as otherwise directed by, the applicable Liquidity Provider and delivered to or upon the order of, or as otherwise directed by, such Liquidity Provider. At the option of the Commission, it may provide funds to the 2008 Liquidity Provider to purchase 2008 Liquidity Facility Bonds, in which event such 2008 Bonds shall be held by the Trustee in accordance with instructions by the Commission. (e) Unless otherwise provided in a 2008 Liquidity Facility, 2008 Liquidity Facility Bonds shall be remarketed by the applicable Remarketing Agent prior to any other 2008 Bonds tendered for purchase pursuant to Section 15.04 or 15.05 and shall be remarketed in accordance with the terms of the applicable Remarketing Agreement. Upon (i) receipt by the Commission and the Trustee of written notification from a 2008 Liquidity Provider that a 2008 Liquidity Facility has been fully reinstated with respect to principal and interest and (ii) release by the 2008 Liquidity Provider of any 2008 Liquidity Facility Bonds that the Remarketing Agent has remarketed, such 2008 Bonds shall be made available to the purchasers thereof and shall no longer constitute 2008 Liquidity Facility Bonds for purposes of this Indenture. The proceeds of any remarketing of 2008 Liquidity Facility Bonds shall be paid to the 2008 Liquidity Provider by the Trustee on such remarketing date in immediately available funds with interest on the sale price being calculated as if such 2008 Bond were not a 2008 Liquidity Facility Bond; provided, however, if all such 2008 Bonds are 2008 Liquidity Facility Bonds, at the principal amount thereof plus accrued interest, and the remarketing date will be considered an Interest Payment Date. (f) The Trustee agrees that it will, promptly upon receipt, send to the 2008 Liquidity Provider (by Electronic Means) a copy of every notice received by it hereunder relating to any 2008 Liquidity Facility Bonds. OHS West:260379565.9 33 255 (g) Notwithstanding anything to the contrary herein or in the 2008 Bonds, all obligations of the Commission under or in connection with .any 2008 Liquidity Facility (including, without limitation, the payment of any reimbursement obligations to any 2008 Liquidity Provider and the payment of any 2008 Liquidity Facility Bonds) shall be governed by the terms of the applicable 2008 Liquidity Facility. (h) The Trustee shall provide to the Remarketing Agent and to each Rating Agency then rating the 2008 Bonds written notice of the provision of a 2008 Liquidity Facility or the extension of any 2008 Liquidity Facility in effect with respect to the 2008 Bonds. (0 Whenever requested in writing by the Commission, the Trustee shall submit to the applicable 2008 Liquidity Provider a reduction certificate or other appropriate documentation necessary under the applicable 2008 Liquidity Facility to reduce the principal amount of the 2008 Bonds and related interest to reflect any purchase or redemption of such 2008 Bonds by the Commission and the cancellation of such 2008 Bonds. Section 15.14. Alternate Liquidity Facilities. (a) So long as any 2008 Bonds bear interest at a Variable Rate (other than 2008 Bonds in a Long -Term Rate Period for which there is no Liquidity Facility or a Fixed Rate Period), on or prior to the Expiration or termination of any existing 2008 Liquidity Facility, including any renewals or extensions thereof (other than an Expiration of such 2008 Liquidity Facility at the final maturity of the 2008 Bonds to which such 2008 Liquidity Facility relates), the Commission shall provide to the Trustee (with a copy to the applicable Remarketing Agent) a renewal or extension of the term of the existing 2008 Liquidity Facility for such 2008 Bonds or an Alternate Liquidity Facility for such 2008 Bonds meeting the requirements set forth in subsection (b) of this Section. (b) The Commission may at any time provide an Alternate Liquidity Facility for the 2008 Bonds in accordance with the provisions hereof and upon delivery to the Trustee of the items specified in subsection (c) of this Section. Any such Alternate Liquidity Facility must meet the following conditions: (i) The obligations of a 2008 Liquidity Provider under an Alternate Liquidity Facility to purchase 2008 Bonds or otherwise provide for the Purchase Price of 2008 Bonds tendered or deemed tendered pursuant to Section 15.04 or Section 15.05 shall not be subject to suspension or termination on less than fifteen (15) days' notice to the Commission and the Trustee; provided, however, that the obligations of a 2008 Liquidity Provider to purchase 2008 Bonds or otherwise provide for the Purchase Price of such 2008 Bonds may be immediately suspended or terminated (A) without such notice upon the occurrence of such events as may be provided in a 2008 Liquidity Facility and which are disclosed to the Holders of such 2008 Bonds in connection with the provision of such 2008 Liquidity Facility or, (B) if applicable, upon the remarketing of such 2008 Bonds upon the mandatory tender thereof as a result of provision of such Alternate Liquidity Facility pursuant to Section 15.05(a)(2); OHS West:260379565.9 34 • 256 • (ii) such Alternate Liquidity Facility must take effect on or before the Purchase Date for the 2008 Bonds established pursuant to Section 15.05(a)(2); and (iii) such Alternate Liquidity Facility must be in an amount sufficient to pay the maximum Purchase Price of the 2008 Bonds which will be applicable during the Rate Period commencing on such substitution. (c) Prior to the date of the delivery of such Alternate Liquidity Facility to the Trustee pursuant to subsection (b) of this Section, the Commission shall cause to be furnished to the Trustee (i) an Opinion of Bond Counsel addressed to the Trustee to the effect that the delivery of such Alternate Liquidity Facility to the Trustee is authorized under this Indenture and complies with the terms hereof and will not, in and of itself, adversely affect the Tax -Exempt status of interest on the 2008 Bonds and (ii) an opinion or opinions of counsel to the Liquidity Provider for such Alternate Liquidity Facility addressed to the Trustee, to the effect that such Alternate Liquidity Facility has been duly authorized, executed and delivered by the applicable Liquidity Provider and constitutes the valid, legal and binding obligation of such Liquidity Provider enforceable against such Liquidity Provider in accordance with its terms and (iii) if the 2008 Bonds are not subject to mandatory tender for purchase, the Ratting Confirmation required by Section 15.05(a)(2). (d) The Trustee shall give notice by fast class mail to the Holders of the 2008 Bonds of the proposed substitution. of a 2008 Liquidity Facility not later than the fifteenth (15th) day prior to the substitution date. Section 15.15. Remarketing Agents for the 2008 Bonds. The Commission shall appoint and employ one or more Remarketing Agents for 2008 Bonds in a Daily Rate Period, a Weekly Rate Period, a Commercial Paper Rate Period and a Long -Term Rate Period. The Commission shall appoint the initial Remarketing Agent for the 2008 Bonds on or before September 1, 2009. All references in this First Supplemental Indenture to the term "Remarketing Agent" shall mean the one or more banks, trust companies or members of the National Association of Securities Dealers Inc. appointed by the Commission to perform the duties and obligations of the Remarketing Agent hereunder with respect to the 2008 Bonds; provided that any such bank, trust company or member of the National Association of Securities Dealers, Inc. so appointed shall be organized and doing business under the laws of any state of the United States of America and shall have, together with its parent, if any, a capitalization of at least fifteen million dollars ($15,000,000) as shown in its or its parent's most recently published annual report. The Commission shall execute and deliver to each Remarketing Agent a Remarketing Agreement, which shall designate the Remarketing Agent's principal office and in which such Remarketing Agent shall agree: (i) to perform the duties and comply with the requirements imposed upon it by such Remarketing Agreement and this Indenture; and (ii) to keep such books and records with ieNprx,t to its activities as Remarketing Agent as shall be consistent with prudent industry practice and to make such books and records available for inspection by each of the Commission and the Trustee at all reasonable times upon reasonable notice. OHS West:260379565.9 35 257 ARTICLE XVI PURCHASE OF 2008 BONDS AT DIRECTION OF COMMISSION Section 16.01. Mandatory Tender for Purchase of 2008 Bonds at Direction of Commission. (a) In addition to the provisions relating to the mandatory tender for purchase of 2008 Bonds pursuant to Section 15.05, the 2008 Bonds, or any of them, shall be subject to mandatory tender for purchase by the Commission, in whole or in part (such that the portion that is subject to mandatory tender for purchase pursuant to this Section 16.01 and the portion not subject to such mandatory tender shall each be in an Authorized Denomination), at the applicable Optional Purchase Price on each Optional Purchase Date. In the event that the Commission determines to purchase any 2008 Bonds on any Optional Purchase Date, the Commission shall provide the Trustee with written notice of such determination at least fifteen (15) days prior to the Optional Purchase Date, which notice shall specify the principal amount of 2008 Bonds of each maturity that are to be purchased and the Optional Purchase Date on which such purchase is to occur. (b) When the Trustee shall receive notice from the Commission of its determination to purchase 2008 Bonds pursuant to subsection (a) of this Section, the Trustee shall give notice, in the name of the Commission, of the mandatory tender for purchase of such 2008 Bonds, which notice shall be mailed, by first class mail, postage prepaid, not more than ninety (90) nor less than ten (10) days before the Optional Purchase Date to the Holders of any 2008 Bonds or portions of 2008 Bonds to be purchased at their addresses appearing in the bond registration books maintained by the Trustee, with a copy to the Notice Parties. Such notice shall specify the maturities of such 2008 Bonds to be purchased, the Optional Purchase Date, the Optional Purchase Price and the place or places where the Optional Purchase Price due upon such tender for purchase shall be payable and, if less than all of the 2008 Bonds of the same maturity are to be purchased, the letters and numbers or other distinguishing marks of such 2008 Bonds so to be purchased, and, in the case of 2008 Bonds to be purchased in part only, such notice shall also specify the respective portions of the principal amount thereof to be purchased. Such notice shall further state that on such Optional Purchase Date there shall become due and payable upon each 2008 Bond to be purchased, the Optional Purchase Price thereof, or the Optional Purchase Price of the specified portions of the principal amount thereof to be purchased in the case of 2008 Bonds to be purchased in part only, and that from and after such Optional Purchase Date interest on such 2008 Bond for the benefit of the current Holder of such 2008 Bond or the portion of such 2008 Bond to be purchased shall cease to accrue and be payable. Receipt of such notice of mandatory tender for purchase shall not be a condition precedent to the mandatory tender for purchase of the 2008 Bonds and failure of any Holder of a 2008 Bond to receive any such notice or any defect in such notice shall not affect the validity of the proceedings for the mandatory tender for purchase of the 2008 Bonds pursuant to this Section. (c) If at the time the Trustee sends any notice of mandatory tender for purchase of the 2008 Bonds pursuant to this Section, the Commission has not deposited with the Trustee OHS West:260379565.9 36 • 258 • an amount sufficient to pay the full Optional Purchase Price of the 2008 Bonds, or the portions thereof, to be purchased, such notice shall state that such mandatory tender for purchase is conditional upon the receipt by the Trustee on or prior to the Optional Purchase Date fixed for such purchase of moneys sufficient to pay the Optional Purchase Price of such 2008 Bonds, or the portions thereof to be purchased, and that if such moneys shall not have been so received said notice shall be of no force and effect and the Commission shall not be required to purchase such 2008 Bonds. In the event that such notice of mandatory tender for purchase contains such a condition and such moneys are not so received, no purchase of the 2008 Bonds identified in the notice of mandatory tender for purchase shall be made and the Trustee shall, within a reasonable time thereafter, give notice, to the Remarketing Agent and to the persons and in the manner in which the notice of tender was given, that such moneys were not so received and' that there will be no purchase of 2008 Bonds pursuant to the notice of mandatory tender for purchase. (d) If less than all of the Outstanding 2008 Bonds are to be called for mandatory tender for purchase pursuant to this Section, the principal amount and maturity of such 2008 Bonds to be purchased shall be selected by the Commission in its sole discretion. If less than all of 2008 Bonds of like maturity shall be called for mandatory tender for purchase pursuant this Section, except as otherwise provided by the Securities Depository, the particular 2008 Bonds or portions of 2008 Bonds to be purchased shall be selected at random by the Trustee in such manner as the Trustee in its discretion may deem fair and appropriate; provided, however, that in selecting portions of 2008 Bonds for purchase, the Trustee shall treat each 2008 Bond as representing that number of 2008 Bonds of the minimum Authorized Denomination for the 2008 Bonds which is obtained by dividing the principal amount of such 2008 Bond by the minimum Authorized Denomination for the 2008 Bonds. Section 16.02. Delivery of Tendered 2008 Bonds. With respect to any 2008 Bond that is registered in book -entry form, delivery of such 2008 Bond to the Trustee in connection with any mandatory tender for purchase pursuant to Section 16.01 shall be effected by the making of, or the irrevocable authorization to make, appropriate entries on the books of the Securities Depository for such 2008 Bond or any Participant thereof to reflect the transfer of the beneficial ownership interest in such 2008 Bond to the account of the Trustee, on behalf of the Commission, or to the account of a Participant acting on behalf of the Commission. With respect to any 2008 Bond that is not registered in book -entry form, delivery of such 2008 Bond to the Trustee in connection with any mandatory tender for purchase pursuant to Section 16.01 shall be effected by physical delivery of such 2008 Bond to the Trustee at its Principal Office, by 1:00 p.m. (New York City time) on the Optional Purchase Date, accompanied by an instrument of transfer thereof, in a form satisfactory to the Trustee, executed in blank by the Holder thereof with the signature of such Holder guaranteed in accordance with the guidelines set forth by one of the nationally recognized medallion signature programs. Section 16.03. 2008 Bonds Deemed Purchased. (a) If moneys sufficient to pay the Optional Purchase Price of 2008 Bonds to be purchased pursuant to Section 16.01 on an Optional Purchase Date shall be held by the Trustee on such Optional Purchase Date, such 2008 Bonds shall be deemed to have been purchased for all purposes of this Indenture, irrespective of whether or not such 2008 Bonds OHS West:260379565.9 37 259 shall have been delivered to the Trustee or transferred on the books of the Securities Depository for the 2008 Bonds, and neither the former Holder or former Beneficial Owner of such 2008 Bonds nor any other person shall have any claim thereunder, under this Indenture or otherwise, for any amount other than the Optional Purchase Price thereof (b) In the event of non -delivery of any 2008 Bond to be purchased pursuant to Section 16.01, the Trustee shall segregate and hold uninvested the moneys for the Optional Purchase Price of such 2008 Bond in trust, without liability for interest thereon, for the benefit of the former Holders or Beneficial Owners of such 2008 Bond, who shall, except as provided in the following sentence, thereafter be restricted exclusively to such moneys for the satisfaction of any claim for the Optional Purchase Price of such 2008 Bond. Any moneys that the Trustee shall segregate and hold in trust for the payment of the Optional Purchase Price of any 2008 Bond remaining unclaimed for one (1) year after the Optional Purchase Date shall be paid automatically to the Commission. After the payment of such unclaimed moneys to the Commission, the former Holder or former Beneficial Owner of such 2008 Bond shall look only to the Commission for the payment thereof. Section 16.04. Deposit of 2008 Bonds. The Trustee agrees to accept and hold all 2008 Bonds delivered to it pursuant to Section 16.01 intrust for the benefit of the respective Holders or Beneficial Owners which shall have so delivered such 2008 Bonds until the Optional Purchase Price of such 2008 Bonds shall have been delivered to or for the account of or to the order of such Holders or Beneficial Owners pursuant to Section 16.05. Any 2008 Bonds purchased pursuant to Section 16.01 and registered for transfer to the Trustee shall be held in trust by the Trustee for the benefit of the Commission in accordance with the instructions of the Commission. Section 16.05. Payment of Optional Purchase Price of 2008 Bonds. (a) Moneys held by the Trustee for the payment of the Optional Purchase Price of 2008 Bonds subject to mandatory tender for purchase pursuant to Section 16.01 shall be applied at or before 3:00 p.m. (New York City time) to the purchase of such 2008 Bonds. Except as otherwise provided with respect to 2008 Bonds that are registered in book -entry from, payment of the Optional Purchase Price of 2008 Bonds tendered for purchase pursuant to Section 16.01 shall be made only upon the surrender of such 2008 Bonds to the Trustee. Notwithstanding anything to the contrary in this Section, if the 2008 Bonds to be tendered for purchase pursuant to Section 16.01 are registered in book -entry form, payment of the Optional Purchase Price for tendered 2008 Bonds shall be made in accordance with the rules and procedures of the Securities Depository. (b) The Trustee shall, as to any 2008 Bonds that are not registered in book -entry form and that have not been delivered to it as required by Section 16.02, place a stop transfer against an appropriate amount of 2008 Bonds registered in the name of the Holder of such 2008 Bonds on the bond registration books maintained by the Trustee. The Trustee shall place and maintain such stop transfer commencing with the lowest serial number 2008 Bond registered in the name of such Holder until stop transfers have been placed against an appropriate amount of 2008 Bondsuntil the appropriate 2008 Bonds are delivered to the OHS West:260379565.9 38 260 • Trustee. Upon such delivery, the Trustee shall make any necessary adjustments to such bond registration books. Section 16.06. 2008 Bonds Owned by Commission. (a) Any 2008 Bonds purchased by the Commission pursuant to Section 16.01 shall not be cancelled by the Trustee unless such cancellation is directed by an Authorized Representative but shall remain Outstanding for all purposes of the Indenture. (b) The Commission covenants and agrees that it shall not transfer or cause the transfer of any 2008 Bond purchased by the Commission pursuant to Section 16.01 unless the Commission delivers to the Trustee a Favorable Opinion of Bond Counsel with respect to such transfer. (c) The Commission covenants and agrees that, in the event that at any time there are insufficient funds in the Revenue Fund, the Principal Fund, the Interest Fund or the Redemption Fund, as applicable, to pay the principal of and interest then due on the Outstanding 2008 Bonds, it will surrender or cause to be surrendered to the Trustee for cancellation any 2008 Bonds held by or on behalf of the Commission. ARTICLE XVII ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF Section 17.01. Funds and Accounts. The following funds and accounts are hereby established in connection with the 2008 Bonds: (a) To ensure the proper application of such portion of proceeds from the sale of the 2008 Bonds to be applied to pay the Costs of Issuance of the 2008 Bonds, there is hereby established the 2008 Costs of Issuance Fund, such fund to be held by the Trustee. (b) To provide for a reserve fund for the 2008 Bonds, there is hereby established and maintained with the Trustee a fund designated as the "2008 Bonds Reserve Fund." (c) To ensure proper application of funds to be applied to the purchase of 2008 Bonds tendered or deemed tendered for purchase pursuant to Section 15.04 or 15.05, there is hereby established the 2008 Bonds Purchase Fund, such fund to be held by the Trustee. There shall also be created and established three (3) separate accounts in the 2008 Bonds Purchase Fund designated the "2008 Remarketing Account," the "2008 Liquidity Facility Purchase Account," and the "2008 Commission Account." Section 17.02. 2008 Costs of Issuance Fund. The monies set aside and placed in the 2008 Costs of Issuance Fund shall be expended for the purpose of paying the Costs of Issuance of the 2008 Bonds. Before any payment from the 2008 Costs of Issuance Fund shall be made by the Trustee, the Commission shall file or cause to be filed with the Trustee a requisition of the Commission (each a "Requisition"), such Requisition to be signed by an Authorized Representative and to include: (i) the item number of such payment; (ii) the name and address of the person to whom each such payment is due, which may be the Commission in the case of reimbursement for costs theretofore paid by the Commission; (iii) the respective amounts to be OHS West:260379565.9 39 261 paid; (iv) the purpose by general classification for which each obligation to be paid was incurred; and (v) that obligations in the stated amounts have been incurred by the Commission and are presently due and payable and that each item thereof is a proper charge against the 2008 Costs of Issuance Fund and has not been previously paid from said fund. On December 1, 2008 any remaining amounts in the 2008 Costs of Issuance Fund shall be transferred to the Revenue Fund and the 2008 Costs of Issuance Fund shall be closed. Section 17.03. Funding and Application of the 2008 Bonds Reserve Fund; Bond Reserve Requirement for the 2008 Bonds. The Trustee shall hold the amount of $ , on deposit in the 2008 Bonds Reserve Fund, which amount is equal to the 2008 Bonds Reserve Requirement upon issuance of the 2008 Bonds. All amounts in the 2008 Bonds Reserve Fund (including all amounts which may be obtained from any Reserve Facility on deposit in the 2008 Bonds Reserve Fund) shall be used and withdrawn by the Trustee solely: (i) for the purpose of making up any deficiency in the Interest Fund or the Principal Fund relating to the 2008 Bonds; or, (ii) together with any other moneys available therefor, (x) for the payment of all of the 2008 Bonds then Outstanding, (y) for the defeasance or redemption of all or a portion of the 2008 Bonds then Outstanding, provided, however, that if funds on deposit in the 2008 Bonds Reserve Fund are applied to the defeasance or redemption of a portion of the 2008 Bonds, the amount on deposit in the 2008 Bonds Reserve Fund immediately subsequent to a partial defeasance or redemption shall equal the 2008 Bonds Reserve Requirement applicable to all 2008 Bonds Outstanding immediately subsequent to such partial defeasance or redemption, or (z) for the payment of the fmal principal and interest payment of the 2008 Bonds. Section 17.04. 2008 Bonds Purchase Fund. Moneys in the 2008 Bonds Purchase Fund shall be applied as provided in this Section. (a) Remarketing Account. All moneys received by the Trustee on behalf of purchasers of 2008 Bonds pursuant to Section 15.10(a), other than the Commission, shall be (i) deposited in the 2008 Remarketing Account within the 2008 Bonds Purchase Fund; (ii) held in trust in accordance with the provisions hereof and (iii) paid out in accordance with Section 15.11. (b) Liquidity Facility Purchase Account. All moneys received by the Trustee as payments under any 2008 Liquidity Facility for the purchase of 2008 Bonds pursuant to Section 15.09(a)(iv), Section 15.09(b)(iv) or Section 15.09(c)(iv) shall be (i) deposited in the 2008 Liquidity Facility Purchase Account within the 2008 Bonds Purchase Fund, (ii) held in trust in accordance with the provisions hereof and (iii) paid out in accordance with Section 15.11. (c) Commission Account. All moneys received by the Trustee from the Commission for the purchase of 2008 Bonds pursuant to Section 15.10(c) shall be (i) deposited in the 2008 Commission Account within the 2008 Bonds Purchase Fund, (ii) held in trust in accordance with the provisions hereof and (iii) paid out in accordance with Section 15.11. The moneys in the 2008 Bonds Purchase Fund shall be used solely to pay the Purchase Price of 2008 Bonds as provided herein (or to reimburse a Liquidity Provider, if any, for OBS West:260379565.9 40 262 • • payments made under the 2008 Liquidity Facility for such purpose) and may not be used for any other purposes. All amounts held in the 2008 Bonds Purchase Fund, including the 2008 Remarketing Account, the 2008 Liquidity Facility Purchase Account and 2008 Commission Account therein, shall be held in trust by the Trustee for the benefit of the Holders or Beneficial Owners of 2008 Bonds to which such account relates tendered or deemed tendered for purchase pursuant to Section 15.04 and 15.05 (provided that any amounts held in the 2008 Remarketing Account that are derived from the remarketing of 2008 Liquidity Facility Bonds shall be held in trust for the benefit of the 2008 Liquidity Provider). Moneys in the 2008 Bonds Purchase Fund shall be held uninvested pending application thereof as provided in this Section 17.04. ARTICLE XVHI MISCELLANEOUS Section 18.01. Severabilitv. If any covenant, agreement or provision, or any portion thereof, contained in this First Supplemental Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this First Supplemental Indenture, and the application of any such covenant, agreement or provision, or portion thereof, to other Persons or circumstances, shall be deemed severable and shall not be affected thereby, and this First Supplemental Indenture and the 2008 Bonds issued pursuant hereto shall remain valid, and the Holders of the 2008 Bonds shall retain all valid rights and benefits accorded to them under this Indenture, the Act, and the Constitution and statutes of the State. Section 18.02. Parties Interested Herein. Nothing in this First Supplemental Indenture expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Commission, the Trustee, each 2008 Credit Provider, each 2008 Liquidity Provider and the Holders of the 2008 Bonds, any right, remedy or claim under or by reason of this First Supplemental Indenture or any covenant, condition or stipulation hereof; and all the covenants, stipulations, promises and agreements in this First Supplemental Indenture contained by and on behalf of the Commission shall be for the sole and exclusive benefit of the Commission, the Trustee, each 2008 Credit Provider, each 2008 Liquidity Provider and the Holders of the 2008 Bonds. Section 18.03. Headings Not Binding. The headings in this Fast Supplemental Indenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this First Supplemental Indenture. Section 18.04. Notice Addresses. Except as otherwise provided herein, it shall be sufficient service or giving of notice, request, complaint, demand or other paper if the same shall be duly mailed by registered or certified mail, postage prepaid, addressed to the Notice Address for the appropriate party or parties as provided in Exhibit B hereto. Any such entity by notice given hereunder may designate any different addresses to which subsequent notices, certificates or other communications shall be sent, but no notice directed to any one such entity shall be thereby required to be sent to more than two addresses. Any such communication may also be sent by Electronic Means, receipt of which shall be confirmed. OHS West260379565.9 41 263 Section 18.05. Notices to Rating Agencies. The Trustee shall provide notice to the Rating Agencies of the following events with respect to the 2008 Bonds: (1) Change in Trustee or Remarketing Agent; (2) Amendments to the Indenture; (3) Provision, Expiration, Termination, substitution or extension of a 2008 Liquidity Facility or any 2008 Liquidity Provider thereunder; (4) Provision, Expiration, Termination, substitution or extension of a 2008 Credit Enhancement or any 2008 Credit Provider thereunder; (5) (6) (7) Conversion of an Interest Rate Determination Method of the 2008 Bonds; Redemption or defeasance of any 2008 Bonds; and Any mandatory tender of any 2008 Bonds. Section 18.06. Indenture to Remain in Effect. Save and except as amended and supplemented by this First Supplemental Indenture, the Indenture shall remain in full force and effect. Section 18.07. Effective Date of First Supplemental Indenture. This First Supplemental Indenture shall take effect upon its execution and delivery. Section 18.08. Execution in Counterparts. This First Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. OHS West:260379565.9 42 264 IN WITNESS WHEREOF, the parties hereto have executed this First Supplemental Indenture by their officers thereunto duly authorized as of the day and year first written above. RIVERSIDE COUNTY TRANSPORTATION COMMISSION (Seal) ATTEST: Clerk of the Riverside County Transportation Commission APPROVED AS TO FORM: By: General Counsel OHS WesC260379565.9 By: Executive Director U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 43 265 0 • EXHIBIT A FORM OF 2008 BOND No. R $ Riverside County Transportation Commission Sales Tax Revenue Bond (Limited Tax Bond) 2008 Series A INTEREST RATE MATURITY ISSUE DATE Variable June 1, 20 , 2008 CUSIP REGISTERED OWNER: Cede & Co. PRINCIPAL AMOUNT: Dollars RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly organized and existing under the laws of the State of California (the "Commission"), for value received, hereby promises to pay (but solely from Revenues as hereinafter referred to) in lawful money of the United States of America, to the registered Holder or registered assigns, on the maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount specified above, together with interest thereon from the Issue Date set forth above until the principal hereof shall have been paid, at the interest rates and on the dates (each, an "Interest Payment Date") described herein. The principal of and premium, if any, on this Bond are payable to the registered Holder hereof upon presentation and surrender of this Bond at the principal office of U.S. Bank National Association, as trustee (together with any successor as trustee under the hereinafter defined Indenture, the "Trustee") in Los Angeles, California. Interest on this Bond shall be paid by check drawn upon the Trustee and mailed on the applicable Interest Payment Date to the registered Holder hereof as of the close of business on the Record Date at such registered Holder's address as it appears .on the Bond Register. As used herein, "Record Date" means: (a) for any Interest Payment Date in respect of any Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period, the Business Day next preceding such Interest Payment Date; and (b) for any Interest Payment Date in respect of any Long -Term Rate Period or Fixed Rate Period, the fifteenth (15th) day (whether or not a Business Day) of the month preceding the month in which such Interest Payment Date occurs. This Bond is one of a duly authorized issue of bonds of the Conunission, designated as "Riverside County Transportation Commission, Sales Tax Revenue Bonds (Limited Tax Bonds)", of the series designated above (the "Bonds"), all of which are being issued pursuant to the provisions of the Riverside County Transportation Sales Tax Act, Division 25 (Section 240000 et seq.) of the Public Utilities Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented (the "Act"), the Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance, adopted by the OHS West:260379565.9 A-1 266 Commission on May 8, 2002 and approved by at least two-thirds of electors voting on such proposition in the November 5, 2002 election and any amendments or extensions thereto (collectively, and together with the Act, the "Law"), and an Indenture, dated as of June 1, 2008, as supplemented, including as supplemented by a First Supplemental Indenture, dated as of June 1, 2008 (the "First Supplemental Indenture"), each between the Commission and the Trustee, hereinafter referred to collectively as the "Indenture." Said authorized issue of Bonds is not limited in aggregate principal amount and consists or may consist of one or more series of varying denominations, dates, maturities, interest rates and other provisions, as in the Indenture provided. Capitalized terms used herein and not otherwise defined shall have the meaning given such terms in the Indenture. THIS BOND IS A LIMITED TAX BOND OBLIGATION OF THE COMMISSION PAYABLE SOLELY FROM REVENUES AS DEFINED AND PROVIDED IN THE INDENTURE AND CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE AND THE COMMISSION IS NOT OBLIGATED TO PAY THIS BOND EXCEPT FROM REVENUES AND THOSE CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE. THIS BOND DOES NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OF CALIFORNIA (THE "STATE") OR ANY POLITICAL SUBDIVISION OF THE STATE OTHER THAN THE COMMISSION, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE STATE OR OF ANY POLITICAL SUBDIVISION OF THE STATE. THE GENERAL FUND OF THE COMMISSION IS NOT LIABLE, AND THE CREDIT OR TAXING POWER (OTHER THAN AS DESCRIBED HEREIN) OF THE COMMISSION IS NOT PLEDGED, FOR THE PAYMENT OF THE BONDS, THEIR INTEREST, OR ANY PREMIUM DUE UPON REDEMPTION OF THE BONDS. THE BONDS ARE NOT SECURED BY A LEGAL OR EQUTTABLE PLEDGE OF, OR CHARGE, LIEN OR ENCUMBRANCE UPON, ANY OF THE PROPERTY OF THE COMMISSION OR ANY OF ITS INCOME OR RECEIPTS, EXCEPT THE REVENUES AND THE CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE. Reference is hereby made to the Indenture and the Law fora description of the terms on which the Bonds are issued and to be issued, the provisions with regard to the nature and extent of the pledge of Revenues and certain other funds and the rights of the registered Holders of the Bonds and all the terms of the Indenture are hereby incorporated herein and constitute a contract between the Commission and the registered Holder from time to time of this Bond, and to all the provisions thereof the registered Holder of this Bond, by its acceptance hereof, consents and agrees. Additional Bonds may be issued and other indebtedness may be incurred on a parity with the Series of Bonds of which this Bond is a part, but only subject to the conditions and limitations contained in the Indenture. This Bond is payable as to both principal and interest, and any premium upon redemption hereof, exclusively from the Revenues and other funds pledged under the Indenture, which consist primarily of the amounts available for distribution to the Commission on and after July 1, 2009 on account of the retail transactions and use tax imposed in the County of Riverside pursuant to the Law, after deducting amounts payable by the Commission to the State Board of Equalization for costs and expenses for its services in connection with the retail transactions and use taxes collected pursuant to the Act, and all regularly -scheduled amounts (but not termination payments) owed or paid to the Commission by any Counterparty under any Interest Rate Swap OHS West:260379565.9 A-2 • 267 • Agreement after offset for the regularly -scheduled amounts (but not termination payments) owed or paid by the Commission to such Counterparty under such Interest Rate Swap Agreement, and, as to Purchase Price, from the proceeds of remarketing this Bond and any moneys made available under the Liquidity Facility, if any, relating to this Bond; all as provided in the Indenture, and the Commissionis not obligated to pay the principal of and interest on this Bond except from Revenues and certain other funds pledged thereunder. Interest Rate Determination Method, Rate Periods, Interest Payment Dates and Authorized Denominations In the manner hereinafter provided and subject to the provisions of the Indenture, the term of this Bond will be divided into consecutive Rate Periods during each of which this Bond shall bear interest at the Daily Rate (the "Daily Rate Period"), the Weekly Rate (the "Weekly Rate Period"), the Commercial Paper Rate (the "Commercial Paper Rate Period"), the Long - Term Rate (the "Long -Term Rate Period") or the Fixed Rate (the "Fixed Rate Period"). The initial Rate Period for this Bond shall be a Long -Term Rate Period and during such initial Rate Period this Bond shall bear interest at Long -Term Rates. The subsequent Rate Period(s) and interest rate(s) for this Bond shall be determined in accordance with the provisions of the Indenture. This Bond shall bear interest from the latest of: (i) its Issue Date; (ii) the most recent Interest Payment Date to which interest has been paid or duly provided for, or (iii) if the date of authentication of this Bond is after a Record Date but prior to the immediately succeeding Interest Payment Date, the Interest Payment Date immediately succeeding such date of authentication. During Daily Rate Periods, Weekly Rate Periods or Commercial Paper Rate Periods, interest on this Bond shall be computed on the basis of a 365- or 366-day year for the number of days actually elapsed. While this Bond is in a Long -Term Rate Period or the Fixed Rate Period, interest on this Bond shall be computed upon the basis of a 360-day year, consisting of twelve 30-day months. The term "Interest Payment Date" means: (i) with respect to any Daily or Weekly Rate Period, the first Business Day of each calendar month; (ii) with respect to any Commercial Paper Rate Period, the day immediately succeeding the last day of the Commercial Paper Rate Period applicable to this Bond; (iii) with respect to a Long -Term Rate Period, each June I and December 1 occurring during such Long -Term Rate Period; (iv) with respect to a Fixed Rate Period, each June I and December I from the Fixed Rate Conversion Date to the maturity or earlier redemption of this Bond; and (v) and in all events the fmal maturity date or redemption date of this Bond, or any date on which, pursuant to the terms of the Indenture, the Bond is subject to redemption at the option of the Commission. Pursuant to the hidenture, at any one time, each Bond shall have the same Interest Rate Determination Method and shall bear interest at the same rate, except for Bonds during a Commercial Paper Rate Period and Bonds of different maturities bearing interest at a Fixed Rate. At the times and subject to the conditions set forth in the Indenture, the Commission may elect that the Bonds shall bear interest based on an Interest Rate Determination Method and for a Rate Period, different from the Interest Rate Determination Method or Rate Period then applicable. Notice of any adjustment of the Interest Rate Determination Method or Rate Period shall be given by the Trustee to the Holder of this Bond as set forth in the Indenture. OHS West260379565.9 A-3 268 During each Daily Rate Period, this Bond shall bear interest at the Daily Rate, determined by the Remarketing Agent on each Business Day. During each Weekly Rate Period, this Bond shall bear interest at the Weekly Rate, determined by the Remarketing Agent by 5:00 p.m., New York City time on each Wednesday (or the immediately succeeding Business Day, if such Wednesday is not a Business Day) for the next Calendar Week, provided that the Weekly Rate for the first Calendar Week (or portion thereof) following a Conversion Date resulting in a change in the Interest Rate Determination Method to a Weekly Rate shall be set by the Remarketing Agent on the Business Day immediately preceding such Conversion Date. During each Commercial Paper Rate Period, this Bond shall bear interest at the Commercial Paper Rate or rates applicable to this Bond. The Remarketing Agent shall select the Commercial Paper Rate Period or Periods for each Bond on a Business Day selected by the Remarketing Agent not more than five (5) Business Days prior to the first day of such Commercial Paper Rate Period and not later than 12:30 p.m., New York City time, on the first day of such Commercial Paper Rate Period. Each Commercial Paper Rate Period shall be a period of not less than one nor more than 270 days. During the Fixed Rate Period, this Bond shall bear interest at the Fixed Rate, determined by the Remarketing Agent on the Fixed Rate Computation Date in accordance with the provisions of the Indenture, and shall not be subject to Conversion to another Interest Rate Determination Method. During a Long -Term Rate Period, this Bond shall bear interest at the Long -Term Rate determined by the Remarketing Agent by 5:00 p.m. on the Long -Term Rate Computation Date. The Commission shall select the duration of each Long -Term Rate Period and each Long -Term Rate Period shall end on the date selected by the Commission, which date is a minimum of 180 days after commencement of such Long -Term Rate Period, but in no event later than the maturity date of this Bond. This Bond shall initially bear interest at a Long -Tenn Rate of percent ( %) per annum with a Long -Term Rate Period ending December 1, 2009, and the initial Interest Payment Date shall be December 1, 2008. On December 1, 2009, this Bond shall be subject to mandatory purchase and conversion to another Interest Rate Determination Method. Prior to December 1, 2009, this Bond shall not be subject to conversion to another Interest Rate Determination Method. This Bond shall not be subject to redemption until the end of the initial Long -Term Rate Period, December 1, 2009. In no event shall the interest rate on this Bond be greater than the Maximum Interest Rate. This Bond shall be deliverable in the form of a fully registered Bond in the following denominations: (a) during any Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period, $100,000 and any integral multiple of $5,000 in excess thereof; and (b) during a Long -Term Rate Period or the Fixed Rate Period, $5,000 and any multiple thereof (such denominations being referred to herein as "Authorized Denominations"). OHS West:260379565.9 A-4 269 • Optional and Mandatory Tender Provisions "Purchase Date" means any date on which this Bond is purchased pursuant to the provisions of the Indenture. "Purchase Price" means an amount equal to 100% of the principal amount of this Bond (or the portion hereof) tendered or deemed tendered to the Trustee for purchase pursuant to the Indenture, plus if such Purchase Date is not an Interest Payment Date, accrued interest to but not including the Purchase Date; provided, however, if the Purchase Date occurs before an Interest Payment Date, but after the Record Date applicable to such Interest Payment Date, then the Purchase Price shall not include accrued interest, which shall be paid to the Holder on the applicable Record Date. This Bond shall be subject to mandatory tender for purchase at the applicable Purchase Price: (a) on the Conversion Date for the Bonds to a new Interest Rate Determination Method specified in a Conversion Notice; (b) if this Bond is bearing interest at a Daily Rate, a Weekly Rate or a Commercial Paper Rate, (1) on the fifth (5th) Business Day preceding (A) the scheduled Expiration of a 2008 Liquidity Facility or (B) the Termination of a 2008 Liquidity Facility, at the election of the Commission as permitted by such 2008 Liquidity Facility; and (2) on the date of the provision of an Alternate Liquidity Facility for this Bond and the resultant Termination of the existing 2008 Liquidity Facility; provided, however, that, notwithstanding any other provision of the Indenture to the contrary, no mandatory tender for purchase shall be required as described in this clause (b)(2) if a Rating Confirmation shall be delivered by each Rating Agency then rating this Bond on the date of the provision of the Alternate Liquidity Facility and the resultant Termination of the existing 2008 Liquidity Facility; (c) if this Bond is bearing interest at a Commercial Paper Rate, on the Interest Payment Date immediately following each Commercial Paper Rate Period; (d) if this Bond is bearing interest at a Long - Term Rate, on the Interest Payment Date immediately following each Long -Term Rate Period; (e) if this Bond is bearing interest at a Weekly Rate or a Daily Rate, on any Business Day; and (f) if this Bond is bearing interest at a Daily Rate, a Weekly Rate or a Commercial Paper Rate, and if the Trustee has received written notice from the 2008 Liquidity Provider that an event of default or event of Termination has occurred under the 2008 Liquidity Facility with the effect that the obligations of the 2008 Liquidity Provider to purchase this Bond or otherwise provide for the Purchase Price of this Bond shall terminate on the date specified in such notice, on a Business Day selected by the Trustee in accordance with the Indenture. During any Daily Rate Period or Weekly Rate Period, this Bond or any portion hereof shall be subject to tender at the option of the Holder or Beneficial Owner of this Bond, as specified in the Indenture. If this Bond is registered in book -entry form with a Securities Depository, delivery of this Bond to the Trustee in connection with any optional or mandatory tender for purchase shall be effected by the making of, or the irrevocable authorization to make, appropriate entries on the books of the Securities Depository for this Bond or any Participant of such Securities Depository to reflect the transfer of the beneficial ownership interest in such Bond to the account of the Trustee, or to the account of a Participant of such Securities Depository acting on behalf of the Trustee. With respect to any Bond that is not registered in book -entry form with a Securities OHS West:260379565.9 A-5 270 Depository, delivery of such Bond to the Trustee in connection with any optional or mandatory tender for purchase shall be effected by physical delivery of such Bond to the Trustee at its Principal Office, by 1:00 p.m. (New York City time) on the Purchase Date, accompanied by an instrument of transfer thereof, in a form satisfactory to the Trustee, executed in blank by the Holder thereof with the signature of such Holder guaranteed in accordance with the guidelines set forth by one of the nationally recognized medallion signature programs. If moneys sufficient to pay the Purchase Price of Bonds to be purchased pursuant to an optional or mandatory tender shall be held by the Trustee on the applicable Purchase Date, such Bonds shall be deemed to have been purchased for all purposes of the Indenture, irrespective of whether or not such Bonds shall have been delivered to the Trustee or transferred on the books of a Securities Depository for such Bonds, and neither the former Holder or Beneficial Owner of such Bonds nor any other person shall have any claim thereon, under the Indenture or otherwise, for any amount other than the Purchase Price thereof. Optional and Mandatory Redemption Provisions While bearing interest at a Daily Rate or a Weekly Rate, this Bond shall be subject to redemption prior to its stated maturity, at the option of the Commission, in whole or in part, in Authorized Denominations, on any date, at a redemption price equal to the principal amount thereof, plus accrued interest, if any, without premium. While bearing interest at a Commercial Paper Rate, this Bond shall be subject to optional redemption, at the option of the Commission, in whole or in part, on the day following the end of any Commercial Paper Rate Period, at a redemption price equal to the principal amount thereof, plus accrued interest, if any, without premium. While bearing interest at a Long -Term Rate, this Bond shall be subject to redemption, at the option of the Commission, in whole or in part, on the day following the last day of any Long - Term Rate Period and on such other dates specified in the Conversion Notice with respect to such Long -Term Rate Period, delivered with a Favorable Opinion of Bond Counsel, at a redemption price equal to the principal amount thereof, plus accrued interest, if any, without premium. Unless the Commission obtains a Favorable Opinion of Bond Counsel and changes redemption provisions as provided in the Indenture, any Bonds bearing interest at a Fixed Rate are subject to redemption in whole or in part (and if in part, in such order of maturity and Mandatory Sinking Account Payment dates as the Commission shall specify and, within a maturity of Mandatory Sinking Account Payment date, by lot or by such other method as the Trustee determines to be fair and reasonable and in Authorized Denominations), at the option of the Commission, on the dates and at such redemption prices as provided in the Indenture. Except as otherwise provided in the Indenture, the Bonds are Term Bonds and shall be subject to mandatory redemption prior to their stated maturity, in part, from Mandatory Sinking Account Payments required by and as specified in the Indenture, at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, on [June 1, 20 and on each June 1 thereafter. OHS West:260379565.9 A-6 271 • • • Mandatory Tender and Purchase at Direction of Commission On each date on which this Bond is subject to redemption at the option of the Commission, this Bond is also subject to mandatory tender for purchase by the Commission, in whole or in part, at a purchase price equal to the amount that would be payable upon the redemption of this Bond at the option of the Commission on such date. Notice of such mandatory tender for purchase shall be given by mail not more than 90 days nor less than 10 days before the date of purchase (the "Optional Purchase Date"). Such notice may be conditional and if conditional notice is given and the Trustee does not have sufficient funds available on the Optional Purchase Date to pay the purchase price of the Bonds (the "Optional Purchase Price') subject to mandatory tender for purchase on such Optional Purchase Date, then such purchase shall be cancelled and the Commission shall be under no obligation to purchase this Bond. If moneys sufficient to pay the Optional Purchase Price of the Bonds subject to mandatory tender for purchase are held by the Trustee on the Optional Purchase Date, all Bonds subject to mandatory tender for purchase on such Optional Purchase Date shall be deemed purchased by the Commission and neither the former Holder or former Beneficial Owner of this Bond nor any other person shall have any claim thereunder, under the Indenture or otherwise, for any amount other than the Optional Purchase Price. Amendments and Modifications The rights and obligations of the Commission and of the Beneficial Owners, registered Holders and registered Owners of the Bonds may be modified or amended at any time in the manner, to the extent, and upon the terms provided in the Indenture, which provide, in certain circumstances, for modifications and amendments without the consent of or notice to the registered Holders of Bonds. Transfer and Exchange Provisions This Bond is transferable or exchangeable as provided in the Indenture, only upon the bond registration books maintained by the Trustee, by the registered Holder hereof, or by his or her duly authorized attorney, upon surrender of this Bond at the Principal Office of the Trustee, together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered Holder or his or her duly authorized attorney, and thereupon a new Bond or Bonds of the same series, maturity and in the same aggregate principal amount, shall be issued to the transferee in exchange therefor as provided in the Indenture, upon payment of any charges therein prescribed. Persons Deemed Holders The person in whose name this Bond is registered shall be deemed and regarded as the absolute Holder hereof for all purposes, including receiving payment of, or on account of, the principal, Purchase Price or Optional Purchase Price hereof and any redemption premium and interest due hereon. It is hereby certified and recited that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by this Bond, and in the issuing of this Bond, exist, have happened and have been OHS West:260379565.9 A-7 272 performed in due time, form and manner, as required by the Constitution and statutes of the State of Califomia and the Act, and that this Bond, together with all other indebtedness of the Commission payable out of Revenue, is within every debt and other limit prescribed by the Constitution and statutes of the State of Califomia and the Act. This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been manually signed by the Trustee. OHS West:260379565.9 A-8 • 273 • IN WITNESS WHEREOF the Riverside County Transportation Commission has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of its duly authorized representatives all as of the Issue Date set forth above. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Chair of the Board of Commissioners (Seal) Attest: Chief Financial Officer [FORM OF CERTIFICATE OF AUTHENTICATION] This Bond is one of the 2008 Series [ ] Bonds described in the within mentioned Indenture and was authenticated on the date set forth below. Date of Authentication: OHS West:260379565.9 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer A-9 274 [DTC LEGEND] Unless this Bond is presented by an authorized representative of The Depository Trust Company to the issuer or its agent for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an - authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered Owner hereof, Cede & Co., has an interest herein. [FORM OF ASSIGNMENT] FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (Please Print or Type Name and Address of Assignee) PLEASE INSERT SOCIAL SECURITY OR OTHER TAX IDENTIFICATION NUMBER OF ASSIGNEE the within bond and all rights thereunder, and hereby irrevocably constitutes and appoint to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature: (Signature of Assignor) Notice: The signature on this assignment must correspond with the name of the registered Holder as it appears upon the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. SIGNATURE GUARANTEED: Notice: Signature must be guaranteed by an eligible guarantor firm. OHS West:260379565.9 A-10 275 • INDEX TO EXHIBITS EXHIBIT B NOTICE ADDRESSES To the Commission: Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92502 Attention: Chief Financial Officer Telephone: (951) 787-7141 Fax: (951) 787-7920 To the Trustee: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Corporate Trust Division Telephone: (213) 615-6023 Fax: (213)615-6197 To the Rating Agencies: Standard & Poor's Ratings Services 55 Water Street, 38th Floor New York, New York 10041 Telephone No.: 212-438-2000 Facsimile No.: 212-438-2157 pubfin__st uctured@standardandpoors.com Moody's Investors Service MSPG Surveillance 99 Church Street, 9`s Floor New York, New York 10007 Fitch Ratings One State Street Plaza New York, New York 10004 OHS Wect:2603795659 B-1 276 l | ATTACHMENT 6 Stradling Yocca Carlson & Rauth Draft of 5/01/08 RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (Limited Tax Bonds) 2008 Series A BOND PURCHASE AGREEMENT , 2008 Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92501 Ladies and Gentlemen: The undersigned, Lehman Brothers, as representative (the "Representative"), acting on behalf of itself and Banc of America Securities LLC (the Representative and such other underwriter being hereinafter referred to as the "Underwriters") offer to enter into this Purchase Agreement (the "Purchase Agreement") with the Riverside County Transportation Commission (the "Commission"), for the purchase by the Underwriters of the Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A (the "Bonds") to be issued by the Commission and authenticated by U.S. Bank National Association, a national banking association, Los Angeles, California, as trustee (the "Trustee") under that certain Indenture dated as of June 1, 2008 between the Commission and the Trustee (the "Original Indenture"), as supplemented by the First Supplemental Indenture dated June 1, 2008 between the Commission and the Trustee (the "First Supplemental Indenture"). The Original Indenture and the First Supplemental Indenture are collectively referred to herein as the "Indenture." The offer made hereby is subject to its written acceptance by the Commission, and delivery of an executed counterpart of this Purchase Agreement to us at or before 11:59 p.m., Pacific Daylight Savings Time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriters upon notice from the Representative delivered to the Commission's Executive Director at any time before acceptance. Upon acceptance, this Purchase Agreement shall be in full force and effect in accordance with its terms and shall be binding upon the Commission and the Underwriters. All capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Indenture. The proceeds of the Bonds will be used (i) to refinance all or a portion of the Commission's outstanding Commercial Paper Notes (Limited Tax Bonds) Series A and Series B, (ii) to fund capitalized interest on the Bonds, (iii) to fund a reserve fund for the Bonds, and (iv) to pay cost of the issuance of the Bonds. The Commission will undertake, pursuant to the Indenture and a Continuing Disclosure Agreement with the Trustee dated as of the Closing Date (the "Continuing Disclosure Agreement"), to provide certain annual financial information and notices of the occurrence of certain events, if material. There has been no material default by the Commission in compliance with the requirements of any prior continuing disclosure undertaking. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Final Official Statement. 1 DOC SOC/ 1274212v4/022584-00I 5 277 1. On the basis of the representations, warranties and covenants and upon the terms and conditions set forth in this Purchase Agreement the Underwriters hereby agree, jointly and severally, to purchase and the Commission hereby agrees to issue and cause the Trustee to authenticate and deliver to the Underwriters all (but not less than all) of the Bonds in the aggregate principal amount of $ . The Bonds shall be dated , 2008, shall initially be in a Long -Term Rate Period at a rate of _% per annum with such Long -Term Rate Period ending on December 1, 2009 and shall mature June 1, 2029. The Underwriters agree to purchase the Bonds at the aggregate purchase .price of $ (consisting of the aggregate principal amount of the Bonds of less Underwriters' discount and plus $ original issue premium). The Bonds shall be substantially in the form described herein, and shall be issued and secured under the provisions of and shall be payable and subject to redemption as provided in the Indenture. The Bonds shall be special limited obligations of the Commission payable from Revenues. The Sales Tax Revenues of the Commission are pledged to the payment of the principal of, interest and premium, if any, on the Bonds as provided in the Indenture. 2. The Underwriters have heretofore designated the undersigned as their representative. The undersigned represents that it has been duly authorized by the Underwriters to execute this Purchase Agreement. The Underwriters agree to make an initial public offering of all of the Bonds, at prices not in excess of the initial public offering yields or prices set forth on the cover page of the Official Statement. Subsequentto the initial public offering, the Underwriters reserve the right to change the public offering prices (or yields) as they deem necessary in connection with the marketing of the Bonds, provided that the Underwriters shall not change the initial interest rate on the Bonds. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. 3. The Commission has delivered or caused to be delivered to the Underwriters prior to the execution of this Purchase Agreement, copies of the Preliminary Official Statement dated. , 2008 relating to the Bonds (the "Preliminary Official Statement"). The Commission ratifies, confirms and approves the use and distribution by the Underwriters of the Preliminary Official Statement, in connection with the sale of the Bonds. The Commission deems such Preliminary Official Statement final as of its date for purposes of Rule 15c2-12 under the Securities Exchange Act of 1934 ("Rule 15c2-12") except for information allowed to be omitted by Rule 15c2-12. Within seven (7) business days from the date hereof and in any event not less than three days prior to the date of Closing (as defined below), the Commission shall deliver to the Underwriters a final Official Statement, executed on behalf of the Commission by an authorized representative of the Commission and dated the date hereof, which shall include information permitted to be omitted by paragraph (b)(1) of Rule 15c2-12 and with such other amendments or supplements as shall have been approved by the Commission and the Underwriters and such additional conformed copies thereof as the Underwriters may reasonably request in sufficient quantities to comply with Rule 15c2-12 and to meet potential customer requests for copies of the Official Statement. The Official Statement, including the cover page, the appendices thereto and all information incorporated therein by reference is hereinafter referred collectively to as the "Official Statement." The Representative agrees to (1) provide the Commission with fmal pricing information on the Bonds on a timely basis, (2) disseminate to the Underwriters copies of the final Official Statement, including any supplements prepared by the Commission, (3) promptly file a copy of the final Official Statement, including any supplements prepared by the Commission, with a nationally 2 DOCSOC/ 1274212v4/02 2584-0015 278 • recognized municipal securities information repository, and (4) take any and all other actions necessary to comply with applicable Securities and Exchange Commission rules and Municipal Securities Rulemaking Board rules governing the offering, sale and delivery of the Bonds to the ultimate purchasers thereof. 4. The Closing. At 8:00 o'clock a.m., California time, on , 2008, or at such other time or on such other date as the Commission and the Representative may agree (the "Closing Date"), the Commission shall deliver or caused to be delivered Bonds in book -entry form through the facilities of DTC (delivered through the Trustee via the F:A.S.T. delivery book -entry system of DTC) on behalf of the Underwriters. Concurrently with the delivery of the Bonds to the Underwriters, the Commission will deliver the documents hereinafter mentioned at the offices of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California ("Bond Counsel") or another place to be mutually agreed upon by the Commission and the Representative. The Representative, acting on behalf of the Underwriters, will accept such delivery and pay the aggregate purchase price set forth in paragraph 1 hereof, in immediately available funds to or on the order of the Commission. This payment for and delivery of the Bonds, together with the delivery of the aforementioned documents, is herein called the "Closing". The Commission represents, warrants and covenants to the Underwriters (and it shall be a condition of the obligation of the Underwriters to purchase and accept delivery of the Bonds) that the representations and warranties contained herein shall be true and correct on the date hereof and at the Closing Date, as if made on and at the Closing. The Commission so represents and warrants that: (a) the Commission is, and will be on the date of Closing, a county transportation commission organized and existing under the laws of the State, with full legal right, power and authority to cause the execution, sale and delivery of the Bonds, to execute, deliver and perform its obligations under this Purchase Agreement, the Continuing Disclosure Agreement and the Indenture (collectively, the "Commission's Documents") and to carry out and consummate all other transactions contemplated by each of the aforesaid and to execute and deliver the Official Statement; (b) By all necessary official action, the Commission has duly adopted Ordinance 02-001, imposing of the Sales Tax, which was approved by at least two-thirds of the electors in the County voting on the Sales Tax on November 5, 2002 ( the "Ordinance"); (c) the Official Statement (excluding therefrom the information under the caption "Underwriting" and all information concerning the book -entry system set forth under the caption "The Series 2008 Bonds," and the information in Appendices B through F, as to which no representations or warranties are made), in the form delivered to the Underwriter, does not, as of the date delivered to the Underwriters, and will not at the time of Closing (if supplemented or amended prior to the Closing, then as so supplemented or amended), contain any untrue statement of a material fact, or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; (d) when delivered to and paid for by the Underwriters on the Closing Date in accordance with the provisions of this Purchase Agreement, the Bonds will have been duly authorized, executed and delivered and will constitute valid and binding limited obligations DOCSOC/1274212v4/022584-0015 3 279 of the Commission in conformity with and entitled to the benefit and security of the Indenture; (e) the Commission, by all necessary official action prior to or concurrently with the acceptance hereof, has duly authorized the execution and delivery of the Commission's Documents and the Official Statement, and the Commission's Documents, when executed and delivered, assuming due authorization, execution and delivery by the other parties thereto, will constitute the legally valid and binding obligations of the Commission enforceable in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally, the exercise of judicial discretion and the limitations on legal remedies against public entities in the State (0 the Commission is not in breach or default under any applicable law or administrative regulation of the State or the United States of America or any applicable judgment or decree to which the Commission is a party or is otherwise subject the breach of which would materially affect its ability to perform its obligations under the Commission's Documents, and the execution and delivery of the Commission's Documents and compliance with the provisions thereof will not in any material respect conflict with or constitute a material breach of or default under any applicable law, regulation, decree, writ, order or injunction or any agreement, resolution, contract or other instrument to which the Commission is subject and which is material to the Commission's ability to perform its obligations under the Commission's Documents, nor will such execution, delivery and compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the Commission under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided in the Indenture; (g) at the Closing, the Commission will be in compliance in all respects with the covenants and agreements contained in the Commission's Documents, and no event of default and no event which, with the lapse of time or giving of notice, or both, would constitute an event of default thereunder shall have occurred and be continuing; (h) As of the date hereof, no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, government agency, public board or body, is pending or, to the best of the Commission's knowledge, threatened against the Commission: (i) in any way affecting the existence of the Commission or in any way challenging the respective powers of the several offices or the titles of the officials of the Commission to such offices; or (ii) affecting or seeking to prohibit, restrain or enjoin the issuance, sale or delivery of any of the Bonds, the application of the proceeds of the sale of the Bonds, the proceedings authorizing and approving the Sales Tax, the levy or collection of the Sales Tax, or in any way contesting or affecting, as to the Commission, the validity or enforceability of the Act, the proceedings authorizing the Sales Tax, Resolution No. 08-010 of the Commission adopted on [May 141, 2008 (the "Bond Resolution") the Bonds or the Commission's Documents or contesting the powers of the Commission or its authority with respect to issuance or delivery of the Bonds or the execution and delivery of the . Commission's Documents or contesting the power or authority to levy the Sales Tax or contesting the completeness or accuracy of the Official Statement, or in any way contesting or challenging DOCS OC/ 1274212v4/022584-0015 280 • • the consummation of the transactions contemplated hereby or thereby or which might materially adversely affect the ability of the Commission to perform and satisfy its obligations under the Commission's Documents or the Bonds; nor to the best of the Commission's knowledge is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the Act, the proceedings authorizing the Sales Tax or the Commission's Documents or the performance by the Commission of its obligations thereunder, or the authorization, execution, delivery or performance by the Commission of the Bonds or the Commission's Documents. (i) the Commission will furnish such information, execute such instruments and take such other action not inconsistent with law in cooperation with the Underwriters which the Underwriters may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate; and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will continue to take such action so long as required for distribution of the Bonds; provided, however, that in no event shall the Commission be required to take any action which would subject it to service of process in any jurisdiction in which it is not now so subject or be required to register as a dealer or broker or qualify to do business as a foreign corporation or be subject to any other similar requirements deemed by the Commission to be unduly burdensome; (j) all approvals, consents and orders of any governmental authority or agency having jurisdiction in the matters which would constitute a condition precedent to the due performance by the Commission of its obligations under the Commission's Documents have been duly obtained or made, and are, and will be on the date of Closing, in full force and effect; (k) if, subsequent to the date hereof, and prior to the Closing, an event occurs affecting the Commission which is materially adverse for the purpose for which the Official Statement, as then supplemented or amended is to be used and such event is not disclosed in the Official Statement, the Commission shall notify the Representative thereof, and if in the mutual opinion of the Commission and the Representative such event requires a supplement or amendment to the Official Statement, the Commission will supplement or amend the Official Statement in a form and manner approved by the Representative; (0 as of the date thereof, the Preliminary Official Statement (excluding therefrom the information under the caption "Underwriting" and all information concerning the book -entry system set forth under the caption "The Series 2008 Bonds," and the information in Appendices B through F, as to which no representations or warranties are made) did not, except as revised by the Official Statement, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading in any material respect. (m) so long as the Underwriters are required under Rule 15c2-12 or any amendment or successor thereto to send any potential customer, on request, a copy of the Official Statement (the "Delivery Period"), if an event occurs which might or would cause the Official Statement (excluding therefrom the information under the caption DOC SOC/ 1274212v4/022584-0015 5 281 "Underwriting" and all information concerning the book -entry system set forth under the caption "The Series 2008 Bonds," and the information in Appendices B through F, as to which no representations or warranties are made), as then supplemented or amended, to contain any untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Commission shall promptly notify the Representative thereof and if, in the opinion of the Representative, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Commission shall prepare and deliver to the Underwriters (at the Commission's expense) for 25 days from the date of the Closing, as many copies of an amendment or supplement which will correct such statement or omission as the Underwriters may reasonably request. During the Delivery Period, the Commission shall furnish such information as the Representative may from time to time reasonably request; (n) if the Official Statement is amended or supplemented pursuant to paragraph 4(k) hereof, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Date, the Official Statement as so supplemented or amended (excluding therefrom the information under the caption "Underwriting" and all information concerning the book -entry system set forth under the caption "The Series 2008 Bonds," and the information in Appendices B through F, as to which no representations or warranties are made) will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (o) after the Closing, the Commission will not participate in the issuance of any amendment of or supplement to the Official Statement, to which, after being furnished with a copy, the Representative shall reasonably object in writing and which shall be disapproved by the law offices of Stradling Yocca Carlson & Rauth, a Professional Corporation ("Underwriters' Counsel") or Bond; (p) between the date of this Purchase Agreement and the date of Closing, the Commission will not, without the prior written consent of the Representative, except as disclosed in the Official Statement and except in the course of normal business operations of the Commission, offer or issue any bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent; and 5. To .the extent permitted by law, the Commission agrees to indemnify and hold harmless the Underwriters and each person, if any, who controls (within the meaning of Section 15 of the Securities Act of 1933, as amended, or of Section 20 of the Securities Exchange Act of 1934, as amended) the Underwriters and the officers, agents and employees of the Underwriters (each such person, an "Indemnified Party") against any and all losses, claims, damages, liabilities and expenses arising out of any untrue statement of a material fact contained in the Preliminary Official Statement or in the Official Statement under the captions "The Series 2008 Bonds," "Plan of Finance," "Application of Series 2008 Bond Proceeds," "Security and Sources of Payment for the Series 2008 Bonds," "The Sales Tax," "Riverside County Transportation Commission," "The Transportation Expenditure Plan" and "Litigation" and, relating to the Commission necessary to make the statements therein relating to the Commission in light of the circumstances under which they were made not misleading provided, however, that in no event shall this indemnification agreement inure 6 DOCSOC/ 1274212v4/022584-0015 282 • • to the benefit of an Indemnified Party on account of any losses, claims, damages, liabilities or actions arising out of, or based upon, an untrue statement or omission in the Preliminary Official Statement if the Official Statement shall correct such untrue statement or omission and a copy of the Official Statement had not been sent or given to such person at or prior to confirmation of such sale to him or her. The Commission shall not be liable for any settlement of any such action effected without its consent by any Indemnified Party, which consent shall not be unreasonably withheld, but if settled with the consent of the Commission or if there be a final judgment for the plaintiff in any such action against the Commission or any Indemnified Party, the Commission agrees to indemnify and hold harmless such Indemnified Party to the extent provided herein. In case any claim shall be made or action brought against an Indemnified Party, for which indemnity may be sought against the Commission, as provided above, the Underwriters shall promptly notify the Commission in writing setting forth the particulars of such claim or action and the Commission shall assume the defense thereof, including at its option the retaining of counsel acceptable to the Underwriters and including the payment of all expenses. The Indemnified Party shall not have the right to retain separate counsel unless (i) the Commission shall have specifically authorized the retaining of such counsel or (ii) the parties to such suit include the Underwriters .or such controlling person or persons, and the Commission and the Indemnified Party and one or more legal defenses may be available to it which may not be available to the Commission, in which case the Commission shall not be entitled to assume the defense of the suit but the Underwriters shall bear the fees and expenses of such counsel. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Commission, its employees and its officers, but only with reference to liability in connection with false statements and information in the Preliminary Official Statement or the Official Statement furnished to the Commission in writing by such Underwriter for inclusion in the Preliminary Official Statement or the Official Statement. (a) The Commission has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the Commission is a bond issuer whose arbitrage certificates may not be relied upon. 6. The Representative on behalf of itself and the Underwriters, hereby enters into this Purchase Agreement in reliance upon the representations and warranties of the Commission contained herein and the representations and warranties to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the Commission of its obligations both on and as of the date hereof and as of the Closing Date. Accordingly, the Underwriters' obligations under this Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds shall be subject, at the sole option of the Representative, to the accuracy in all material respects of the representations and warranties of the Commission contained herein as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the Commission made in any certificate or other document furnished pursuant to the provisions hereof, to the performance by the Commission of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing Date, and to the following additional conditions: (a) Prior to the Closing, the Commission's Documents shall have been duly authorized, executed and delivered and none of such documents shall have been amended, DOC SOC/ 1274212v4/022584-0015 7 283 modified or repealed, except to the extent to which the Representative has given its written consent; (b) At the time of Closing all official action of the Commission related to the Commission's Documents, and the sale of the Bonds, shall be in full force and effect and shall not have been amended, modified, supplemented or repealed in any material respect; (c) At the time of Closing the Commission shall have made timely payment of principal and/or interest when due on all of its respective outstanding bonds, notes or other obligations; (d) As of the date hereof and at Closing, trading in any securities of the Commission shall not have been suspended on any national securities exchange; nor shall any proceeding be pending or threatened by the Securities Exchange Commission against the Commission; (e) Subsequent to the date hereof, up to and including the Closing, there shall not have occurred any change in or particularly affecting the Commission, the Act, the Ordinance, the Sales Tax, the Sales Tax Revenues, the Bonds or the Commission's Documents as the foregoing matters are described in the Official Statement, which in the reasonable professional judgment of the Underwriters materially impairs the investment quality of the Bonds. (f) Subsequent to the date hereof, up to and including the Closing, the California State Board of Equalization shall not have suspended or advised the Commission of suspension of the collection of the Sales Tax or the escrow of any proceeds thereof, and counsel to the Commission shall not have been advised of the suspension of the collection of the Sales Tax or the escrow of any proceeds thereof or have any question as to the validity of the Sales Tax 7. The Underwriters shall have the right to cancel their obligation hereunder to purchase the Bonds (and such cancellation shall not constitute a default hereunder by the Underwriters) by the Representative notifying you in writing or by telegram of its election so to do between the date hereof and the Closing, if at any time hereafter and prior to the Closing: (i) any event occurring, or information becoming known that, in the reasonable judgment of the Representative, makes untrue in any material respect any statement or information contained in the Official Statement or results in an omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; or (ii) an amendment to the Constitution of the United States of America or by any legislation in or by the Congress of the United States of America or by the State of California, or the amendment of legislation pending as of the date of this Purchase Agreement in the Congress of the United States of America, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States of America, the Treasury Department of the United States of America, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways 8 DOC S OC/ 1274212v4/022584-0015 284 • and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States of America, or the favorable reporting for passage of legislation to either House of the Congress of the United States of America by a Committee of such House to which such legislation has been referred for consideration, or any decision of any federal or State of California court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State of California authority materially adversely affecting, in the reasonable judgment of the Representative, the federal or State of California tax status of the Commission, or the status of the interest on bonds or notes or obligations of the general character of the Bonds; or (iii) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State of California, or a decision by any court of competent jurisdiction within the State of California or any court of the United States of America shall be rendered which, in the reasonable opinion of the Representative, materially adversely affects the market price of the Bonds; or (iv) legislation shall be enacted by the Congress of the United States of America, or a decision by a court of the United States of America shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the execution, delivery, offering or sale of obligations of the general character of the Bonds, or the execution, delivery, offering or sate of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration under, any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Indenture needs to be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or (v) the imposition by the New York Stock Exchange or other national securities exchange or any governmental authority of any material restrictions not now in force with respect to the Bonds or obligations of the general character of the Bonds or securities generally or the material increase of any such restrictions now in force, including those relating to the extension of credit by or the charge to the net capital requirements of, the Underwriters, which, in the reasonable opinion of the Representative, materially adversely affects the market price of the Bonds; or (vi) the declaration of a general banking moratorium by federal, New York or California authorities or a major financial crisis or a material disruption in commercial banking or securities settlement or clearances services shall have occurred, or the general suspension of trading or minimum or maximum prices for trading shall have been fixed and be in force or maximum ranges or prices for securities shall have been required and be in force on the New York Stock Exchange on any national securities exchange by a determination by that exchange or by order of the Securities and Exchange Commission or any other governmental agency having jurisdiction, which, in the reasonable opinion of the Representative, materially adversely affects the market price of the Bonds; DOC SOC/ 1274212v4/022584-0015 9 285 (vii) any new outbreak or escalation of hostilities, declaration by the United States of America of a national emergency or war or other calamity or crisis affecting the financial markets , which, in the reasonable opinion of the Representative, materially adversely affects the market price of the Bonds; or (viii) any rating of securities. of the Commission payable from or secured by Revenues reflecting the creditworthiness of the Commission shall have been withdrawn or reduced, which, in the Representative's reasonable opinion, materially adversely affects the marketability or market price of the Bonds; or (ix) the commencement of any action, suit or proceeding described in Section 4(h) hereof which, in the reasonable judgment of the Representative, materially adversely affects the market price of the Bonds; or (x) there shall be in force a general suspension of trading on the New York Stock Exchange. (b) The Commission shall perform, or have performed at or prior to the time of the Closing, all of its obligations required under or specified in the Commission's Documents, as amended to the date of Closing, to be performed at or prior to the Closing; (c) At or prior to the Closing, the Underwriters shall receive, among other items, the following, in each case reasonably satisfactory in form and substance to the Representative and Underwriters' Counsel: (i) Executed copies of each of the Commission's Documents; (ii) The approving opinion of Bond Counsel, substantially in the -form attached to the Official Statement as Appendix E; (iii) A supplemental opinion of Bond Counsel, addressed to the Commission and the Underwriters, stating the Underwriters may rely upon the opinion referred to in subparagraph (ii) hereof as though addressed to them and to the following effect: (A) The information contained in the Official Statement in the sections entitled "INTRODUCTION," "THE SERIES 2008 BONDS" (other than the information concerning DTC and the book -entry system) "SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2008 BONDS," "TAX EXEMPTION," "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE " and "APPENDIX E - PROPOSED FORM OF BOND COUNSEL OPINION" insofar as such information purports to summarize certain provisions of the Bonds (except information with respect to the pricing, as to which no opinion need be given), the Indenture and such counsel's opinion relating to the tax exemption of interest on the Bonds, are accurate in all material respects; and (B) The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; 10 DOCSOC/1274212v4/022584-0015 286 • • • (iv) The opinion of Nossaman Guthner Knox & Elliott LLP ("Disclosure Counsel") addressed to the Underwriters, to the effect that while they have not independently verified the fairness, correctness and completeness of the statements and representations set forth in the Official Statement or referred to therein or the financial statements and other appendices thereto, as a result of their participation in the preparation of the Official Statement and their review of certain documents referred to therein, nothing has come to their attention which gives them reason to believe that the Official Statement or any amendment or supplement thereto as of their respective issue dates, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading (except for the financial statements and other financial and statistical data included therein, including the Appendices thereto, as to which no view need to be expressed); and (v) An opinion, dated the date of the Closing and addressed to the Underwriters, of Best, Best & Krieger LLP, General Counsel to the Commission, to the effect that: (i) the Commission is a county transportation commission duly organized under the laws of the State; (ii) the resolution or resolutions of the Commission approving and authorizing the execution and delivery of the Commission's Documents by the Commission (the "Resolutions") were duly adopted at meetings of the Commission, which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting at the time of adoption; (iii) to the best knowledge of such counsel, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or threatened against or affecting the Commission, to restrain or enjoining the enforcement of the Commission's Documents or in any way contesting or affecting the validity of the Commission's Documents; (iv) the execution and delivery of the Commission's Documents by the Commission, the adoption of the Resolutions, and compliance by the Commission with the provisions of the foregoing, as appropriate, under the circumstances contemplated thereby, does not and will not in any material respect conflict with or constitute on the part of the Commission a breach or default under any agreement or other instrument to which the Commission is a party or by which it is bound (and of which such counsel is reasonably aware) or any existing law, regulation, court order or consent decree to which the Commission is subject; (v) the Commission's Documents have been duly authorized, executed and delivered, by the Commission and, assuming due authorization, execution and delivery by the other parties thereto, the Commission's Documents constitute legal, valid and binding agreements of the Commission, enforceable in accordance with their respective terms, subject in each case to laws relating to banlavptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and the application of equitable principles if equitable remedies are sought; (vi) except as described in the Official Statement, no authorization, approval, consent, or other order of the State or any other governmental authority or agency within the State having jurisdiction over the Commission is required for the valid authorization, execution, delivery and performance by the Commission of the Commission's Documents which has not been obtained; and (vii) without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement and based upon the information made available to such counsel in the course of its participation in the preparation of the Official Statement as counsel for the Commission, nothing has come to such counsel's attention which would cause them to believe that the Official Statement (excluding therefrom the financial statements and the statistical data included in the Official Statement, as to which no opinion need be expressed), as of the date thereof and as of the Closing Date, contained an untrue DOCSOC/ 1274212v4/022584-0015 11 287 statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (vi) a certificate or certificates, dated the Closing Date, signed by a duly authorized official of the Commission to the effect that, to the best of such official's knowledge, (i) the representations and warranties of the Commission contained in this Purchase Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) no event affecting the Commission has occurred since the date of the Official Statement which has the effect of causing the Official Statement (excluding the information under the caption "Underwriting" and all information concerning the book -entry system set forth under the caption "The Series 2008 Bonds," and the information in Appendices B through F) to contain any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements and information therein, in light of the circumstances under which they were made not misleading; (iii) the Commission is duty organized and existing under the provisions of the Act; (iv) the Commission has, and at the time of the Closing will have, full legal right, power and authority (A) to execute and enter into the Commission's Documents, (B) to adopt the Bond Resolution, (C) to sell and deliver the Bonds to the Underwriters pursuant to the Constitution and laws of the State, (D) to issue the Bonds, (E) to cause the Sales Tax to be levied and collected, (F) to pledge the Sales Tax Revenues to the payment of the Bonds and (G) to carry out and to consummate the transactions contemplated by, and to perform all of its obligations under, the Bond Resolution, the Commission's Documents, the Bonds and the Official Statement; (v) the Commission has (A) duly authorized and approved the Official Statement, (B) duly authorized and approved the execution and delivery of, and performance by the Commission of its obligations under, the Bonds and the Commission's Documents, (C) duly adopted the Bond Resolution and (D) duly authorized and approved the use of the proceeds of the sale of the Bonds, as contemplated by the Official Statement; (vi) at or prior to the time and date the Closing, the Bonds will have been duly executed and delivered by the Commission, and each of them and the Bond Resolution and the Commission's Documents will constitute legal, valid and binding obligations of the Commission enforceable against the Commission in accordance with their respective terms, except to the extent that the enforceability may be limited by bankruptcy, insolvency, arrangement, moratorium or other laws affecting the rights of creditors generally, equitable remedies, judicial discretion and the limitations on legal remedies against local transportation authorities in the State; (vii) the Bond Resolution, the Commission's Documents and the Bonds conform in all material respects to the descriptions thereof in the Official Statement; (viii) the financial data relating to the Commission and the financial statements of the Commission contained in the Official Statement present fairly the financial condition and results of the operation of the Commission at the dates and for the periods therein specified and such financial data relating to the Commission and the financial statements of the Commission contained in the Official Statement are presented in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements of the Commission except as otherwise specifically noted in the Official Statement; (ix) no litigation of any nature is now pending or, to the best of the Commission's knowledge, threatened in any court or before any governmental agency: (A) restraining or enjoining, or seeking to restrain or enjoin, the issuance, sale, execution or delivery of the Bonds; or (B) in any way contesting or affecting (1) the validity or enforceability of the Bonds, or (2) any proceedings of or on behalf of the Commission taken with respect to the issuance or sale of 12 DOCSOC/ 12742 ] 2v4/022584-00I 5 288 the Bonds, or (3) adoption of the Bond Resolution or the execution and delivery of the Commission's Document, or (4) the levy and collection of the Sales Tax, or (5) the pledge of Sales Tax Revenues effected by the Indenture, as described in the Official Statement, or (6) the proceedings authorizing and approving the Sales Tax or the levy or collection of the Sales Tax, or (7) the existence or powers of the Commission; or (C) in any manner questioning (1) the proceedings or authority for the issuance of the Bonds, or (2) any provision made or authorized for the payment of the Bonds, or (3) the existence or operations of the Commission, or (4) the power of the Commission to issue the Bonds, or (5) the power of the Commission to undertake any other transactions necessary in connection with this proposed financing; or (D) which would have a material adverse effect upon the operations of the Commission relating to the Bonds or to the contemplated use of the proceeds thereof; (x) none of the Commission's proceedings or authority for the issuance, sale, execution and delivery of the Bonds, or the execution and delivery of the Commission's Documents, or the adoption of the Bond Resolution as described in the Official Statement has been repealed, modified, amended, revoked or rescinded; (xi) no approval, permit, consent or authorization of any governmental or public agency, authority or person having jurisdiction over the Commission not already obtained and no proceedings not already had are required in connection with (A) the issuance and sale of the Bonds, (B) the execution and delivery by the Commission of, or the performance by it of its obligations under, the Bonds, the Commission's Documents and the Bond Resolution or (C) except as contemplated by the Official Statement, the issuance and sale of the Bonds or the application of the proceeds of the sale thereof; (xii) there is no material adverse change in the condition or affairs of the Commission that would make it unreasonable for the Underwriters or other purchasers of the Bonds to rely upon the Official Statement in connection with the resale of the Bonds, and the Underwriters are hereby authorized to distribute copies of the Official Statement in connection with the resale of the Bonds; and (xiii) the Commission has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the date of issuance of the Bonds with respect to the issuance of the Bonds; (vii) A certificate, dated the Closing Date, signed by a duly authorized official of the Trustee (hereinafter in this paragraph referred to as the "Bank); (A) the Bank is a national banking association organized and existing under and by virtue of the laws of the United States of America, having the full power and being qualified to enter into and perform its duties under the Indenture and the Continuing Disclosure Certificate; (B) the Bank is duly authorized to enter into the Indenture and the Continuing Disclosure Agreement (hereinafter collectively referenced as the "Bank Documents") and Bank has duly executed and delivered the Bank Documents; (C) the execution and delivery of the Bank Documents and compliance with the provisions on Bank's part contained therein, will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which Bank is a party or is otherwise subject (except that no representation, warranty or agreement is made with respect to any federal or state securities or blue sky laws or regulations), nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon 13 DOCSOC/ 1274212v4/022584-0015 289 any of the properties or assets held by Bank pursuant to the Indenture under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Indenture; (D) to the best of the knowledge of Bank, it has not been served with any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, nor is any such action or other proceeding threatened against Bank, as such but not in its individual capacity, affecting the existence of Bank, or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the collection of Sales Tax Revenues to be applied to pay the principal, premium, if any, and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Bank Documents, or contesting the powers of Bank or its authority to enter into, adopt or perform its obligations under any of the foregoing, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Bank Documents; (E) the Bank will apply the proceeds from the Bonds as provided in the Indenture. (viii) an opinion of counsel to the Trustee, addressed to the Underwriters, in form and substance satisfactory to the Representative, to the effect that the Trustee is a national banking association with due power and authority to execute the Original Indenture and the First Supplemental Indenture, and that the Indenture is in effect and is valid and binding upon the Trustee; (ix) a copy of the Official Statement, executed on behalf of the Commission by a person duly authorized to sign on behalf of the Commission; (x) a certified copy of the general resolution or resolutions of the Trustee authorizing the execution and delivery of the Indenture and the Bonds; (xi) certified copies of the resolution or resolutions of the Commission authorizing the execution and delivery of the Commission's Documents; (xii) a copy of the Preliminary Blue Sky Memorandum with respect to the Bonds, prepared by Underwriters' Counsel; (xiii) 8038-G. Evidence that the federal tax information form 8038-G relating to the Bonds has been prepared for filing; (xiv) Tax Certificate. A tax certificate relating to the Bonds in form satisfactory to Bond Counsel and the Underwriters (xv) CDIAC Statements. A copy of the Notices of Sale required to be delivered to the California Debt Investment and Advisory Commission pursuant to Sections 8855(g) and 53583 of the California Government Code; (xvi) Ratings. Evidence that any ratings on the Bonds described in the Official Statement are in full force and effect as of the date of the Closing; and 14 DOCS001274212v4/022584-0015 • 290 • (xvii) A Certificate, dated the Closing Date, signed by an authorized representative of Fieldman Rolapp & Associates, Financial Advisor to the Commission, to the effect that no information came to such representative's attention which gives such representative reason to believe that the statements and information in the Official Statement under the caption "PLAN OF FINANCE" contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; (xviii) A certified copy of the proceedings relating to authorization and approval of the Sales Tax, including: (i) a certified copy of the Ordinance; and (ii) a certification from the Registrar of Voters in the County of Riverside concerning results of the November 8, 1988 election and (iii) a certification from the Registrar of Voter; in the County of Riverside concerning results of the November 5, 2002 election; (xix) A copy of the executed Agreement for State Administration of Transactions and Use Tax, between the Commission and the California State Board of Equalization, including all amendments thereto; (xx) A copy of the Blanket Letter of Representation to DTC relating to the Bonds signed by DTC and the Commission; (xxi) such additional certificates, legal opinions of Bond Counsel, Disclosure Counsel or other counsel and such other instruments or documents as the Underwriters' Counsel, Disclosure Counsel or Bond Counsel reasonably request to evidence the truth and accuracy as of the date hereof and as of the Closing Date of information contained in the Official Statement and the representations and warranties contained herein and in the Official Statement and the due satisfaction as or prior to the Closing Date of all conditions then to be satisfied in connection with the transaction contemplated hereby. 8. The Underwriters shall be under no obligation to pay and the Commission shall pay or cause to be paid from the proceeds of the Bonds or other funds available to it the expenses incident to the performance of the obligations of the Commission hereunder, including but not limited to (a) the cost of printing or engraving, and mailing or delivering the definitive Bonds, the Preliminary Official Statement and the final Official Statements in reasonable quantities and all other documents or the cost of recording and filing such documents (other than as set forth in the next succeeding paragraph) prepared in connection with the transactions contemplated hereby; (b) the fees and disbursements of the Trustee, in connection with the execution, sale and delivery of the Bonds; (c) the fees and disbursements of the Bond Counsel, Disclosure Counsel, General Counsel, and any other experts or consultants retained by the Commission in connection with the transactions contemplated hereby; (d) the costs related to obtaining ratings on the Bonds; and (e) CUSIP number cost. The Underwriters shall pay (a) California Debt and Investment Advisory Commission fees; (b) the cost of preparation and printing of any Blue Sky Memorandum to be used by them; (c) all advertising expenses in connection with the public offering of the Bonds; and (d) the fees and expenses of Underwriters' Counsel. 9. No covenant or agreement contained in this Purchase Agreement shall be deemed to be a covenant or agreement of any member, officer, agent or employee of the Commission nor shall such persons be liable personally under this Purchase Agreement or be subject to any personal DOCSOC/1274212v4/022584-0015 15 291 liability or accountability solely by reason of the execution of this Purchase Agreement or solely by reason of the breach or attempted alleged breach hereof by the Commission. 10. Any notice to be given to the Commission under this Purchase Agreement may be given by delivering the same to the office thereof c/o Riverside County Transportation Commission, P.O. Box 12008, Riverside, California 92502, and any such notice to be given to the Representative or the Underwriters may be given by delivering the same to Lehman Brothers, 555 California Street, 30th Floor, San Francisco, California 94104. 11. The Commission hereby authorizes the Official Statement and the information therein contained to be used by the Underwriters in connection with the public sale of the Bonds. The Commission consents to the use by the Underwriters prior to the date hereof of the Preliminary Official Statement in connection with the public offering of the Bonds. 12. This Purchase Agreement shall be governed by, and construed in accordance with, the laws of the State of California. 13. The representations and warranties of the Commission set forth in or made pursuant to this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Purchase Agreement and regardless of any investigations or statements as to the results thereof made by or on behalf of the Underwriters and regardless of delivery of and payment for the Bonds. 14. This Purchase Agreement, when accepted by the Commission, shall constitute the entire agreement between the Commission and the Underwriters and is made solely for the benefit of the Commission and the Underwriters (including the successors of the Underwriters). No other person shall acquire or have any right hereunder by virtue hereof, except as provided herein. 15. This Purchase Agreement is made solely for the benefit of the Commission and the Underwriters (including the successors thereof), and no other person, partnership or association shall acquire or have any right hereunder or by virtue hereof. All representations and agreements by the Commission in this Purchase Agreement shall remain operative and in full force and effect except as otherwise provided herein, regardless of any investigations made by or on behalf of the Underwriters and shall survive the issuance of and payment of the Bonds. 16. This Purchase Agreement may be executed simultaneously in several counterparts each of which shall be an original and all of which shall constitute but one and the same instrument. 17. The Representative, in its sole discretion, may waive any condition or requirement imposed upon the Commission as set forth in this Purchase Agreement. 18. This Purchase Agreement shall become effective upon the execution of the acceptance hereby by the Commission, and shall be valid and binding and enforceable as of the time of such acceptance. 19. The rights and obligations created by this Purchase Agreement shall not be subject to assignment by the Underwriters or the Commission without the prior written consent of the other parties hereto. 16 DOCSOC/ 1274212v4/022584-0015 . • 292 • 20. In case any one or more of the provisions, contained herein shall for any reason to be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not effect any other provisions hereof 21. The validity, interpretation, and performance of this Purchase Agreement shall be governed by the laws of the State of California. LEHMAN BROTHERS, on behalf of itself and as representative of the Underwriters By: The foregoing is hereby agreed to and accepted as of the date first above written: RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: DOC SOC/ 1274212v4/022584-0015 17 293 0 AGENDA ITEM 10 1 • i • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Plans and Programs Committee Tanya Love, Program Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Trade Corridors Improvement Fund Program of Projects and Next Steps Report PLANS AND PROGRAMS COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to receive an update on the Trade Corridors Improvement Fund (TCIF) approved program of projects and Next Steps report. BACKGROUND INFORMATION In November 2006, the voters passed Proposition 1B, which provided $2 billion in funding for goods movement. That pot subsequently "grew" to approximately $3 billion through the use of State Highway Operation and Protection Program (SHOPP) dollars and unspecified additional funding e.g. congressional funding and/or container fees. For the past several months, Commission staff has been working closely with staff from the cities of Banning, Corona, and Riverside as well as the county of Riverside and the Coachella Valley Association of Governments (sponsoring agencies) to develop project applications as part of the TCIF funding opportunity. As shown on the attachment, the Commission, on behalf of the sponsoring agencies, submitted applications for 13 first tier projects totaling $596.1 million; of that amount $169 million was requested in TCIF funding. The second tier applications identified three projects for a total cost of $201.7 million; a TCIF match of $50.7 million was requested. The project submittals were based on the economic contributions, congestion relief, and health impacts to Riverside County residents. In January 2008, the California Transportation Commission (CTC) received 84 nominations consisting of 107 individual projects, totaling $4.1 billion of TCIF funding requests. Request for TCIF funding exceeded the CTC Trade Corridor targets and as a result, only tier 1 projects were funded. At its April 2008 Agenda Item 10 294 meeting, the CTC approved projects totaling $3.088 billion for 79 projects; of that amount, $162.7 million' in funding was approved for the following Riverside County projects: Sponsoring Agency City of Banning City of Corona City of Riverside County of Riverside Next Steps in TCIF Process Project Sunset Avenue Auto Center Drive 3rd Street Columbia Avenue Iowa Avenue Magnolia Avenue (UP) Riverside Avenue Streeter Avenue Avenue 56 Avenue 66 Clay Street Magnolia Avenue (BNSF) March Inland Cargo Airport, 1-215 Van Buren Ground Access Improvement TCIF Amount (in millions) $10.0 $16.0 $17.5 $ 6.0 $13.0 $ 20.0 $ 8.5 $15.5 $10.0 $10.0 $12.5 $13.7 $10.0 CTC Approved Funding: $162.7 The CTC staff identified several critical issues that will need to be further developed as part of the next steps in the TCIF process: • Budget appropriation and allocation will occur through legislative process; • Deliverability: Projects must commence construction by December 31, 2013. CTC staff has expressed concern that several projects may not be able to achieve environmental clearance in time for the remaining pre -construction project development activities to take place by the December 2013 date. It is anticipated that in Spring 2010, CTC staff will review the program status; any project that does not have environmental clearance at that time is in risk of being dropped from the program. CTC staff will work with the sponsoring agencies during the development of baseline agreements to further address this issue. $169 million was requested; however, due to funding requests exceeding revenue, transportation commissions were requested to reduce project funding requests. As a result, the requested funding for Magnolia (BNSF) grade separation was reduced from $20 million to $13.7 million. Agenda Item 10 295 • Projects in Riverside County that are potentially at risk include grade separations at Avenue 56 (environmental clearance projected for June 2010) and Avenue 66 (environmental clearance projected for September 2010). • Development of. baseline agreements will be initiated upon adoption of the program and will become the basis for determining accountability. The agreements will set forth the proposed scope, expected benefits, delivery schedule and project cost and funding plan. Once completed, any amendments to the scope, project benefits, schedule and/or cost will require CTC approval. Following is the schedule for completion of the baseline agreements: July 2008: Agreements will be presented to the CTC for highway projects; and September 2008: Agreements will be presented to the CTC for grade separation and mainline rail projects. -� Note: If agreements are not executed by the specified date, the project will be eliminated from the program. • Supplemental Funding and the 1:1 Match: Several project funding plans included references to unsecured or future revenue sources (e.g. future container fees, future toll authority, railroad contributions, Public Utilities Commission (PUC) 190 funds, etc.). As part of the baseline agreements, the CTC requires that funding plans must be identified and committed through the form of regional board or local commission actions or resolutions. Sponsoring agencies will have the ability to substitute committed local, federal or private funds with newly generated local funds when those funds become available. Projects in Riverside County that are potentially at risk include: Auto Center Drive, Columbia Avenue, Iowa Avenue, Magnolia Avenue (UP line), and Sunset Avenue due to the identification of PUC Section 190 funds; Projects potentially at risk due to PUC Section 190 funds as well as container fees include: 3rd Street, Clay Street, Magnolia Avenue (BNSF Line), Riverside Avenue, and Streeter Avenue; The grade separation project for Avenue 66 identified PUC Section 190 match funds that may be available through the Commission; however, the project is not on the PUC Section 190 list and as a result, would not be eligible for the commission's matching funds. As a result, this project is also at risk; and Agenda Item 10 296 The March Inland Cargo Airport — 1-215 Van Buren ground access improvement project may be at risk as it identified a 87 million contribution in right-of-way costs and $39 million in the Commission's Regional Arterial Measure A funds. Air Quality and Emission Reduction: Screening at the regional level is complete; however, CTC staff is currently reviewing projects to identify which projects could have a potential impact at the local level. Those projects that are identified as such will be flagged for conditional language that will be included in the project's baseline agreement. CTC staff will monitor the progress of the environmental process and will require that the sponsoring agency demonstrate concurrence to recommended mitigation strategies; 3 Note: The commission is the lead agency on an environmental justice and community outreach study. It is recommended that staff from the sponsoring agencies participate on the Environmental Justice Technical Advisory Committee as the focus will be on developing a guidebook on mitigation strategies related to goods movement. • Overprogramming: The TCIF program is over subscribed by approximately $650 million. The approved TCIF project funding is based on the availability of future revenue sources (e.g. additional federal funding, user fees, tolls, etc.). Should that level of funding not materialize, the projects will have to be re -calibrated to fit within available funding levels; • Public -Private Benefits and Memorandum of Understanding (MOU): As part of the baseline agreement process, MOUs will need to be developed and negotiated with respect to public and private benefits related to projects that involve investments in rail facilities; and • Grade Separation Projects: A master agreement or MOU for grade separation projects will be required to accompany the baseline agreement. Coordination with railroad agencies is extremely critical as this may have a detrimental effect on the proposed scope, the cost to construct temporary facilities for the railroad, or the level of financial commitments expected from the railroad agency, as well as the delivery schedule. In preparation for the baseline agreements related to grade separation projects, the commission is working with the Southern California Consensus Group and the CTC to convene an initial joint meeting to discuss the potential impacts to the railroads. As stated in the CTC staff report: Agenda Item 10 • 297 • "Many of the proposed grade separations are located along corridors that either UP or BNSF, or both, own and operate. Many of the grade separations propose alternatives that would require the temporary relocation of railroad tracks to construct a vehicular roadway below tracks that must remain in full operation during construction. Coordination with railroad agencies is extremely critical " The intent of the joint meeting is to ensure that uniform and comprehensive data for all 29 TCIF grade separation projects can be presented together with a map of the project locations. It is anticipated that the data and map will assist staff in evaluating whether the combined effect of the projects create a problem for the railroads as well as potential impacts to project delivery. Key to success in the next steps category will be the finalization of the baseline agreements and project deliverability by the lead agencies. Attachment: Project List Agenda Item 10 298 • Riverside County Transportation Commission Project List Trade Corridor Improvement Fund January 17, 2008 Project Name Total Project Cost TCIF Request (in Millions) Tier 1 ACE: Columbia Avenue Grade Separation (BNSF & UP) $29.1 $6.0 ACE: Auto Center Drive Grade Separation (BNSF) $32.0 $16.0 ACE: Magnolia Avenue Grade Separation (UP) $51.2 $20.0 ACE: Iowa Avenue Grade Separation (BNSF & UP) $32.0 $13.0 ACE: Sunset Avenue Grade Separation (UP) $36.5 $10.0 ACE: Streeter Avenue Grade Separation (UP) $36.8 $15.5 ACE: Avenue 56 Grade Separation (UP) $60.0 $10.0 ACE: Avenue 66 Grade Separation (UP) $33.5 $10.0 ACE: Clay Street Grade Separation (UP) $37.0 $12.5 ACE: Riverside Avenue Grade Separation (UP) $30.3 $8.5 ACE: 3`d Street Grade Separation (BNSF & UP) $40.2 $17.5 ACE: Magnolia Avenue Grade Separation (BNSF) $80.0 $20.0 March Inland Cargo Port Airport - 1-215 Van Buren Ground Access Improvement Project $97.5 $10.0 Total Tier 1 $596.1 $169.0 Tier 2 ACE: Mary Street Grade Separation (UP) $38.0 $17.7 ACE: Jurupa Road Grade Separation (UP) $108.4 $10.0 1-10/SR60 Truck Climbing Lane $55.3 $23.0 Total Tier 2 $201.7 $50.7 299 AGENDA ITEM 11 -fir • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: San Jacinto Branch Line Ad Hoc Committee Stephanie Wiggins, Regional Programs Director THROUGH: Anne Mayer, Executive Director SUBJECT: Perris Valley Line Freight Study SAN JACINTO BRANCH LINE AD HOC COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to receive and file a presentation on the findings of the draft Perris Valley Line (PVL) Freight Study. BACKGROUND INFORMATION: San Jacinto Branch Line Ad Hoc Committee members requested an analysis of the impacts to freight traffic once the improvement of the tracks for the PVL are completed. Wilbur Smith and Associates conducted a study to: • Document the current freight rail shippers, their freight carload volumes, and any volume trends; and • Determine if improvements planned for the Perris Valley Line commuter rail service will facilitate any expansion of shipper volumes. Study Findings The study identified eight shippers on the San Jacinto Branch Line: Perris Valley Line Shipper Volumes Shipper City Commodity Received Weekly Carloads Quebecor Riverside Rolled paper stock 19.25 AOC Resins Perris Chemicals for resin 6.50 Cal Truss Perris Lumber 2.50 MWD Perris Chlorine 0.25 McAnally Enterprises Perris Com and soy meal 16.50 JM Eagle Perris Resin 9.00 Star Milling Co. Perris Grains 20.00 Team Track Perris Various 2.00 Grove Lumber Romoland Lumber/Wood 40.00 Total 116.00 Agenda Item 11 300 • Improvements in the line to support commuter rail service may enable Burlington Northern Santa Fe (BNSF) railroad to operate at higher speeds than it does now. Freight trains are limited to 20 mph north of Perris, and 10 mph through Perris to Romoland. Faster speeds may theoretically result in a small savings in labor cost to BNSF, but since most of the time involved is devoted to local switching activity, any benefit to BNSF would be inconsequential in, the overall cost of delivering loaded cars and returning with empty cars. Furthermore, the inbound trains with heavy carloads would still have to climb a grade through Box Springs Canyon from Riverside at a low speed. Given the current and forecast carload volumes, the improvements planned for the Perris Valley Line commuter rail service will not facilitate any expansion of shipper volumes. Justin Fox of Wilbur Smith & Associates will present the findings of the Freight. Study at the Commission meeting. Attachment: Draft Report - Perris Valley Line Freight Study, Wilbur Smith & Associates Per a railroad timetable. Agenda Item 11 301 • • • Final Report PERRIS VALLEY LINE FREIGHT STUDY Study Purpose The Perris Valley Line (PVL) Freight Study is prepared for the San Jacinto Branch Line Ad Hoc Committee of the Riverside County Transportation Commission (RCTC). The purpose of this study is twofold. First, the Study documents the current freight rail shippers on the San Jacinto Branch Line (where the PVL will operate), their freight carload volumes, and any volume trends. Second, the Study seeks to determine if improvements planned for new commuter rail service on the line would facilitate any expansion of shipper volumes. The San Jacinto Branch Line is owned by the ROTC. RCTC purchased the line from the. former Atchison Topeka and Santa Fe Railway (ATSF) in 1992. As a condition of the sale, ATSF retained an exclusive right to serve shippers on the line. ATSF's successor railroad, the Burlington Northern and Santa Fe Railway (BNSF), operates the freight service on the line today. There appear to be up to two round trips or four trains per day on the line. The line runs 38 miles from Highgrove and a connection to the BNSF Transcon mainline in the north to San Jacinto to the southeast. For commuter rail service, RCTC is planning to build a connection using existing and new trackage between the Metrolink Riverside station and the northern end of the Perris Valley Line. Future 91 Line trains will run on the line, beginning their daily journeys from South Perris. The study team solicited information from BNSF with regards to its current operations on the line. BNSF declined to offer comment. On March 6, the team visited all active shippers on the line with rail spurs — tracks leading to shipper facilities from the line itself. Shippers were asked a series of questions aimed at quantifying rail carload volumes and whether or not the volumes are expected to grow — with or without future improvements installed for commuter rail operations which would facilitate faster freight train speeds. The team posed follow-up questions to some shippers during the following week. As a consequence of the shipper responses, the team learned broadly how BNSF operates on the line. Freight Volumes on the Perris Valley Line There are 8 shippers with rail spurs off of the Perris Valley Line between Riverside south of Eastridge Avenue and Romoland. There is also a public loading and unloading facility in Perris, known as a team track, whose users are likely small. Based on conversations with officials knowledgeable of rail shipments at each site, this study estimates that the line handles about 116 carloads per week, or a yearly volume of just over 6,000 carloads. The shippers and their weekly volumes are cited in Table 1. The specifics of their rail service are discussed in the subsequent section. The locations of the shippers and the Perris team track appear in Figure 1. 102424 PERRIS VALLEY LINE FREIGHT STUDY WILBUR SAUDI ASSOCIATES Page 1 302 • • • Figure 1 Perris Valley Line Shipper Locations 102424 PERRIS VALLEY UNE FREIGHT STUDY Page 2 WIfBUR SMITH ASSOCIATES 303 • • • Table 1 Perris Valley Line Shipper Volumes Shipper City Commodity Received Weekly Carloads Quebecor Riverside Rolled paper stock 19.25 AOC Resins Perris Chemicals for resin 6.50 Cal Truss Perris Lumber 2.50 MWD Perris Chlorine 0.25 McAnally Enterprises Perris Corn and soy meal 16.50 JM Eagle Perris Resin 9.00 Star Milling Co. Perris Grains 20.00 Team Track Perris Various 2.00 Grove Lumber Romoland Lumber/Wood 40.00 Total 116.00 The carload volume estimates above are based on shipper comments. If shipper stated a range in weekly carloads, the table shows the average. Quebecot's volume was derived from a yearly carload total The team track figure is a WSA estimate, based on its observation. The shipper interviews revealed that BNSF provides daily service (including weekends) on the Perris Valley Line. BNSF delivers loaded cars and picks up empty cars both during the day and at night, depending on shipper preference. The line and most of the shippers can handle the heaviest loaded car weights of 286,000 pounds. Impact of Commuter Rail Improvements Implementation of commuter rail service on the Perris Valley Line will change the operating environment on the line. The line will be improved: track will be upgraded and passing sidings, providing more capacity to accommodate both freight and passenger services, will be installed. The improvements may enable BNSF to operate at higher speeds than it does now. Freight trains are limited to 20 mph north of Perris, and 10 rnph through Perris to Romoland . Faster speeds might theoretically result in a small savings in labor cost to BNSF, but since most of the time involved is devoted to local switching activity, any benefit to BNSF would be inconsequential in the overall cost of delivering loaded cars and returning with empty cars. Furthermore, the inbound trains with heavy carloads would still have to climb a grade through Box Springs Canyon from Riverside at a low speed. It is unlikely also that the improvements will benefit Perris Valley Line shippers in any material way. Generally, the shippers interviewed appeared satisfied with BNSF service: they are getting the level of service they want. No shippers indicated that the improvements would help them increase their rail shipments. It is important to note that most of these shipments travel hundreds if not thousands of miles and spend several days in transit before they get to the Perris Valley Line. Thus, any minor improvement in freight train speeds on the line would be negligible in the context of total travel time. The largest shipper on the line, Grove Lumber, is located in Romoland, which is beyond South Perris, the southern limit of the planned improvements for the Perris Valley Line With its market being local home construction, this shipper has the largest potential for rail car volume increases, albeit only when the housing market recovers from its current slump. Indeed, Grove Lumber intends to build a new rail -served facility in Per a railroad timetable. 102424 PERRIS VALLEY LINE FREIGHT STUDY WILBUR SMITH ASSOCIATES Page 3 304 Ramoland. Clearly, current conditions on the line to Perris are no constraint for this shipper's expansion plans. Line Shippers Quebecor World 6688 Box Springs Blvd. Riverside, CA 92507 Contact: Paul Cleveland, Transportation This facility receives box cars of paper stock which it uses for printing. The paper comes from central and western Canada, Washington, Oregon, and in some cases from overseas via the Port of Los Angeles. The facility receives on the low side about 1,000 carloads per year, or almost 20 carloads per week. This volume should increase about 10 percent over the next year and a half. BNSF serves the plant 6 to 7 days a week. Cars are spotted (delivered) and picked up both day and night The facility can handle the biggest cars with a total loaded weight of 286,000 pounds. AOC Resins California Oleander and Havrill Avenues Perris, CA, 92570 Contact: Mitch Bell, Operations Supervisor This facility receives tank car loads of chemicals for the production of polyester resins. The chemicals are unloaded into tanker trucks at this facility. The carloads originate in Tennessee. The facility receives about 6 or 7 carloads per week. This volume is expected to grow with the domestic economy or at about 2 or 3 percent per year. Shipments are received on Tuesdays and Thursdays during the day. The facility can receive maximum car weights of 286,000 pounds, but rarely does so, as smaller cats are more economical. California Truss Company, Inc. (Cal Truss) 23665 Cajalco Road Perris, CA 92570 Contact: Dean Turner, Production Manager This facility receives carloads of lumber for the manufacture of trusses used in construction. Ninety percent of the lumber comes from Washington, and the remainder from other western states and Canada. The facility typically receives about 10 carloads per month, or about 2 to 3 carloads per week. This volume is expected to increase, but by how much and when is unknown. In the past, rail shipments have been two and a half times what they are today. The facility can receive deliveries day and night Whether or not it can handle 286,000 pound cars is also unknown. Metropolitan Water District (MWD) Chlorine Unloading Facility (CUF) 19765 Patterson Avenue Perris, CA 92570 Contact: Sergio Ochoa, Facility Manager 102429 PERRIS VALLEY LINE FREIGHT STUDY W►LBUR SMITH ASSOCIATES Page 4 305 • This facility receives tank cars full of chlorine. The chlorine comes from Henderson, Nevada, and is used as a water disinfectant. The chlorine is unloaded from the tank cars into tanker trucks. Last year, the facility received just four tank cars. Before that, the facility had been dormant. The volume should expand in the near future to about a tank car per month. BNSF delivers the cars during the day. Current net loads amount to 180,000 pounds, with total car weights about 240,000 pounds. MWD related that being able to receive heavier carloads would not be important. McAnally Enterprises, Feed Division 23840 Rider Street Perris, CA 92570 Contact: Mark Jacobs, Mill Manager This facility receives hopper cars of soybean meal and corn, which it processes into finished chicken feed. The feed is then loaded to trucks for delivery to McAnally's area poultty farms, whose eggs are distributed locally. The soybean meal comes from Kansas, and corn comes from South Dakota, Nebraska, and Iowa. The facility typically receives between 16 and 17 carloads per week. This volume is likely to hold steady for the next year or two, and then grow with the local population. The BNSF delivers the rail cars Monday through Friday, during the day. The facility can handle maximum car weights of 286,000 pounds. JM Eagle 23711 Rider Street Perris, CA 92570 Contact: Joe Seanz, Materials Supervisor This facility receives hoppers of PVC resin for pipe making. The PVC comes from plants in Texas. The facility receives 9 cars per week on average. The volume is anticipated to grow with the economy, or about 2 to 3 percent per year. BNSF serves the plant on Mondays, Wednesdays, and Fridays. The facility can receive 286,000 pound cars. Star Milling Co. 24067 Water Street Perris, CA 92570 Contact: Garrit Van Leeuwen, Purchasing Manager This facility receives hopper cars of grain products, the majority of which is corn, originating in the Mid West. The corn is processed into chicken feed. The facility receives about 20 carloads a week, a volume which is likely to remain steady indefmitely. BNSF serves the facility Mondays through Fridays during the day. The facility can handle maximum car weights of 205,000 pounds. Being able to handle heavier cars would be beneficial to the business, by lowering transportation costs per pound of commodity received. Star Milling has another facility on Oleander Street, near AOC Resins, which is used only for com car storage. 102924 PERRIS VALLEY LINE FREIGHT STUDY WILBUR SMITH ASSOCIATES Page 5 306 Team Track Orange Avenue, Perris A team track is a facility open'to the public where shippers can load and unload rail cars. The shippers taking advantage of a team track typically are small shippers, lacking spurs of their own. Such a facility exists just south of Star Milling, accessible via Orange Avenue. Other than easy access, the chief requirement for a team track is a siding or spur, where cars can be delivered and picked up after unloading, leaving the branch line itself clear for trains. The study team spotted rail cars being worked at the team track during its early March tour of the Perris Valley Line. Grove Lumber 27126 Watson Road Romoland, CA 92585 Ron Hillman, Purchasing Manager This facility receives carloads of lumber and wood products used in housing construction. The origins of the carloads include Canada, Louisiana, Minnesota, and the Pacific Northwest. The facility receives typically 40 carloads per week, which is down from a high of 70 carloads a week during periods of strong house construction. The 70-car figure is the facility's current maximum car handling capacity. Even the lower figure can drop significantly. No major growth is volume is expected to occur this year. The facility receives cars three days a week and can handle maximum car weights of 286,000 pounds. Grove Lumber does not expect a stronger market to return until perhaps 2010. The firm is planning on the development of a new lumber transload facility about one mile southeast of the Watson Road facility along the portion of the Perris Valley Line that is now out of service. When operational in 2010, that facility will have the capacity to handle 10 rail cars per day. 102424 PERRIS VALLEY LINE FREIGHT STUDY WILBUR SMITH ASSOCIATES Page 6 307 Perms Valley Line Freigh-t Study - Study purpose Inventory the shippe Determine if iri provemen • Methodology . • Prepared questions • Contacted BNS • Visited sh p'pe.rs;o. •- Made follow=u anston of shipper:yolumes- Perms Valley Line Line runs: 38 miles from BNSF Transcon in; Highgrove,to San Jacinto Northern portion cli'mbs'a • RCTC owns •the`line • BNSF runs daily frei • 2 to 4 trains-p0(. • Carib -ads. are inboun Trains are limite BNSF appears to'store 4 Line is out of serer • RCTC is plannin distant future. Box Springs; Canyon n the not too Perris Valley Line Shiper Locations SOriiys ',ark legend Park n villeyA us_m d J 6vciI alkrFri_ River:la f; SNaticnal -�'Cem�rte Pe ii,s Vall YUne, ' _ a -Lake Perris Stall e'rRetr abonal kr lake. Perris _.. -Perris y-a:10y Li`ne Shipper Specifics 8 shippers with .rail spurs between Riverside and Romoland • Perris team track'availa • Shippers receive, • Shippers are}:gettn Largest shipper Perris Valley Li e- Carloads Shipper CirtyQy; aCommo, Received Weekly Carloads Quebecor. R1 r'si,, Rolled,lpaper stoclr 19.25 AOC Resins ' , ..��.. 'Perris�'`4 {Chemcals _ . afor resin . 6.5 Cal Truss t Peris�,;'Lumber, dra.,, v ri _.,'+.;.E ? .,. � r `` -.a.�A..€h3n5+i"H.HKiy ": e.,,,- 2.5 MWD•`}PerrrscY�w$;,.lonne�r a a -. 0.25 . McAnally Enterprises �iit M.`.`F�.A T yyK Peres , l kL �K1Nz rN' I o rand s�oV meal z 16.5 JM Eagle 'Perri;s �"�, �1J?t.:.. �.n.4�'v )._x.Ab� \ es°i aKf}�` '� R�' Nk .-4s�£ ..r � � .r 9 1 L Star Milling Co :,r Pre ns� h'��Grains� p C ink f. 5. w. Sh:-'i V S A -'.':"'law. 1�M ✓ V "+ r F' '+'SJ+Yaa ] SJ. Ni�4 t. 20 Team Track _ s �' ,.e �" 'yy •Rr Yt" Li'G'' `"XuSS"'rN3 .h`'.7 Perrrs?$�Vangous�,} t rxt Ei x o- £id t £'i to r .%.fia Sw"".y°^.._5tau:a- 2 s Grove Lumber ts4z R®moland,yL�i _A3L",5_ .. y3'IL11YCx5'1 �� ..1 bee/�W.1ood Wtdni�'!S'L'2aa"�.�,b V }., .3'i'�3:.�. Y.a � _.. _ .__ » . _ -40 Total Y 3 - .1;� ry .'� ='ti t1 ➢1 y y x �P , M -- vTy3 '`m x. fi f 1"" 116 • . Passenger Train, I nprovements to Change operating Envror�nnent Several more trains` will use Track and capacity up0a Maximum a l lowa Small benefits :for Rail Freight • BNSF's savings from increase • Trains will still -have dim • Once in Perris Valley • . m expand their volumes URGENCY ITEM RIVERS/DE COUNTY TRANSPORTATION COMM/SS/ON DATE: May 14, 2008 TO: Riverside County Transportation Commission FROM: Aaron Hake, Government Relations Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Resolutions Regarding State Reimbursement for Commission -Sponsored Legislation Costs of STAFF RECOMMENDATION: This item is for the Commission to: 1) Adopt Resolution 08-014 "Resolution of the Riverside County Transportation Commission Certifying that Upon Enactment of Senate Bill 1316, the Commission Shall Not Seek Reimbursement from the State of California for Any Costs Associated with Senate Bill 1316 or Any of the Activities Authorized or Mandated Therein;" 2) Adopt Resolution 08-015 "Resolution of the Riverside County Transportation Commission Certifying that Upon Enactment of Assembly Bill 1954, the Commission Shall Not Seek Reimbursement from the State of California for Any costs Associated with Assembly Bill 1954 or Any of the Activities Authorized or Mandated Therein;" and 3) Forward to the California State Legislature. BACKGROUND INFORMATION: Two days ago, the Senate Appropriations Committee referred Commission - sponsored Senate Bill 1316 (Correa) to the "suspense" file. This action was in response to analysis by Senate staff that identified upwards of $100,000 of state - mandated costs imposed upon the Commission contained in the bill. These costs are associated with the requirement for a reconstituted State Route 91 Advisory Committee to oversee the operation of the toll facilities on each side of the Riverside -Orange County line, and also for an annual audit of toll revenue and expenditures. These "mandates" have been voluntarily sought by the Commission; however, the Commission could potentially seek reimbursement from the State for the costs in incurs as a result of the advisory committee and the annual audit. The role of the Appropriations Committee is to screen legislation for fiscal impacts to the state; given California's budget deficit, there is a low threshold for bills that have the potential to impose new costs on the state. Senate Appropriations Committee staff has recommended the Commission and Orange County Transportation Authority (OCTA) adopt resolutions declaring their intent to not seek reimbursement from the state related to costs imposed by SB 1316. The OCTA Board of Directors already adopted a similar resolution this week. Additionally, Appropriations Committee staff recommends SB 1316 be amended with standard language that prohibits the Commission or OCTA from being reimbursed with state funds for any costs related to the bill. The Commission's other sponsored legislation, AB 1954 (Jeffries) for Interstate 15 high occupancy toll (HOT) lanes, is in the Assembly Appropriations Committee "suspense" file. However, that bill does not contain any potential reimbursable state mandates at this time. In anticipation of the possibility that AB 1954 may be amended in the future with a similar framework as SB 1316, staff is recommending that the Commission proactively adopt a similar resolution for AB 1954 that declares the Commission's intent to not seek state reimbursement related to the legislation. The urgency of this item is related to the legislative deadline that Appropriations committees in the Senate and Assembly report all of their bills to the floor by May 23. The need for the resolutions developed Monday, and this Commission meeting provides the last opportunity for the Commission to declare its intent to the legislature with regard to this aspect of these bills. SB 1316 can be removed from the suspense file and heard on the Senate floor if state -mandated reimbursable cost concerns are addressed within the legislative deadlines. Attachments: 1) Resolution 08-014 2) Resolution 08-015 RESOLUTION 08-014 RESOLUTION OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION CERTIFYING THAT UPON ENACTMENT OF SENATE BILL 1316, THE COMMISSION SHALL NOT SEEK REIMBURSEMENT FROM THE STATE OF CALIFORNIA FOR ANY COSTS ASSOCIATED WITH SENATE BILL 1316 OR ANY OF THE ACTIVITIES AUTHORIZED OR MANDATED THEREIN WHEREAS, the Riverside County Transportation Commission (RCTC) has requested Senator Lou Correa to introduce Senate Bill 1316; WHEREAS, Senate Bill 1316 would allow the Commission to implement an extension of the SR-91 Express Lanes, consistent with Commission policy, in addition to capital improvements promised to Riverside County voters in Measure A; WHEREAS, the SR-91 Express Lanes extension will be operated in cooperation with the Orange County Transportation Authority (OCTA); WHEREAS, the Commission currently participates in the SR-91 Advisory Committee mandated by state law; WHEREAS, Senate Bill 1316 requires a reconstituted advisory committee; WHEREAS, the Commission has not sought reimbursement from the State of California for costs associated with the current advisory committee; WHEREAS, the estimated annual cost to the Commission of operating the SR-91 Advisory Committee is less than $7,000; WHEREAS, Per Senate Bill 1316 the Commission's toll revenues and expenditures be audited on an annual basis; NOW THEREFORE, BE IT RESOLVED, upon enactment of Senate Bill 1316, the Commission shall not seek reimbursement from the State of California for costs associated with Senate Bill 1316 or any of the activities authorized or mandated therein. APPROVED AND ADOPTED by the Riverside County Transportation Commission at its meeting on Wednesday, May 14, 2008. ATTEST: BY: By: Jeff Stone, Chair Riverside County Transportation Commission Jennifer Harmon Clerk of the Board RESOLUTION 08-015 RESOLUTION OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION CERTIFYING THAT UPON ENACTMENT OF ASSEMBLY BILL 1954, THE COMMISSION SHALL NOT SEEK REIMBURSEMENT FROM THE STATE OF CALIFORNIA FOR ANY COSTS ASSOCIATED WITH ASSEMBLY BILL 1954 OR ANY OF THE ACTIVITIES AUTHORIZED OR MANDATED THEREIN WHEREAS, the Riverside County Transportation Commission (RCTC) has requested that Assemblyman Kevin Jeffries introduce Assembly Bill 1954; WHEREAS, Assembly Bill 1954 would allow the Commission to implement high - occupancy toll (HOT) lanes in the median of Interstate 15, consistent with Commission policy, in addition to capital improvements promised to Riverside County voters in Measure "A"; WHEREAS, the Interstate 15 HOT lanes will be operated in cooperation with the California Department of Transportation ("Ca!trans") and the California Highway Patrol (CHP); WHEREAS, prior to enactment of the bill, the California Legislature might amend Assembly Bill 1954 to mandate the Commission carry out certain activities that would create a reimbursable state mandate; WHEREAS, the Commission has not sought reimbursement from the State of California for costs associated with current state mandates regarding toll lanes; NOW THEREFORE, BE IT RESOLVED, upon enactment of Assembly Bill 1954, the Commission shall not seek reimbursement from the State of California for costs associated with Assembly Bill 1954 or any of the activities authorized or mandated therein. APPROVED AND ADOPTED by the Riverside County Transportation Commission at its meeting on Wednesday, May 14, 2008. ATTEST: BY: By: Jeff Stone, Chair Riverside County Transportation Commission Jennifer Harmon Clerk of the Board