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08 August 23, 2010 Budget & ImplementationRECORDS RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE MEETING AGENDA TIME: 9:30 a.m. DATE: Monday, August 23, 2010 LOCATION: BOARD ROOM County of Riverside Administrative Center 4080 Lemon Street, First Floor, Riverside %P. COMMITTEE MEMBERS ..q? Greg Pettis, Chair / Kathleen DeRosa, City of Cathedral City Scott Matas, Vice Chair / Russell Betts, City of Desert Hot Springs Roger Berg / Jeff Fox, City of Beaumont Joseph DeConinck / To Be Appointed, City of Blythe Ray Quinto / Jim Hyatt, City of Calimesa Mary Craton / Jordan Ehrenkranz, City of Canyon Lake Eduardo Garcia / Steven Hernandez, City of Coachella Robin Lowe / Eric McBride, City of Hemet Bob Magee / Melissa Melendez, City of Lake Elsinore Terry Henderson / Don Adolph, City of La Quinta Rick Gibbs / Randon Lane, City of Murrieta Steve Adams / Andy Melendrez, City of Riverside Ron Roberts / Jeff Comerchero, City of Temecula John F. Tavaglione, County of Riverside, District II Jeff Stone, County of Riverside, District III 4P- STAFF -V Anne Mayer, Executive Director Theresia Trevino, Chief Financial Officer W. AREAS OF RESPONSIBILITY �d Annual Budget Development and Oversight Competitive Federal and State Grant Programs Countywide Communications and Outreach Programs Countywide Strategic Plan Legislation Measure A Implementation Public Communications and Outreach Programs Short Range Transit Plans Comments are welcomed by the Committee. If you wish to provide comments to the Committee, please complete and submit a Speaker Card to the Clerk of the Board. 11.36.06 RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE ROLL CALL AUGUST 23, 2010 Present County of .Riverside, District II County of Riverside, District III City ofB City of Blythe City of C i 6 City of Canyo City of Ctl�ed ea TMn City of Coachella City of Desert Hot=Springs City of Hemet City ofLake Elsinorev City of La Quinta City of- Murr eta City of Riverside City of Temecula Absent RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE SIGN -IN SHEET AUGUST 23, 2010 N/JVIE AGENCY E MAIL ADDRESS l �' r n t .A �/V 1--&I'e-- I,"G - �,✓ �o,c3z,�s %F--114a��-•E RC& (-6,7-75 QAT-74 .-i.a 24(._ Crry D$sFrvv-- � S621‘ ",ems dip-14,�Q'� �- rr CJ.,' 'ITV" LGC1� � � / 7-- /GI J � n3f &(_L7 �� c�.�c �_ `6-0-4. ,e-2 66 I,jl 4 c5.e`' J'.'l` • • • RIVERS/DE COUNTY TRANSPORTATION COMM/SS/ON BUDGET AND IMPLEMENTATION COMMITTEE www.rctc.org AGENDA* *Actions may be taken on any item listed on the agenda 9: 30 a.m. Monday, August 23, 2010 BOARD ROOM County Administrative Center 4080 lemon Street, First Floor Riverside, California In compliance with the Brown Act and Government Code Section 54957.5, agenda materials distributed 72 hours prior to the meeting, which are public records relating to open session agenda items, will be available for inspection by members of the public prior to the meeting at the Commission office, 4080 Lemon Street, Third Floor, Riverside, CA, and on the Commission's website, www.rctc.org. In compliance with the Americans with Disabilities Act and Government Code Section 54954.2, if you need special assistance to participate in a Committee meeting, please contact the Clerk of the Board at (951) 787-7141. Notification of at least 48 hours prior to meeting time will assist staff in assuring that reasonable arrangements can be made to provide accessibility at the meeting. 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. PUBLIC COMMENTS - Each individual speaker is limited to speak three (3) continuous minutes or less. The Committee may, either at the direction of the Chair or by majority vote of the Committee, waive this three minute time limitation. Depending on 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. Also, the Committee may terminate public comments if such comments become repetitious. In addition, the maximum time for public comment for any individual item or topic is thirty (30) minutes. Speakers may not yield their time to others without the consent of the Chair. Any written documents to be distributed or presented to the Committee shall be submitted to the Clerk of the Board. This policy applies to Public Comments and comments on Agenda Items. Budget and Implementation Committee August 23, 2010 Page 2 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 membersmay refer such matters to staff for factual information or to be placed on the subsequent agenda for consideration. 5. APPROVAL OF MINUTES - JUNE 28, 2010 6. ADDITIONS/REVISIONS (The Committee may add an item to the Agenda after making a finding that there is a need to take immediate action on the item and that the item came to the attention of the Committee subsequent to the posting of the agenda. An action adding an item to the agenda requires 2/3 vote of the Committee. If there are less than 2/3 of the Committee members present, adding an item to the agenda requires a unanimous vote. Added items will be placed for discussion at the end of the agenda.) 7. 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. 7A. QUARTERLY INVESTMENT REPORT Overview This item is for the Committee to: • Page 1 • 1) Receive and file the Quarterly Investment Report for the quarter ended June 30, 2010; and 2) Forward to the Commission for final action. 7B. QUARTERLY SALES TAX ANALYSIS Overview This item is for the Committee to: Page 14 1) Receive and file the sales tax analysis for Quarter 1 (Q1) 2010; and 2) Forward to the Commission for final action. • Budget and Implementation Committee August 23, 2010 Page 3 7C. SINGLE SIGNATURE AUTHORITY REPORT Overview This item is for the Committee to: Page 20 1) Receive and file the Single Signature Authority Report for the fourth quarter ended June 30, 2010; and 2) Forward to the Commission for final action. 8. PROPOSED DEBT ISSUANCE Overview This item is for the Committee to: • 9. • Page 22 1) Direct staff to continue efforts to develop a plan to refinance the outstanding commercial paper; and 2) Forward to the Commission for final action. FUNDING FOR INTERSTATE 215 FROM MURRIETA HOT SPRINGS ROAD TO SCOTT ROAD WIDENING PROJECT Page 766 Overview This item is for the Committee to: 1) Approve the use of $9 million in Measure A Western County Community and Environmental Transportation Acceptability Program (CETAP) funds for the 1-215 widening project until reimbursement of state funds are authorized and allocated by the California Transportation Commission (CTC); 2) Approve a letter of no prejudice (LONP) for Corridor Mobility Improvement Account (CMIA) funds; 3) Approve a SB 184 request for State Transportation Improvement Program (STIP) funds; and 4) Forward to the Commission for final action. Budget and Implementation Committee August 23, 2010 Page 4 10. PROPOSITION 1 B FISCAL YEAR 2009/10 CALIFORNIA TRANSIT SECURITY • GRANT PROGRAM - CALIFORNIA TRANSIT ASSISTANCE FUND AND SUPPORTING RESOLUTIONS Page 169 Overview This item is for the Committee to: 1) Approve discretionary allocations from the California Transit Security Grant Program — California Transit Assistance Fund (CTSGP-CTAF) population funds in the amount of $1,553,821 to the Riverside County transit operators; 2) Adopt Resolution No. 10-028, "Resolution of the Riverside County Transportation Commission Approving the Allocation of FY 2009/10 Proposition 1B-6261-0002 California Transit Security Grant Program - California Transit Assistance Fund (CTSGP-CTAF) - Population Funds"; 3) Adopt Resolution No. 10-029, "Resolution of the Riverside County Transportation Commission Appointing Individuals to Act on Behalf of the Commission for the Purpose of Applying and/or Accepting Grants Awarded to the Commission's Rail Program"; and 4) Forward to the Commission for final action. 11. AGREEMENT WITH SMITH, WATTS & COMPANY, LLC FOR STATE LEGISLATIVE ADVOCACY SERVICES Overview This item is for the Committee to: Page 176 1) Award Agreement No. 10-14-105-00 to Smith, Watts & Company, LLC for the provision of state legislative advocacy services for a two-year term, and two, two-year options to extend the agreement in an amount not to exceed $408,000; 2) Authorize the Chair, pursuant to legal counsel review, to execute the agreement, including option years, on behalf of the Commission; and 3) Forward to the Commission for final action. 12. STATE AND FEDERAL LEGISLATIVE UPDATE Overview This item is for the Committee to: 1) Receive and file an update on state and federal legislation; and 2) Forward to the Commission for final action. Page 183 • Budget and Implementation Committee August 23, 2010 Page 5 13. ITEM(S) PULLED FROM CONSENT CALENDAR AGENDA 14. COMMISSIONERS / STAFF REPORT Overview This item provides the opportunity for the Commissioners and staff to report on attended and upcoming meeting/conferences and issues related to Commission activities. 15. ADJOURNMENT AND NEXT MEETING The next Budget and Implementation Committee meeting is scheduled to be held at 9:30 a.m., Monday, September 27, 2010, Board Chambers, First Floor, County Administrative Center, 4080 Lemon Street, Riverside. • • • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE Monday, June 28, 2010 MINUTES 1. CALL TO ORDER The meeting of the Budget and Implementation Committee was called to order by Chair Greg Pettis at 9:30 a.m., in the Board Room at the County of Riverside Administrative Center, 4080 Lemon Street, First Floor, Riverside, California, 92501. 2. PLEDGE OF ALLEGIANCE At this time, Commissioner Steven Hernandez led the Budget and Implementation Committee in a flag salute. 3. ROLL CALL Members/Alternates Present Steve Adams Roger Berg Mary Craton Rick Gibbs Terry Henderson Steven Hernandez Bob Magee Scott Matas Greg Pettis Ray Quinto Ron Roberts Jeff Stone* Members Absent Joseph DeConinck Robin Lowe John Tavaglione `Arrived after the meeting was called to order. Chair Pettis thanked Commissioner Mary Craton for chairing the May Budget and Implementation Committee meeting. Budget and Implementation Committee Minutes June 28, 2010 Page 2 4. PUBLIC COMMENTS There were no requests to speak from the public. 5. APPROVAL OF MINUTES — MAY 24, 2010 M/S/C (Adams/Craton) to approve the minutes of May 24, 2010, as submitted. Abstain: Hernandez and Pettis At this time, Commissioner Jeff Stone arrived at the meeting. 6. ADDITIONS / REVISIONS There were no additions or revisions to the agenda. 7. FISCAL YEARS 2011-15 MEASURE A FIVE-YEAR CAPITAL IMPROVEMENT PLANS FOR LOCAL STREETS AND ROADS Andrea Zureick, Senior Staff Analyst, presented the FYs 201 1-15 Measure A Five -Year Capital Improvement Plans (CIP) for Local Streets and Roads. M/S/C (Craton/Henderson) to: 1) Approve the FYs 2011-15 Measure A Five -Year Capital Improvement Plans (CIP) for Local Streets and Roads as submitted; and 2) Forward to the Commission for final action. 8. MEASURE A LOCAL STREETS AND ROADS — MAINTENANCE OF EFFORT BASE YEAR EXTENSION FOR FISCAL YEAR 2010/11 AND THE 2009 MAINTENANCE OF EFFORT GUIDELINES Shirley Medina, Programming and Planning Manager, provided an overview for the 1989 Measure A Maintenance of Effort base year extension for FY 2010/11, and the 2009 Maintenance of Effort Guidelines. Commissioner Ron Roberts requested as part of staffs recommendation to include the city of Temecula since it was incorporated in 1989. Shirley Medina concurred. • • • • • • Budget and Implementation Committee Minutes June 28, 2010 Page 3 M/S/C (Roberts/Craton) to: 1) Approve using the 1989 Measure A Maintenance of Effort (MOE) base year amount for the FY 2010/11 Measure A Local Streets and Roads MOE certification; 2) For cities incorporated in or after 1989, excluding the cities of Menifee and Wildomar, approve using the Proposition 42 MOE amount for the FY 2010/11 Measure A Local Streets and Roads MOE certification; 3) Approve the 2009 Measure A Local Streets and Roads MOE Guidelines; and 4) Forward to the Commission for final action. 9. COMMERCIAL ADVERTISING POLICY AND CONTENT GUIDELINES, AND INCIDENTAL USE POLICY Sheldon Peterson, Rail Manager, presented the resolution to adopt the Commercial Advertising Policy and Content Guidelines, and the Incidental Use Policy for the Commission -owned stations. Commissioner Stone suggested advertising on the Metrolink electronic tickets, rolling kiosks, cell towers affixed to the parking structures, billboard signs along the rights of way, and potentially re-evaluate the policy to allow alcoholic beverage advertising to create a larger market of advertisers. In response to Commissioner Rick Gibbs' request for clarification if the commercial advertising policy was reviewed by legal counsel and if the advertising fees are fixed, Sheldon Peterson replied the policy was reviewed by the Commission's legal counsel and most of the restrictions came from the Los Angeles County Metropolitan Transportation Authority's commercial advertising policy. He stated the fees are open for discussion as this agenda item establishes a policy to allow the Commission to pursue this option. Commissioner Gibbs concurred with Commissioner Stone's comment and suggested a sliding scale of fees for advertising locations. At Commissioner Craton's request, Sheldon Peterson clarified the intent of the naming rights section and noted that it is listed as a policy for consideration. She expressed concern for advertising alcoholic beverages on Commission - owned property since the Commission is a transportation agency. Commissioner Steve Adams discussed the city of Riverside's free public access television and suggested utilizing it to advertise public transportation programs. Budget and Implementation Committee Minutes June 28, 2010 Page 4 Sheldon Peterson replied Metrolink has provided closed caption television promotions through Time Warner Cable and staff will look into broadcasting those promotions through public access television. Commissioner Roger Berg referred to the proposed guideline that states the Commission will respect the guidelines of each city and therefore would be applied to alcoholic beverage advertising. He expressed concern about the restriction on non-commercial advertising as he believes it limits the Commission's opportunities. Commissioner Terry Henderson highly recommended that well-defined criteria be established immediately for naming rights and asked for clarification on Commissioner Berg's concern regarding non-commercial advertising. Sheldon Peterson replied the non-commercial advertising guidelines states that the Commission does not accept advertising from non -governmental entities if the subject matter's intent of said advertising is non-commercial. John Standiford, Deputy Executive Director, explained the intent was not to limit universities or military, it relates to political advertising. He stated staff will review with legal counsel to strengthen the wording to clarify the intent. Commissioner Ron Roberts expressed he does not support advertising alcoholic beverages on Commission -owned property. Commissioner Berg provided additional examples of non-commercial advertisers that would be restricted based on the current wording of the guidelines such as rotary or alliance clubs. In response to Commissioner Ray Quinto question, Sheldon Peterson replied the Commission will comply with all local agency policies for signage and advertising. He explained once the Commission adopts the policy, a request for proposal will be developed and the proposals will be presented to the Commission for action. Commissioner Hernandez stated he believes that alcoholic beverage advertising and even tobacco advertising are acceptable as long as the agencies that advertise against their use are also able to do so. He believes it is not the Commission's responsibility to regulate morals or health issues. John Standiford expressed gratitude for the Commissioners' comments and stated the comments will be reviewed for incorporation into the policy for the Commission's final approval. • • • • • Budget and Implementation Committee Minutes June 28, 2010 Page 5 In response to Commissioner Stone's question, Sheldon Peterson replied there are approximately 5,000 commuter rail passengers per day. Commissioner Stone stated this is a significant population to advertise to and the beginning of a significant revenue source. M/S/C (Stone/Adams) to: 1) Adopt a Commercial Advertising Policy and Content Guidelines, and Incidental Use Policy; 2) Adopt Resolution No. 10-011, "A Resolution of the Riverside County Transportation Commission Adopting a Commercial Advertising Policy and Content Guidelines, and an Incidental Use Policy Covering Concession Stands, Merchandising, and Contractor Services for Commission -Owned Facilities and Property"; and 3) Forward to the Commission for final action. 10. RIVERSIDE COUNTY TRANSIT SERVICES FUNDING ALLOCATION FOR FISCAL YEAR 2010/11 Fina Clemente, Transit Manager, presented the Riverside County transit services funding allocation for FY 2010/11, highlighting the following: • Short Range Transit Plans FY 2010/11 - FY 2012/13 for the cities of Banning, Beaumont, Corona, Riverside, Riverside Transit Agency, SunLine Transit Agency, Palo Verde Valley Transit Agency, and the Commission's Commuter Rail Program; • State and local revenues; • Operating and capital costs comparison: FY 2008/09 - FY 2010/11; and • Riverside County: FY 2010/11 operating and capital costs. M/S/C (Henderson/Stone) to: 1) Conduct a public hearing at the July Commission meeting on the proposed Section 5307 Program of Projects (POP); 2) Approve the FY 2010/11 Federal Transit Administration's (FTA) Section 5307 and 5311 POP for Riverside County; 3) Approve the FY 2010/11 Local Transportation Fund (LTF) and State Transit Assistance (STA) fund allocations for transit; 4) Direct staff to add projects into the Regional Transportation Improvement Plan (RTIP); Budget and Implementation Committee Minutes June 28, 2010 Page 6 5) Adopt Resolution No. 10-025, "Resolution of the Riverside County Transportation Commission to Allocate State Transit Assistance Funds'; and 6) Forward to the Commission for final action. 11. TRANSPORTATION INVESTMENT GENERATING ECONOMIC RECOVERY II TRANSPORTATION INFRASTRUCTURE FINANCE AND INNOVATION ACT PROGRAM John Standiford presented Agenda Item 11 and 12 concurrently, discussing the following areas: • Update on state and federal legislation; • AB 1955 (De La Torre) Incompatible Offices - Oppose; • H.R. 891 // S. 322 Commuter Benefits - Support; and • Update on the Transportation Investment Generating Economic Recovery II (TIGER II) program. Commissioner Henderson expressed concern for the issues currently going on in Sacramento and heavily emphasized the critical importance of paying close attention, remaining involved, and communicating our views. M/S/C (Craton/Stone) to: 1) Authorize staff to apply for Transportation Investment Generating Economic Recovery II (TIGER II) Transportation Infrastructure Finance and Innovation Act (TIFIA) program for the State Route 91 Corridor Improvement Project (SR-91 CIP); 2) Authorize staff to support regionally significant projects nominated for TIGER II by members of the Southern California Consensus Group (SCCG), as appropriate; and 3) Forward to the Commission for final action. 12. STATE AND FEDERAL LEGISLATIVE UPDATE M/S/C (Craton/Stone) to: 1) Receive and file an update on state and federal Legislation; 2) Approve the following bill positions: a) AB 1955 (De La Tone) - OPPOSE; b) H.R. 891 (McGovern) - SUPPORT; c) S. 322 (Schumer) - SUPPORT; and 31 Forward to the Commission for final action. • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: August 23, 2010 TO: Budget and Implementation Committee FROM: Anne Hallberg, Accounting Supervisor THROUGH: Theresia Trevino, Chief Financial Officer SUBJECT: Quarterly Investment Report STAFF RECOMMENDATION: This item is for the Committee to: 1) Receive and file the Quarterly Investment Report for the quarter ended June 30, 2010; and 2) Forward to the Commission for final action. 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 June 30, 2010, is also attached for review. Attachments: 1) Quarterly Investment Report for the Quarter ended June 30, 2010 2) County of Riverside Investment Report for the Month ended June 30, 2010 Agenda Item 7A 1 • • • I-AIF O.7 I •' o COun[y FOpI/Caan 03. 76 Statement of Compliance Klein re of Investments Bona Projects 2.aa Operating Fund3 81 .8896 Debt Reserve 3.05% d n u F �Trus[ s 1nt Per 1394 Po rtFolie. Investment Type ® Mutual F.In as 2. 72.34. Ms Cpunty POOIJInv¢ sf m Br f 2,51 All of the above investments and any investment decisions made for the quarter ended June 30, 2010 were in full compliance with the Commission's investment policy as adopted on May 12, 2010. The Commission has adequate cash flows for six months of operations. • Signed by. 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L00'SIP squad 8uawad0 leloNgnS V/N 'ON pales loN OIL'ELS'£ (AIV) pund luswlsanul Aousba lanai %WO V/N I+AIV'YVadW/eetl 999.LIC'ala pund luawlsanul peloonsodo *me leallonl 40 V!N V/N ts9B/CV B65'9lb'l ylsoda0 Nuas IeuopeN N!O SONNA ONI1V83d0 (9901) 3Ol'dn 1500 Alian1VW 31tl0 31V0 En-ivn 31Vs d9S 1-1311d/SA00001 3l11VA sled NItl003ZIlV3sN1 13Ndtl6V 3SVH3slld 010131A A112101V49 3SVHOarld dVd NOdNO3 ONI1Vs 040Z'OC aunp :papu3 pouad poday CNIONgod luaw)sanul uolsslwwop uogeuodsuell Aluno3 eplslaAl8 i • • • a-y IQLiIDIT'Y'' � 14IL aikT. ,AtTL 1tN 1, Don Kent eas ier rTat'to.u8afpl,.FY Jofi,Chri tepsen • ; Aiits pt 7r tisurer.`Tax Collector`'- ` �- I;. ovan fpj �Iriuestmgrif7 . 5,809,312,985.89 5,499,942,292.84 5,786,604,370.24 Consumer Confidence (52.9 actual 29-tun vs.63.3 survey) Unemp ayment Rate (9.5%actual vs: 04-Jul 5.8%survey ) Papal(change(-125000 actual vs.-125000 survey) • "June Gloom or Summer Bummer?" June gloom is the Southern California summer weather pattern that results in overcast skies with cool temperatures. It is an offshore marine layer which creates the cloudy, cool effect on land. So far our eco- nomic June gloom is turning out to have the same effect on our markets as well; economic reports have not fared well so far this month and looks as if it will carry over into July and beyond to become our "Summer Bummer". Most of the federal government's stimulus pro- grams have either run their course or are due to run out of steam soon. This is an important factor as the stimulus money had provided for just over half of our economic growth in the 1't quarter with the rest coming from the pri- vate sector. Hit especially hard have been new home sales down almost 33% in June, after homebuyer tax credits had expired. The story is much the same with pending home sales down 30%, greater than the expected 14% decline. Slowing home sales also have had a negative 'a per Caili� Loss ;w effect on consumer spending; con- sumer confidence figures for June came in at 52.9 vs. the 62.5 ex- pected, definitely less than ex- pected. The economic indicators, coupled with the private sector hav- ing to carry all of the economic weight without additional govern- ment intervention along with the specter of millions of workers com- ing off extended unemployment benefits, is likely to continue to place a huge burden on the fledgling U.S. economy. As we had anticipated, there were no changes in interest rates at the June 23rd FOMC meeting and once again, expect that the FED is on hold until first quarter, or later, in 2011. • .ss Don Kent Treasurer -Tax Collector 0 k tart h?VI I'ri o l f i e d rer's Pooled Investment Fund is composed of County, Schools, Special Districts and other Discretionary Depositors 5,800,852,609.80 5,493,676,571.36 5,768,992,066.26 6,265,721.48 17,612,303.98 •tion 4 The Fed maintained the target rate at a range of 0 to 25 bps. The 2 year T-Note was yielding 0.61% (down 15bps) while the 10 year T-Note was yielding 2.97% (down 34bps). For June, the Pool had an increase of 3 bps in the average monthly yield. 3 Mo US Treasury Bill 6 Mo US Treasury Bill 2YrUS Treasury Note 5YrUS Treasury Note 10YrUS Treasury Note 0.18 0,02 0.22 0.00 0.61 (0.15) 1.79 (0.31) 2.97 (0.34) FED Fund Rate 0-.25 0.00 Crude Oil (barrel) Gold Ounce 75.63 1.66 1,242.25 26.05 DJIA 9,774.02 (362.58) S&P500 1,030.71 (58.70) NASDAQ 2,109.24 (147.80) Page 1 • 41,548,005 0.49 3.48 Sector breakdown MMF Negotiable COs 539,108,108 0.08 0.25 Municipal Bonds Bond - U.S. Treasury ' A-1/ P-1 or better. 1.00% Federal Agencyand LSS frc•usury 87.005/1: -. Maturity Distribution 30% 25% 20% 15% 10% 5% 0% 30 days or Less 30 - 90 Days 90 Days - 1 Year 1- 2 Years 2- 3 Years Over 3 Years Jun -Oa Jul -OS Aug-09 Sep-09 Oat-09 Nov-Oe Owe 09 Jan•10 Cash Flows2 Itton 81A 07/2010 09/2010 11/3010 01/2011 735.29 566.39 754.63 615.93 .lu l.dLdv 007.85 799.59 767.61 1,409.36 (372.56) (233.20) (12 98) t . (793.43) 233.20 1,05553 398 00 4 86 22990 03/2011 952.96 850.00 102.96 102.96 13 65 05/2011 760 95 1.200.00 (439.05) 233.52 129.99 nti 1.'i7 ;1vs 3 b8 33" t Treasurer's Institutional Money Market Index (IIMM1) is compiled and reported by the Riverside Count` Treas- urer's Capital Markets division It Is a composite index derived from the average of three multi -billion dollar AAA rated Prime ()rods that invest in a diversified portfo- lio of US. dollar denominated money market instruments including U.S. Treasuries, government agencies. bankers' acceptances, commercial paper, certificates of deposits, repurchase agreements, etc.) por folios that the Treasurer tracks. Further details available upon request. Current funds are ASTITGA, WFJKC(12/09). and MPFXX. e The Pooled Investment Frond cash tow requirements are based upon a 12 month historical cash flow model. 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BACKGROUND INFORMATION: At its December 2007 meeting, the Commission awarded an agreement to MuniServices, LLC (MuniServices) for quarterly sales tax reporting services plus additional fees contingent on additional sales tax revenue generated from the transactions and use tax (sales tax) audit services. The services performed under this agreement pertain to only the Measure A sales taxes. Since the commencement of these services, MuniServices has submitted an audit update, which reported findings that have been generated and submitted to the State Board of Equalization (SBOE) for review and determination of errors in sales tax reporting related to 138 businesses. Through Q1 2010 for January through March 2010, the SBOE has approved corrections for 81 of these accounts for a total sales tax revenue recovery of $888,345. If the SBOE concurs with the error(s) for the remaining claims, the Commission would receive additional revenues; however, the magnitude of the value of the remaining findings was not available. It is important to note that while the recoveries of additional revenues will be tangible, it will not be sufficient to alter the overall trend of sales tax revenues. Additionally, MuniServices has provided the Commission with the quarterly sales tax summary report for the first quarter of calendar 2010 for January through March 2010. Most of the Q1 2010 Measure A sales taxes were received by the Commission in the second quarter of calendar 2010, during April through June 2010 due to a lag in the sales tax calendar. The summary section of the Q1 2010 report is included as an attachment to the staff report and includes an Agenda Item 7B 14 overview of California sales tax receipts, local results, historical cash collections analysis, summary of the top 25 sales tax contributors, historical sales tax amounts, sales tax by business category, economic trends for a significant business category, and results. The following observations were noted in the Q1 2010 report: • Sales tax receipts for Riverside County were slightly higher (0.1 %) compared to the Q1 2009, providing support to the prior quarterly report analysis that the economic decline was slowing. However, similar to the state's experience, much of the growth that occurred came from higher gas prices. Overall growth is expected after the jobs and housing markets stabilize. • Taxable transactions for the Top 25 Tax Contributors in Riverside County, which generated 24% of the sales tax in Q1 2010, increased 5.2% compared to Q1 2009. • Over the last two-year period, the Q1 2010 sales tax levels were at or near the low points for eight of the top ten economic segments; the levels for service stations and apparel stores improved by moving above the low points. • Over the last two-year period, the Q1 2010 sales tax levels for new auto sales and building materials -wholesale showed a significant variance from the high point, indicating that these segments continue to have been significantly affected by the slowdown in the economy. • Department stores, restaurants, and service stations continue to represent the three largest economic segments for Riverside County. • The order of the top tier of the top ten economic segments has been consistent, while the order of the bottom tier group of five segments changed. The sales tax level of these five segments ranged from $5.87 million to $6.37 million, representing no significant differentiation. • When comparing the Q1 2010 benchmark year level to Q1 2008, the decrease over the two-year period is 23.5%. • The construction economic category is below post-2004 levels; general retail and transportation have shown improvements over the last two or three quarters. Staff continues to monitor monthly sales tax receipts and other available economic data to determine the need for any additional adjustment to the revenue projections in FY 2010/11. Staff will utilize the forecast scenarios included with the complete report and recent trends in assessing such projections. Attachment: Sales Tax Analysis for Q1 2010 Agenda Item 7B • • 15 • • District of Riverside Co Rctc Sales Tax Digest Summary 2nd Quarter 2010 Collection of 1st Quarter 2010 Sales CALIFORNIA OVERVIEW For the first time since 2007 the State's quarter -over -same -quarter -prior -year sales tax increased by 0.5% in 15t Quarter 2010. While the news is the first positive sign in several years, the state's economy does not show immediate signs of impending growth as much of the 0.5% increase came from increased gasoline prices over the prior year. Eventual growth will come slowly after the jobs market and housing markets stabilize. Varying instability in regional housing markets and job markets has changed the way state observers view California's diverse economies. The traditional comparison of Northern California to Southern California is changing to a comparison of Western California to Eastern California. Western California includes the North Coast, San Francisco Bay Area, Central Coast and South Coast regions, which grew 1.2% in rt Quarter 2010 compared to 15t Quarter 2009. Eastern California includes the Sacramento Valley, Central Valley and Inland Empire regions, which declined —1.9% in the same period. As for the District of Riverside Co Rctc, sales changed by .1%. LOCAL RESULTS Net Cash Receipts Analysis Local Collections Share of County Pool 0.0% Share of State Pool 0.0% SBE Net Collections Less: Amount Due County 0.0% Less: Cost of Administration Net 1Q2010 Receipts Net 1Q2009 Receipts Actual Percentage Change $28,223,231 0 0 28,223,231 .00 (195,470) 28,027,761 28,003,505 .1% Business Activity Performance Analysis Local Collections Less: Payments for Prior Periods Preliminary 102010 Collections Projected 102010 Late Payments Projected 1Q2010 Final Results Actual 1Q2009 Results Projected Percentage Change $28,223,231 (1,640,822) 26,582,409 1,214,780 27,797,189 27,847,302 -.2% www. Mu n iServi ces. co m (800) 800-8181 16 Page 1 District of Riverside Co Rctc HISTORICAL SALES TAX AMOUNTS The following chart shows the sales tax level for the year ended ft Quarter 2010, the highs, and the lows for each segment over the last two years. (in thousands of$) ■1Q2010 ♦ High a Low $18,000 $16,000 • - $14,000 $12,000 $10,000 • $8,000 $,000 $4,000 $2,000 $0 tio�sS ,10`� ♦ocs .�`�' m". e`S s�' <� �.bJ 't4' N. 149 * ''� o ' cPa0 ooa �,q Qom{ cl 9sfi =�`' Q,o'` ``��� 4 ��a� PQ 4�a$ ti,,4, s ANNUAL SALES TAX BY BUSINESS CATEGORY (in thousands of $) 1 Q2010 4Q2009 3Q2009 202009 1 Q2009 402008 3Q2008 2Q2008 1 Q2008 4Q2007 $O $20,000 540,000 560,000 $80,000 $100,000 $120,000 $140,000-5160,000 General Retail Food Products ED Transportation Const ction® Business ToB Business Miscellaneous www.MuniServices.com (800) 800-8181 Page 3 18 District of Riverside Co Rctc FIVE-YEAR ECONOMIC TREND: Construction S8,000 S7,000 $6,000 S3,00011 $Z,OoO $1,000 SO (in thousands of $) " I ' I I I 111:1111111 I 1 I 1 1 1 I 1 1 I 1 1 1 I II 1 1 I I I I_ I I I I I I i I I I I I I I.. I- I I I I I I I I I I I I- I I I I I - I N M WI Y5 b ,O V ..O. •- •-- 1,-. N CO 00 00 a0 ON O, O, O, O O O O O O O O O O 0O O O O O O O O O O acoN N a a a N No,7a a a a a c c a a 4t QUARTER 2009 FINAL RESULTS Local Net Cash Collections Less: Pool Amounts Less: Prior Quarter Payments Add: Late Payments Local Net Economic Collections after Adjustments Percent Change from 4t Quarter 2008 MUNISERVICES' ON -GOING AUDIT RESULTS This Quarter $97,636 Total to Date $696,382 $29,966,847 ($-365,500) ($2,034,679) $1,313,197 $29,610,865 DOWN BY6.7% www.MuniServices.com (800) 800-8181 Page 4 19 • • • RIVERS/DE COUNTY TRANSPORTATION COMM/SS/ON DATE: August 23, 2010 TO: Budget and Implementation Committee FROM: Greg Moore, Procurement and Assets Manager THROUGH: Theresia Trevino, Chief Financial Officer SUBJECT: Single Signature Authority Report STAFF RECOMMENDATION: This item is for the Committee to: 1) Receive and file the Single Signature Authority Report for the fourth quarter ended June 30, 2010; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: The attached report details all professional services and administrative contracts that have been executed for the fourth quarter ended June 30, 2010, under the Single Signature Authority granted to the Executive Director by the Commission. The unused capacity at June 30, 2010 is $105,788. Attachment: Single Signature Authority Report as of June 30, 2010 Agenda Item 7C 20 • SINGLE SIGNATURE AUTHORITY AS OF JUNE 30, 2010 ORIGINAL CONTRACT CONSULTANT DESCRIPTION OF SERVICES AMOUNT ?AMOUNT AVAILABLE July 1, 2009 i. Next Insight !. ATBT Mobility Verizon , Smith, Watts ',& Company;:.. Preparation of Google Transit Feed Specifications State of California 511 Inland Empire Traveler Program PAID AMOUNT $500,000.00 26,412.00 17,108.00 2,500.00 2,500.00 511 Routing Service 49,000.00 17,379.03 Legal Representation 50,000.00 40,572.70 Bond Counsel Services 44,500.00 fineCegsl PYPISePAP:es.14 Niil,. Engineering Resources o Southern Califomfa, 1pC.- i, Finak,Oektp�:p,nsi0cn.0:0,4 :44*.ppo 0:0,1 gis nirgillgi ig :Bernard J. Aroyo ,f6eaG7n Epojhomics McGladreq & puilen, LLC !, AMOUNT USED IAMOUNT USED { AMOUNT REMAINING through June 30, 2010 eaiu"I�fn4�anrcas � t��' Ai Mplth nw Wallara Thrre<la Trrvinn Prepared by "Npte: shaded aka reares�nlf7n� w co�frSoU lstafJ�tgj Reviewed by { 1€1;L IQ'I 394,212.00 394,212.00 $105,788.00 eau 0.00 REMAINING CONTRACT AMOUNT 9,304.00 0.00 31,620.97 9,427.30 44,500.00 21 • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: August 23, 2010 TO: Budget and Implementation Committee FROM: Theresia Trevino, Chief Financial Officer THROUGH: John Standiford, Executive Director SUBJECT: Proposed Debt Issuance STAFF RECOMMENDATION: This item is for the Commission to: 1) Direct staff to continue efforts to develop a plan to refinance the outstanding commercial paper; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: In March 2005, the Commission launched its $185 million commercial paper program to provide advance funding for projects included in the 2009 Measure A expenditure plan. Commercial paper proceeds have been used to finance Western County and Coachella Valley highway and regional arterial projects, as well as local streets and roads projects in the cities of Blythe and Indio. The Commission refinanced $110,005,000 and $53,716,000 of the outstanding commercial paper notes in connection with the 2008 and 2009 sales tax bond issuances, respectively. In February 2010, the commercial paper program was reduced to $120 million upon the extension of the standby letter of credit that supports the program as a result of various considerations. Currently, the Commission has $83,284,000 in outstanding commercial paper notes and will issue approximately $20 million in additional commercial paper notes in September 2010, to continue financing certain 2009 Measure A highway projects. Accordingly, there is limited capacity in the commercial paper program to commit to funding future 2009 Measure A project expenditures. The FY 2010/11 budget included $185 million in proceeds from additional commercial paper and sales tax revenue bonds issuances primarily to refinance $83.3 million of outstanding commercial paper notes and provide funds for projects. Agenda Item 8 22 Plan of Finance Based on this need for additional financing capacity and additional funds to finance 2009 Measure A project costs, staff has prepared a preliminary plan of finance with the assistance of its financing team to issue approximately $135 to $150 million of sales tax revenue bonds (2010 Bonds) to fund 2009 Measure A projects; refinance all or a portion of the outstanding commercial paper; establish a reserve fund; and pay costs of issuance of the 2010 Bonds. The combination of the commercial paper program maximum debt capacity of $120 million, the outstanding 2009 Bonds, and the proposed 2010 Bonds will not exceed the $500 million debt limitation specified in the 2009 Measure A. The 2010 Bonds are proposed to be issued as fixed rate, long-term sales tax revenue bonds with a 20-year maturity; however, the financing team is considering the possibility of a longer maturity through the expiration of the 2009 Measure A in June 2039. The bonds will be repaid solely from 2009 Measure A sales tax receipts and may be issued as tax-exempt, taxable, or a hybrid structure. The taxable bonds would be issued as part of the Build America Bonds (BABs) program established under the American Recovery and Reinvestment Act of 2009. The policy goal of the BABs program was to provide municipalities a potentially more cost-effective financing alternative than tax-exempt bonds as a result of a 35% issuer subsidy on the bond interest rate. Due to the strength in the taxable debt market and low U.S. Treasury benchmark rates, there is a larger pool of investors and tax-exempt investors seeking to diversify. The current legislation for BABs expires in December 2010, and an extension of the BABs program at a lower subsidy rate is pending in Congress. The financing team is continuously monitoring the BABs market as the relative economic benefit/cost of BABs changes daily. Staff will make a presentation at the meeting regarding the debt structuring options that are being analyzed in order to obtain direction from the Commission regarding the plan of finance. The financing team that has participated in the development of this proposed plan of finance is similar to the team for the 2009 Bond Issuance, and includes the following key members: • Financial Advisor - Fieldman, Rolapp & Associates; • Bond Counsel - Orrick Herrington & Sutcliffe LLP; • Disclosure Counsel - Fulbright & Jaworski LLP; • General Counsel - Best, Best & Krieger LLP; and • Underwriters - Barclays Capital Inc. and E.J. De La Rosa & Co. Inc. Agenda Item 8 • 23 • • Arrangements have been made to present this plan of finance to the rating agencies. Chair Bob Buster, First Vice -Chair Greg Pettis, Executive Director Anne Mayer, Chief Financial Officer Theresia Trevino, Toll Projects Director Michael Blomquist, and certain members of the finance team will participate in these presentations to confirm the strong credit ratings on the Commission's outstanding bonds and to seek ratings on the 2010 Bonds. Meetings with Standard & Poor's, Fitch Ratings, and Moody's Investors Service are scheduled on September 27-28, 2010 in New York. Credit ratings are expected to be received by mid -October. The proposed documents for this transaction will continue to be revised for the final debt structuring and any matters that arise as a result of the rating agency meetings. Final documents will be presented for approval at the October 13, 2010 Commission meeting. Drafts of the documents for the proposed 2010 Bonds are included as attachments to this staff report for preliminary consideration and consist of the following: • Preliminary official statement (draft); • Resolution No. 10-030 (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; • Third supplemental indenture between the Commission and the trustee (draft) regarding the terms and conditions of the issuance of the 2010 Bonds; and • Purchase contract (draft) between the Commission and the underwriters regarding the purchase of the 2010 Bonds. As part of the action that is expected to occur on October 13, 2010, to authorize the issuance of the 2010 Bonds, the Commission will approve the form of the Preliminary Official Statement and authorizing its distribution in connection with the sale of the 2010 Bonds, as well as the preparation of a final Official Statement once the 2010 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 2010 Bonds unless all matters that would be material to an investor in the 2010 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 2010 Bonds unless they have received a substantially final offering document, which discloses all material information that they reasonably believe to be true and correct. Agenda Item 8 24 The Commissioners serving on the Board as the governing body of the issuer of the 2010 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 Budget and Implementation Committee and Commission meetings to respond to the identification of any misstatements or omissions or to such questions. Anticipating Commission approval for this transaction on October 13, 2010, the pricing activities related to the 2010 Bonds are expected to occur through mid -November with a closing date of December 1, 2010 for the issuance of the 2010 Bonds. Financial Information In Fiscal Year Budget: Yes Year: FY 2010/11 Amount: S150,000,000 bond Proceeds; $1,500,000 costs of issuance Source of Funds: Sales tax revenue bonds Budget Adjustment: No GLA No.: 305 31 59102 $150,000,000 Estimated Bond Proceeds 305 31 96103 $ 1,500,000 Estimated Costs of Issuance Fiscal Procedures Approved: \14€4,„ f 4;vitturin Date: 08/12/10 Attachments: 1) Preliminary Official Statement (Draft) 2) Resolution No. 10-030 (Draft) 3) Third Supplemental Indenture (Draft) 4) Purchase Contract (Draft) Agenda Item 8 • 25 ATTACHMENT 1 tion or amendment. fl.= P = C n c o us y s- V C . �t ✓ 8 al = v v. c v � , I)w- o '71 C e - 0 y 0 4 l F 4) 7 c c v= 7 ,Ir- G c C v 0 ✓ , _ r o y r U o a-.a)G y ' _ ll r3 �+ 5'ter ✓ _ L _ r '� s C Fulbright & Jaworski L.L.P. — Draft 08/17/10 PRELIMINARY OFFICIAL STATEMENT DATED , 2010 NEW ISSUE —BOOK -ENTRY ONLY RATINGS• Moody's: " " S&P: "" [DAC Logo] Fitch: " " See "RATINGS" herein 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 2010 Series A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986. In the further opinion of Bond Counsel, interest on the 2010 Series A Bonds is not a specific preference item for purposes of the federal individual and corporate alternative minimum taxes, nor is it included in adjusted current earnings when calculating corporate alternative minimum taxable income. Interest on the 2010 Bonds is exempt from State of California personal income taxes. Bond Counsel observes that interest on the 2010 Series B Bonds is not excluded from gross income for federal income tax purposes. Bond Counsel expresses no opinion regarding any other federal or state tax consequences relating to the ownership or disposition of, or the accrual or receipt of interest on, the 2010 Bonds. See "TAX MATTERS" herein. RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2010 Series $ RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2010 Series A (Tax -Exempt) $ RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2010 Series B (Taxable Build America Bonds) Dated: Date of Delivery Due: June 1, 20 The Sales Tax Revenue Bonds described above (individually referred to as the "2010 Series A Bonds" and the "2010 Series B Bonds," collectively referred to herein as the "2010 Bonds") are being issued by the Riverside County Transportation Commission (the "Commission") pursuant to an Indenture, dated as of June 1, 2008, between the Commission and U.S. Bank National Association, as trustee (the "Trustee"), as supplemented, including as supplemented by a Third Supplemental Indenture, dated as of November 1, 2010, between the Commission and the Trustee (collectively, the `Indenture"). The proceeds of the 2010 Bonds will be applied to (i) pay a portion of the costs of the Project (as defined herein), (ii) retire S principal amount of the Commission's outstanding Commercial Paper Notes, and (iii) pay costs of issuance of the 2010 Bonds. Interest on the 2010 Bonds will be payable on each June 1 and December 1, commencing June 1, 2011. The 2010 Bonds are initially being issued as fully registered bonds without coupons in the denominations of $5,000 and any integral multiple thereof. The 2010 Bonds will be registered in the name of Cede & Co., as holder of the 2010 Bonds and nominee for The Depository Trust Company ("DTC"). Purchasers will not receive physical certificates representing their interest in the 2010 Bonds purchased. The principal or redemption price of and interest on the 2010 Bonds are payable by wire transfer to DTC which, in turn, is obligated to remit such principal, redemption price or interest to DTC Participants for subsequent disbursement to the Beneficial Owners of the 2010 Bonds. Preliminary, subject to change. 556326604 26 The 2010 Bonds will be subject to optional, extraordinary and mandatory sinking fund redemption as described herein. - See "THE 2010 BONDS" herein. The 2010 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 that became effective on July 1, 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. The Commission expects to designate the 2010 Series B Bonds as `Build America Bonds" under the provisions of the American Recovery and Reinvestment Act of 2009 (the "Stimulus Act"), the interest on which is not excluded from gross income for federal income tax purposes but is exempt from State of California personal income taxes. The Commission expects to receive a cash subsidy from the United States Treasury equal to 35% of the interest payable on such 2010 Series B Bonds. The Commission is obligated to make all payments of principal of and interest on the 2010 Series B Bonds from the sources described herein whether or not it receives cash subsidy payments pursuant to the Stimulus Act. 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 THAT OF THE COMMISSION TO THE EXTENT OF THE PLEDGE OF THE REVENUES, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE 2010 BONDS. This cover page contains certain information for general reference only. It is not a summary of the security or terms of this issue. Investors must read the entire Official Statement to obtain information essential to make an informed investment decision with respect to the 2010 Bonds. The 2010 Bonds are offered when, as and if issued and received by the Underwriters, subject to the approval of validity by Orrick, Herrington & Sutcliffe LLP as Bond Counsel to the Commission, and certain other conditions. Certain legal matters will be passed on for the Commission by Fulbright & Jaworski L.L.P., 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, a Professional Corporation, Newport Beach, California. It is anticipated that the 2010 Bonds will be available for delivery through the book -entry facilities of DTC on or • about November , 2010. Barclays Capital De La Rosa & Co. Dated: November , 2010 55632660.4 27 • • • Maturity Schedule` $ 2010 Series A Bonds Due Principal Interest June 1 Amount Rate Yield CUSIPt % Term Bonds due June 1, 20_ Yield: %; CUSIPt: $ 2010 Series B Bonds % Term Bonds due June 1, 20 Yield: %; CUSIPt: Preliminary, subject to change. CUSIP is a registered trademark of the American Bankers Association. CUS1P data on the cover hereof and herein is provided by CUSIP Global Services, managed by Standard & Poor's Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. The Commission, the Financial Advisor and the Underwriters are not responsible for the selection or correctness of the CUSIP numbers set forth herein. 55632660.4 28 No dealer, salesman or any other person has been authorized by the Riverside County. Transportation Commission (the "Commission') or the underwriters of the 2010 Bonds listed on the cover page hereof (the "Underwriters") to give any information or to make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Commission or the Underwriters. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the 2010 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the 2010 Bonds. Neither the delivery of this Official Statement nor the sale of any of the 2010 Bonds implies that the information herein is correct as of any time subsequent to the date hereof. The information and expressions 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 the implication that there has been no change in the matters described herein since the date hereof. This Official Statement is submitted in connection with the sale of securities referred to herein and may not be reproduced or be used, as a whole or in part, for any other purpose. The information set forth herein has been obtained from the Commission and other sources believed to be reliable. The information and expressions of opinions herein are subject to change without notice and neither delivery of the Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Commission since the date hereof. All summaries contained herein of the Indenture (as defined herein) or other documents are made subject to the provisions of such documents and do not purport to be complete statements of any or all of such provisions. All statements made herein are made as of the date of this • document by the Commission except statistical information or other statements where some other date is indicated in the text. 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 responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2010 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL ON THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITERS MAY OFFER AND SELL THE 2010 BONDS TO CERTAIN DEALERS AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE HEREOF AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS. 55632660.4 29 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. 55632660.4 30 e 31 • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BOARD MEMBERS Bob Buster, Chair Greg Pettis, 1st Vice Chair John J. Benoit, 2nd Vice Chair Marion Ashley Bob Magee Jeff Stone Wallace Edgerton John F. Tavaglione Bonnie Flickinger Bob Botts Rick Gibbs Roger Berg Malcolm Miller Joseph DeConinck Richard Kelly Ray Quinto Steve Pougnet Mary Craton Daryl Busch Eduardo Garcia Ron Meepos Karen Spiegel Steve Adams Scott Matas Steve Di Memmo Robin Lowe Ron Roberts Patrick J. Mullany Scott Farnam Glenn Miller Ray Wolfe Terry Henderson 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 Disclosure Counsel Orrick, Herrington & Sutcliffe LLP San Francisco, California 55632660.4 Fulbright & Jaworski L.L.P. Los Angeles, California Trustee U.S. Bank National Association Los Angeles, California 32 • • 33 • TABLE OF CONTENTS Page INTRODUCTION 1 General 1 Authority for Issuance 1 Purpose and Application of Proceeds 2 The 2010 Bonds 2 Designation of 2010 Series B Bonds as "Build America Bonds" 2 Security for the 2010 Bonds 2 No Reserve Fund for the 2010 Bonds 3 Continuing Disclosure 3 References 3 THE 2010 BONDS 3 General 3 Designation of 2010 Series B Bonds as `Build America Bonds" 4 Redemption of 2010 Series A Bonds 4 Redemption of 2010 Series B Bonds 5 Selection of 2010 Bonds for Mandatory Sinking Account Redemption 8 Purchase In Lieu of Redemption 9 PLAN OF FINANCE 9 ESTIMATED SOURCES AND USES OF PROCEEDS 9 DEBT SERVICE SCHEDULE 9 SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS 10 Limited Obligation 10 Pledge of Revenues 10 Revenue Fund; Allocation of Revenues 11 Additional Bonds and Parity Obligations 14 OTHER SALES TAX OBLIGATIONS 16 Existing Swap Agreements 16 Subordinate Obligations 17 Limitation on Outstanding Sales Tax Obligations 18 THE SALES TAX 18 General 18 Collection of Sales Tax Revenues 19 Historical Sales Tax Receipts 20 RIVERSIDE COUNTY TRANSPORTATION COMMISSION 21 General 21 The Transportation Expenditure Plan 22 Toll Road Bonds 23 55632660.4 34 TABLE OF CONTENTS (continued) Page Commissioners 23 Executive Staff 23 RISK FACTORS 24 Economic Recession and Financial Crisis 24 Investments 24 No Acceleration Provision 24 The Sales Tax 25 Proposition 218 25 Further Initiatives 25 Loss of Tax Exemption 25 Build America Bonds 25 FINANCIAL STATEMENTS 26 LITIGATION 26 TAX MA 1'1'ERS 26 Tax Matters Relating to the 2010 Series A Bonds 27 Tax Matters Relating to the 2010 Series B Bonds 29 CERTAIN LEGAL MATTERS 32 RATINGS 32 UNDERWRITING 33 FINANCIAL ADVISOR 33 CONTINUING DISCLOSURE 33 MISCELLANEOUS 34 APPENDIX A - APPENDIX B - APPENDIX C - APPENDIX D - APPENDIX E - APPENDIX F - 55632660.4 - Commission Audited Financial Statements For Fiscal Year Ended June 30, 2010 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 Agreement F-1 11 35 • • • OFFICIAL STATEMENT RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2010 Series S RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2010 Series A (Tax -Exempt) S RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2010 Series B (Taxable Build America Bonds) 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), 2010 Series A (Tax-Exempt)(the "2010 Series A Bonds") and $ * principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2010 Series B (Taxable Build America Bonds) (the "2010 Series B Bonds" and, together with the 2010 Series A Bonds, the "2010 Bonds"). As used herein, the tern "Bonds" means any Bonds, including the 2010 Bonds, issued pursuant to the Indenture (as defined below). Authority for Issuance The 2010 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 of the County of Riverside (the "County") 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 (the "2008 Indenture"), as supplemented by a First Supplemental Indenture, dated as of June 1, 2008 (the "First Supplemental Indenture"), a Second Supplemental Indenture, dated as of October 1, 2009 (the "Second Supplemental Indenture") and a Third Supplemental Indenture, dated as of November 1, 2010 (the ""Third Supplemental Indenture" and, together with the 2008 Indenture, the First Supplemental Indenture and the Second Supplemental Indenture, the "Indenture"), each between the Commission and U.S. Bank National Association, as trustee (the Preliminary, subject to change. 55632660.4 j 36 "Trustee"). 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 in the Indenture. Purpose and Application of Proceeds The proceeds of the 2010 Bonds will be applied to (i) pay a portion of the costs of the Project (as defined herein), (ii) retire $ principal amount of the Commission's outstanding Commercial Paper Notes, and (iii) pay costs of issuance of the 2010 Bonds. See "PLAN OF FINANCE" and "ESTIMATED SOURCES AND USES OF PROCEEDS" herein. The 2010 Bonds Interest on the 2010 Bonds will be payable on each June 1 and December 1, commencing June 1, 2011. The 2010 Bonds are initially being issued as fully registered bonds without coupons in the denominations of $5,000 and any integral multiple thereof. The 2010 Bonds will be registered in the name of Cede & Co., as holder of the 2010 Bonds and nominee for The Depository Trust Company ("DTC"). Purchasers will not receive physical certificates representing their interest in the 2010 Bonds purchased. The 2010 Bonds will be subject to optional, extraordinary and mandatory sinking fund redemption. See "THE 2010 BONDS — Redemption of 2010 Series A Bonds" and "— Redemption of 2010 Series B Bonds" herein. Designation of 2010 Series B Bonds as "Build America Bonds" The Commission expects to designate the 2010 Series B Bonds as "Build America Bonds" under the provisions of the American Recovery and Reinvestment Act of 2009 (the "Stimulus Act"), the interest on which is not excluded from gross income for federal income tax purposes but is exempt from State of California personal income taxes. The Commission expects to receive a cash subsidy from the United States Treasury ("Federal Subsidy") equal to 35% of the interest payable on the 2010 Series B Bonds. The Commission will covenant for the benefit of the Holders of the 2010 Series B Bonds to comply with any conditions to receive the cash subsidy or to maintain the Commission's right to retain or receive future subsidy payments in respect of the 2010 Series B Bonds. The Commission is obligated to make all payments of principal of and interest on the 2010 Series B Bonds from Revenues (as defined below) whether or not it receives cash subsidy payments pursuant to the Stimulus Act. Security for the 2010 Bonds The 2010 Bonds are limited obligations of the Commission payable from and Secured by certain revenues (the "Revenues") pledged under the Indenture, including a pledge of revenues (the "Sales Tax Revenues") derived from a '/z-cent sales tax that became effective on July 1, 2009 (the "Sales Tax"), imposed in the County 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 55632660.4 2 • • • 37 • Tax was approved by more than a two-thirds vote of the electorate of the County 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 2010 BONDS. No Reserve Fund for the 2010 Bonds The Commission is not funding a reserve for the 2010 Bonds. The Commission has funded a reserve for its $185,000,000 Sales Tax Revenue Bonds (Limited Tax Bonds) 2009 Series A, 2009 Series B and 2009 Series C (collectively, the "2009 Bonds"). Such reserve is not available to pay debt service on the 2010 Bonds. Continuing Disclosure The Commission will covenant for the benefit of the beneficial owners of the 2010 Bonds to provide certain financial information and operating data relating to the Commission and notices of the occurrence of certain enumerated events, if material, to the Municipal Securities Rulemaking Board (the "MSRB") pursuant to a Continuing Disclosure Agreement (the "Continuing Disclosure Agreement"). These covenants are being made in order to assist the Underwriters of the 2010 Bonds in complying with Rule 15c2-12 (the "Rule") of the U.S. Securities and Exchange Commission ("SEC") promulgated under the Securities Exchange Act of 1934, as amended. See "APPENDIX F — PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT." The Commission has not, within the past five years, failed to comply in all material respects with any previous continuing disclosure undertaking pursuant to the Rule to provide annual reports or notices of material events. References The descriptions and summaries of the Indenture and various other 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. THE 2010 BONDS General Interest on the 2010 Bonds will be payable on each June 1 and December I, commencing June 1, 2011. DTC will act as the initial securities depository for the 2010 Bonds, which will be issued initially pursuant to a book -entry only system. See "APPENDIX D — BOOK -ENTRY SYSTEM." Under the Indenture, the Commission may appoint a successor securities depository to DTC for the 2010 Bonds. The information under this caption, "THE 2010 BONDS," is 55632660.4 3 38 subject in its entirety to the provisions described in "APPENDIX D — BOOK -ENTRY SYSTEM" while the 2010 Bonds are in the book -entry only system. The 2010 Bonds will be subject to optional and mandatory sinking fund redemption as. described herein. See "THE 2010 BONDS — Redemption of 2010 Series A Bonds" and "— Redemption of 2010 Series B Bonds" herein. Designation of 2010 Series B Bonds as "Build America Bonds" The Commission is issuing the 2010 Series B Bonds as taxable bonds, and expects to designate the 2010 Series B Bonds as `Build America Bonds" under section 54AA(d) of the Internal Revenue Code of 1986 (the "Code") and as "qualified Build America Bonds" (Direct Subsidy) under section 54AA(g) of the Code. In connection with the issuance of the 2010 Series B Bonds, and as permitted by the Stimulus Act, the Commission will elect (which election is irrevocable pursuant to the provisions of the Stimulus Act) for the Trustee to receive directly from the United States Department of the Treasury on or about each interest payment date for the 2010 Series B Bonds a Federal Subsidy payment equal to 35% of the taxable interest it pays on the 2010 Series B Bonds to the Holders thereof. The Federal Subsidy payment does not constitute a full faith and credit guarantee of the United States Government, but is required to be paid by the United States Treasury under the Stimulus Act. If the Commission fails to comply with the conditions to receiving the Federal Subsidy payments throughout the term of the 2010 Series B Bonds, it may no longer receive the Federal Subsidy payments and could be subject to a claim for the return of previously received Federal Subsidy payments. The Commission will covenant for the benefit of the Holders of the 2010 Series B Bonds to comply with any conditions to receive the Federal Subsidy payments or to maintain the Commission's right to retain or receive future Federal Subsidy payments in respect of the 2010 Series B Bonds. The Commission is obligated to make all payments of principal of and interest on the 2010 Series B Bonds from Revenues whether or not it receives Federal Subsidy payments pursuant to the Stimulus Act. Redemption of 2010 Series A Bonds' Optional Redemption. The 2010 Series A Bonds maturing on or before June 1, 20 shall not be subject to redemption prior to their respective stated maturities. The 2010 Series A Bonds maturing on or after June 1, 20 shall be subject to redemption prior to their respective stated maturities, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after June 1, 20_ at the principal amount of 2010 Series A Bonds called for redemption plus accrued interest to the date fixed for redemption, without premium. Selection of 2010 Series A Bonds for Optional Redemption. The Commission shall designate which maturities of any 2010 Series A Bonds are to be called for optional redemption pursuant to the Indenture. If less than all 2010 Series A Bonds maturing by their terms on any one date are to be redeemed at any one time, the Trustee shall select the 2010 Series A Bonds of such maturity date to be redeemed in any manner that it deems appropriate and fair and shall ' Preliminary, subject to change. 55632660.4 4 39 • • • • promptly notify the Commission in writing of the numbers of the 2010 Series A Bonds so selected for redemption. For purposes of such selection, 2010 Series A Bonds shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. "Authorized Denomination" means, with respect to the 2010 Bonds, . $5,000 and any integral multiple thereof. In the event 2010 Series A Term Bonds are designated for redemption, the Commission may designate the Mandatory Sinking Account Payments, or portions thereof, that are to be reduced as allocated to such redemption. Sufficient Funds Required for Optional Redemption. Any optional redemption of 2010 Series A Bonds and notice thereof shall be conditional and rescinded and cancelled 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 2010 Series A Bonds called for redemption. Mandatory Redemption of the 2010 Series A Bonds from Mandatory Sinking Account Payments. The 2010 Series A Bonds maturing on June 1, 20_ shall also be subject to mandatory redemption prior to their respective stated maturities, in part, by lot, from Mandatory Sinking Account Payments on each June 1 a Mandatory Sinking Account Payment is due, in the principal amount equal to the Mandatory Sinking Account Payment due on such date and at a redemption price equal to 100% of the principal amount thereof, plus accrued but unpaid interest to the redemption date, without premium. Redemption Date Mandatory Sinking Redemption Date Mandatory Sinking (June 1) Account Payment (June 1) Account Payment t Final Maturity. Redemption of 2010 Series B Bonds* Optional Redemption. The 2010 Series B Bonds of each maturity will be subject to redemption prior to their respective stated maturity dates, at the option of the Commission, from any source of available funds, as a whole or in part by lot in authorized denominations of $5,000 and any integral multiple thereof, on any date at a redemption price equal to 100% of the principal amount of 2010 Series B Bonds to be redeemed plus the Make -Whole Premium, together with accrued interest, if any, to the date fixed for redemption. "Make -Whole Premium" means, with respect to any 2010 Series B Bond to be redeemed, an amount calculated by an Independent Banking Institution equal to the positive difference, if any, between: Preliminary, subject to change. 55632660.4 5 40 (I) redemption of The sum of the present values, calculated as of the date fixed for (A) Each interest payment that, but for the redemption, would have. been payable on the 2010.Series B Bond or portion thereof being redeemed on each regularly scheduled interest payment date occurring after the date fixed for redemption through the maturity date of such 2010 Series B Bond (excluding any accrued interest for the period prior to the date fixed for redemption); provided, that if the date fixed for redemption is not a regularly scheduled interest payment date with respect to such 2010 Series B Bond, the amount of the next regularly scheduled interest payment will be reduced by the amount of interest accrued on such 2010 Series B Bond to the date fixed for redemption; plus (B) The principal amount that, but for such redemption, would have been payable on the maturity date of the 2010 Series B Bond or portion thereof being redeemed; minus (2) The principal amount of the 2010 Series B Bond or portion thereof being redeemed. The present values of the interest and principal payments referred to in (1) above will be determined by discounting the amount of each such interest and principal payment from the date that each such payment would have been payable but for the redemption to the date fixed for redemption on a semiannual basis (assuming a 360-day year consisting of twelve (12) 30-day months) at a discount rate equal to the Comparable Treasury Yield, plus ( (U) basis points. "Comparable Treasury Yield" means the yield which represents the weekly average yield to maturity for the preceding week appearing in the most recently published statistical release designated "H.15(519) Selected Interest Rates" under the heading "Treasury Constant Maturities," or any successor publication selected by the Independent Banking Institution that is published weekly by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded United States Treasury securities adjusted to constant maturity, for the maturity corresponding to the remaining term to maturity of the 2010 Series B Bond being redeemed. The Comparable Treasury Yield will be determined as of the third business day immediately preceding the applicable date fixed for redemption. If the H.15(519) statistical release sets forth a weekly average yield for United States Treasury securities that have a constant maturity that is the same as the remaining term to maturity of the 2010 Series B Bond being redeemed, then the Comparable Treasury Yield will be equal to such weekly average yield. In all other cases, the Comparable Treasury Yield will be calculated by interpolation on a straight-line basis, between the weekly average yields on the United States Treasury, securities that have a constant maturity (i) closest to and greater than the remaining term to maturity of the 2010 Series B Bond being redeemed; and (ii) closest to and less than the remaining term to maturity of the 2010 Series B Bond being redeemed. Any weekly average yields calculated by interpolation will be rounded to the nearest 1/100th of 1%, with any figure of 1/200th of 1% or above being rounded upward. 55632660.4 6 • • 41 • If, and only if, weekly average yields for United States Treasury securities for the preceding week are not available in the H.15(519) statistical release or any successor publication, then the Comparable Treasury Yield will be the rate of interest per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a . percentage of its principal amount) at the Comparable Treasury Price as of the date fixed for redemption. "Comparable Treasury Issue" means the United States Treasury security selected by the Independent Banking Institution as having a maturity comparable to the remaining term to maturity of the 2010 Series B Bond being redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term to maturity of the 2010 Series B Bond being redeemed. "Independent Banking Institution" means an investment banking institution of national standing which is a primary United States government securities dealer in the City of New York designated by the Commission (which may be the underwriters of the 2010 Series B Bonds). If the Commission fails to appoint an Independent Banking Institution at least 45 days prior to the date fixed for redemption, or if the Independent Banking Institution appointed by the Commission is unwilling or unable to determine the Comparable Treasury Yield, the Comparable Treasury Yield will be determined by an Independent Banking Institution designated by the Trustee, as Paying Agent. "Comparable Treasury Price" means, with respect to any date on which a 2010 Series B Bond or portion thereof is being redeemed, either (a) the average of five Reference Treasury Dealer quotations for the date fixed for redemption, after excluding the highest and lowest such quotations, and (b) if the Independent Banking Institution is unable to obtain five such quotations, the average of the quotations that are obtained. The quotations will be the average, as determined by the Independent Banking Institution, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of principal amount) quoted in writing to the Independent Banking Institution, at 5:00 p.m. New York City time on the third business day preceding the date fixed for redemption. "Reference Treasury Dealer" means a primary United States Government securities dealer in the United States appointed by the Commission and reasonably acceptable to the Independent Banking Institution (which may be one of the underwriters of the 2010 Series B Bonds). if the Commission fails to select the Reference Treasury Dealers within a reasonable period of time, the Trustee will select the Reference Treasury Dealers in consultation with the Commission. Extraordinary Optional Redemption of 2010 Series B Bonds. [to come] Selection of 2010 Series B Bonds for Optional Redemption. The Commission shall designate which maturities of any 2010 Series B Bonds are to be called for optional redemption pursuant to the Indenture. If less than all 2010 Series B Bonds maturing by their terms on any one date are to be redeemed at any one time, the Trustee shall select the 2010 Series B Bonds of such maturity date to be redeemed in any manner that it deems appropriate and fair and shall 55632660.4 7 42 promptly notify the Commission in writing of the numbers of the 2010 Series B Bonds so selected for redemption. For purposes of such selection, 2010 Series B Bonds shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. In the event 2010 Series B Term Bonds are designated for redemption, the Commission may designate the Mandatory Sinking Account Payments, or portions thereof, that are to be reduced as allocated to such redemption. Sufficient Funds Required for Optional Redemption. Any optional redemption of 2010 Series B Bonds and notice thereof may be conditional and rescinded and cancelled pursuant to the provisions of the Indenture 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 2010 Series B Bonds called for redemption. Mandatory Redemption of the 2010 Series B Bonds from Mandatory Sinking Account Payments. The 2010 Series B Bonds maturing on June 1, 20 , shall also be subject to mandatory redemption prior to their respective stated maturities, in part, by lot, from Mandatory Sinking Account Payments on each June 1 a Mandatory Sinking Account Payment is due, in the principal amount equal to the Mandatory Sinking Account Payment due on such date and at a redemption price equal to 100% of the principal amount thereof, plus accrued but unpaid interest to the redemption date, without premium. [add language for pro rata call if allowed by future DTC procedures?] Redemption Date Mandatory Sinking Redemption Date Mandatory Sinking (June 1) Account Payment t Final Maturity. (June 1) Account Payment Selection of 2010 Bonds for Mandatory Sinking Account Redemption If less than all 2010 Bonds of any Series 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 2010 Bonds of such maturity date to be redeemed by lot in any manner that it deems appropriate, and the Trustee shall promptly notify the Commission in writing of the numbers of the 2010 Bonds so selected for redemption. For purposes of such selection, 2010 Bonds of each Series shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. 55632660.4 • 43 • • • Purchase In Lieu of Redemption The Commission reserves the right at all times to purchase any of its 2010 Bonds on the open market. In lieu of mandatory redemption, the Commission may surrender to the Trustee for cancellation 2010 Bonds purchased on the open market, and such 2010 Bonds shall be cancelled by the Trustee. If any 2010 Bonds are so cancelled, the Commission may designate the Mandatory Sinking Account Payments or portions thereof within such 2010 Bonds so purchased that are to be reduced as a result of such cancellation. [ALLOWED FOR BABS1 PLAN OF FINANCE The proceeds of the 2010 Bonds will be applied to (i) to pay a portion of the costs of the Project, (ii) retire $ principal amount of the Commission's outstanding Commercial Paper Notes, and (iii) pay costs of issuance of the 2010 Bonds. "Project" means projects authorized to be financed with the proceeds of the 2010 Bonds on the Riverside County Transportation Commission Transportation Expenditure Plan. See "RIVERSIDE COUNTY TRANSPORTATION COMMISSION — The Transportation Expenditure Plan" herein. ESTIMATED SOURCES AND USES OF PROCEEDS The proceeds from the sale of the 2010 Bonds and certain other amounts are expected to be applied as follows: Sources of Funds: Principal Amount Original Issue Discount/Premium Total Sources: Uses of Funds: Deposit to 2010 Bonds Project Fund Transfer to Commercial Paper Notes Trustee Deposit to 2010 Costs of Issuance Fund(l) Total Uses: 2010 Series A 2010 Series B Bonds Bonds P1 Includes Underwriters' discount, Rating Agency fees, Trustee fees, printing costs, fees and expenses of Bond Counsel, Disclosure Counsel, the Financial Advisor, the Auditor, and other miscellaneous costs of issuance. DEBT SERVICE SCHEDULE Fiscal 2010 Series A Bonds 2010 Series B Bonds Year Annual Ending 2009 Federal Debt June 30 Bonds Principal Interest Principal Interest Subsidy Service 556326604 9 44 SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS Limited Obligation THE 2010 BONDS ARE LIMITED TAX OBLIGATIONS OF THE COMMISSION PAYABLE SOLELY FROM REVENUES AS DEFINED AND PROVIDED IN THE INDENTURE AND CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE. THE COMMISSION IS NOT OBLIGATED TO PAY THE 2010 BONDS EXCEPT FROM REVENUES AND THOSE CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE. THE 2010 BONDS DO NOT CONSTITUTE A DEBT OR LIABILITY OF 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 IN THE INDENTURE) OF THE COMMISSION IS NOT PLEDGED, FOR THE PAYMENT OF THE 2010 BONDS, THEIR INTEREST, OR ANY PREMIUM DUE UPON REDEMPTION OF THE 2010 BONDS. THE 2010 BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE 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. Pledge of Revenues All Revenues, consisting of Sales Tax Revenues and Swap Revenues, are irrevocably pledged by the Commission to secure the punctual payment of the principal of, premium, if any, and interest on the 2010 Bonds and any additional Series of Bonds issued under the Indenture and all amounts owing on any Parity Obligations in accordance with their terms. The 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 Revenues constitutes a first lien to secure the Bonds and Parity Obligations. The pledge of Revenues shall be irrevocable until all Bonds issued under the Indenture, including the 2010 Bonds, and all Parity Obligations are no longer Outstanding. 55632660.4 10 • • • 45 i The 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 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. For a discussion of Swap Revenues, see "OTHER SALES TAX OBLIGATIONS — Existing Swap Agreements" 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 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 Sales Tax 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. 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, including certain regularly scheduled payments pursuant to Interest Rate Swap Agreements that are payable on a parity with the 2010 Bonds, 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 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 has not 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 will 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 55632660.4 Il 46 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 Outstanding Bonds issued under the Indenture, 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) will 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, and 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 and 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; 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 are required to be set aside toward such principal to be so refunded or paid. All of the aforesaid deposits made in connection with future Mandatory Sinking Account Payments are to be made without priority of any payment into any one such Sinking Account over any other such payment. If the Sales Tax Revenues are not 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 will be applied on a Proportionate Basis and in such proportion as said Serial Bonds and said Tenn Bonds shall bear to each other, after first deducting for such purposes from said Term Bonds any of said Term Bonds required to be redeemed 55632660.4 12 • • 47 annually which will have been redeemed or purchased during the preceding 12-month period and any of said Tenn Bonds required to be redeemed semiannually which will 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 will 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 are to 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 must be made into the Principal Fund as long as such fund holds (i) moneys sufficient to pay the Bond Obligations of all then Outstanding Serial Bonds 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 is required to 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 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) are required to be transferred to the Commission. 3. Bond Reserve Fund. The Indenture also requires the Trustee to make deposits to the Bond Reserve Fund (including the 2010 Bonds Reserve Fund) as set forth below. See "— 2010 Bonds 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 described in (1), (2) and (3) above have been made shall be transferred to the Notes Trustee in connection with the Commission's Commercial Paper Notes (Limited Tax Bonds), Series A and Series B (the "Notes"). After the Notes Trustee has made the required deposit of Revenues under the Subordinate Indenture, the Notes 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, 55632660.4 13 48 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. 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 the 2010 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 on or prior to such payment date. The Commission has covenanted and agreed 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. See "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Allocation of Sales Tax Revenues" 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 limitations of the Act and 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 2010 Bonds, but only upon compliance by the Commission with the provisions of the Indenture, including the conditions that: (1) No Event of Default shall have occurred and then be continuing. (2) The aggregate principal amount of Bonds issued pursuant to the Indenture may not exceed any limitation imposed by the Act. 55632660.4 14 • • • 49 • (3) 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 an 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 may be made in the form of a Reserve Facility. (4) The Commission shall place on file with the Trustee a Certificate of the Commission certifying that the amount of 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 (4) "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, 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. 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 (4) 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 Existing Swaps or 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). 55632660.4 15 50 The Commission's obligation to make regularly scheduled payments under the Existing Swap Agreements (as defined below) constitutes a Parity Obligation under the Indenture. OTHER SALES TAX OBLIGATIONS Existing Swap Agreements The Commission has entered into the following interest rate swap agreements (collectively, the "Existing Swap Agreements"), in a combined notional amount of $185,000,000 (subject to amortization), which Existing Swap Agreements have an effective .date of October 1, 2009 and expire on June 1, 2029, and are designed to cause the total interest obligation with respect to the 2010 Bonds to accrue at a synthetic fixed rate: (i) An 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 (the "BofA Swap Agreement"). BofA's current long-term unsubordinated ratings are "A+" by Standard & Poor's Rating Service ("S&P"), "Aa3" by Moody's Investors Service ("Moody's") and "A+" by Fitch Ratings ("Fitch"). Such ratings reflect only the views of such organizations and any desired explanation of the significance of such ratings should be obtained from the rating agency furnishing the same. (ii) An ISDA Master Agreement, dated as of September 24, 2008, between Deutsche Bank AG, New York Branch ("DBAG") and the Commission, as supplemented by the Schedule, dated as of September 24, 2008 and the confirmation of a transaction entered into on September 24, 2008 between DBAG and the Commission (the "DBAG Swap Agreement"). DBAG's current long-term unsubordinated ratings are "A+" by S&P, "Aal" by Moody's and "AA" by Fitch. Such ratings reflect only the views of such organizations and any desired explanation of the significance of such ratings should be obtained from the rating agency furnishing the same. The Commission's obligation to make regularly scheduled payments to the swap counterparties under the Existing 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 2010 Bonds, and therefore such obligation constitutes a Parity Obligation under the Indenture. The Commission's obligation to make any early termination payment under the Existing Swap Agreements is secured by a pledge of Sales Tax Revenues subordinate to the pledge of Sales Tax Revenues in favor of the 2010 Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations. The BofA Swap Agreement is in the initial notional amount of $100,000,000, subject to amortization as set forth therein. Pursuant to this agreement, BofA has agreed to pay the Commission a floating rate equal to 67% of USDLIBOR (One Month) and the Commission has agreed to pay BofA a fixed rate equal to 3.679%. The BofA Swap Agreement is subject to early termination in the event that the unenhanced ratings on the 2010 Bonds issued by Moody's 55632660.4 16 • 51 Investors Service ("Moody's") and Standard & Poor's Rating Service ("S&P") fall below investment grade or are withdrawn or suspended; a reduction in the long-term unsubordinated ratings of BofA below investment grade can also result in an early termination of the BofA Swap Agreement. The Commission has the option of terminating the BofA Swap Agreement upon two Business Days' notice provided it has sufficient funds to pay any early termination amount. The DBAG Swap Agreement is in the initial notional amount of $85,000,000, subject to amortization as set forth therein, which corresponds to the amortization of the 2010 Series A Bonds. Pursuant to this agreement, DBAG has agreed to pay the Commission a floating rate equal to 67% of USDLIBOR (One Month) and the Commission has agreed to pay DBAG a fixed rate equal to 3.206%. The DBAG Swap Agreement is subject to early termination in the event that the unenhanced ratings on the 2010 Bonds issued by Moody's and S&P fall below investment grade or are withdrawn or suspended; a reduction in the unenhanced ratings of the long-term unsecured unsubordinated debt of DBAG below investment grade can also result in an early termination of the DBAG Swap Agreement. The Commission has the option of terminating the DBAG Swap Agreement upon two Business Days' notice provided it has sufficient funds to pay any early termination amount. In the event of an early termination of one or both of the Existing Swap Agreements, a termination payment will be payable by either the Commission or the swap counterparty depending on the then current market value of the Existing Swap Agreement subject to termination. Any such termination payment payable by the Commission could be substantial. As of November 1, 2010, the value of the termination payment, if each of the Existing Swap Agreements were terminated based on the mid -market swap curve and assuming functioning markets was estimated by the Commission's financial advisor to be approximately $ million payable by the Commission. Any early termination payments are payable from Sales Tax Revenues on a basis subordinate to the Bonds (including the 2010 Bonds). 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 Commission's Sales Tax Revenue Commercial Paper Notes (Limited Tax Bonds) (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 Existing Swap Agreements is secured by a pledge of the Sales Tax Revenues subordinate to the pledge in favor of the 2010 Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations. As of November 1, 2010, there was $ principal amount of Notes outstanding of an authorized $120,000,000 program. The program was initially established at a maximum of $185,000,000 in principal amount and has been reduced to a maximum of $120,000,000 in principal amount. 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. ("BofA"), pursuant to a Reimbursement Agreement, dated as of March 1, 2005, as amended ("Reimbursement Agreement"), by and between the Commission and BofA. The stated amount of the letter of 55632660.4 17 52 credit may not exceed $121,500,000. The letter of credit expires March 29, 2012, unless terminated earlier as provided in the Reimbursement Agreement. The Commission's obligation to reimburse BofA 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 2010 Bonds and on parity with the obligation to pay Note holders. If the Commission is unable to extend or replace such letter of credit by its expiration date, the Commission may refund any outstanding Notes and any related reimbursement obligations due to BofA with the proceeds of an additional Series of Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS — Additional Bonds and Parity Obligations" herein. Limitation on Outstanding Sales Tax Obligations Under the Act, the Commission has the power to sell or issue, from time to time, on or before the collection of taxes, bonds or other evidence of indebtedness, including but not limited to capital appreciation bonds, in the aggregate principal amount at any one time outstanding of not to exceed $500 million. Pursuant to Resolution No. 2010-255, the County has approved a ballot measure for a special election to be conducted on November 2, 2010 that if approved would increase such not to exceed amount from $500 million to $975 million. See "SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS — Additional Bonds and Parity Obligations" herein. 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. The Sales Tax commenced on July 1, 2009 and will be collected for a thirty-year period ending on June 30, 2039. 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. See "RIVERSIDE COUNTY TRANSPORTATION COMMISSION — The Transportation Expenditure Plan" herein. The one-half of one percent sales tax imposed in the County for transportation purposes and administered by the Commission, is in addition to an eight and one -quarter percent sales tax levied statewide by the State of California (the "State"). 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 55632660.4 18 • • • 53 • • 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. 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 eh%) 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 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 ceased to be effective on June 30, 2009. The Commission has previously issued indebtedness secured by the 1988 Sales Tax, and all outstanding principal and interest with respect to such indebtedness has been fully paid on or before June 1, 2009. 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" (Le., 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. Such changes or amendments could have either an adverse or beneficial effect on 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 "RISK FACTORS — Proposition 218" herein. Collection of Sales Tax Revenues Collection of the Sales Tax is administered by the Board of Equalization. The Commission and the 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 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 55632660.4 19 54 Agent"). See "SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS" herein. The remaining unapplied Sales Tax Revenues, if any, are transferred to the Commission for use for any purpose contemplated by the Ordinance. The fee that the Board of Equalization is authorized to charge for collection of the Sales Tax is determined by State legislation. The. Board of Equalization fee for collection of the Sales Tax for fiscal year 2010-11 is estimated at Historical Sales Tax Receipts The following table sets forth net sales tax receipts for the Fiscal Years indicated below. Net sales tax receipts through a portion of 2009 were received under the Prior Ordinance and were levied by the Commission at the same rate and on the same types of transactions as the sales tax constituting the Sales Tax Revenues. RIVERSIDE COUNTY TRANSPORTATION COMMISSION HISTORICAL SALES TAX RECEIPTS Fiscal Year Net Sales % Change Ended June 30 Tax Receipts") (2) From Prior Fiscal Year 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 2008 146,083,683 (7.01) 2009 124,691,932 (14.64) 2010 111,809,759(3) (10.33) (1) Net of Board of Equalization administrative fee. (2) Amounts shown for the Fiscal Years ended June 30, 2001 through 2008, collected under the Prior Ordinance, consist of amounts that the Commission actually received from the Board of Equalization, calculated on a cash basis. The month of receipt reflected the estimated amount for sales tax transactions that occurred approximately two months prior. At the end of each quarter, an adjustment (i.e., increase or decrease) was made to those estimates and included with the quarter -end disbursement. (3) Amounts shown for the Fiscal Year ended June 30, 2009 through 2010 were calculated with respect to Measure A Sales Tax receipts on a modified accrual basis and measured from the date that a relevant sales transaction took place, and not from the date of actual receipt from the Board of Equalization. Source: The Commission. Annual Measure A Sales Tax receipts received for the Fiscal Year ended June 30, 2010 are $111,809,759, representing a decline of (10.33%) from the Measure A Sales Tax receipts received in the Fiscal year ended June 30, 2009. Year over year quarterly declines/increases for the Fiscal Year ended June 30, 2010 were: (20.66%) first quarter, (16.23%) second quarter, (3.81%) third quarter and 2.46% fourth quarter. Measure A Sales Tax receipts received for the [first] month of the Fiscal Year ending June 30, 2011 are [$7,821,300], representing a decline of 55632660.4 20 • 55 • [(6.44%)] from those received in the [first] month of the Fiscal Year ended June 30, 2010. [UPDATE WHEN AVAILABLE] See "APPENDIX B — COUNTY DEMOGRAPHIC AND ECONOMIC INFORMATION" and "RISK FACTORS" herein. The Commission is unable to predict if and when Sales Tax Receipts will 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 — COUNTY DEMOGRAPHIC AND ECONOMIC INFORMATION." The following table sets forth the maximum annual debt service coverage on the Bonds based on historical Sales Tax receipts for the Fiscal Year ended June 30, 2010. Sales Tax Revenues Measure A Maximum Annual Projected Debt Service') Coverage (') Interest on variable rate debt is calculated assuming the interest rates are equal to the fixed rates on the Existing Swaps. Under the Indenture, the Federal Subsidy is treated as an off -set to debt service. "See DEBT SERVICE SCHEDULE" herein. Source: The Commission. RIVERSIDE COUNTY TRANSPORTATION COMMISSION General The Commission is charged with a number of important responsibilities in serving the residents of the County. Administering the sales tax program, which has raised more than $1 billion, has been 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 — 680 call boxes along the County roadways and 20 FSP tow trucks providing assistance to more than 52,000 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 terns, 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 55632660.4 21 56 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. 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 Board expanded in 2008 with the addition of two members representing newly incorporated cities and again in 2010 with addition of one member representing another newly incorporated city. Thus, the current Board has thirty three members. The expanded Commission ensures better representation throughout the County and provides the participatory framework for continued success in carrying out these responsibilities. The Transportation Expenditure Plan On November 5, 2002, 69.2% of the voters of the County approved Measure "A" — The Riverside County Transportation Commission Transportation Expenditure Plan (the "PIan") 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 (Le., 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 55632660.4 22 • 57 • • used for new corridor projects, $1.020 billion 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. Toll Road Bonds On July 14, 2010, the Commission adopted Resolution No. 10-026 authorizing the issuance and sale of not to exceed $900 million principal amount of toll revenue bonds. The proceeds of the toll revenue bonds will be applied to finance certain State Route 91 corridor improvement project costs through a design -build method of delivery. The Commission expects to secure the toll revenue bonds by a first lien on toll revenues and possibly by a subordinate pledge of Sales Tax Revenues. Subordinate Bonds secured by toll revenues would not be subject to the current limit on the total principal amount of bonds secured by Sales Tax Revenues. See "OTHER SALES TAX OBLIGATIONS - Limitation on Outstanding Sales Tax Obligations" herein. 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 25 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 current appointment. Mr. Standiford also served as the Manager of Government and Media Relations for the Orange County Transportation 55632660.4 23 58 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. RISK FACTORS Economic Recession and Financial Crisis The economy of the County has been in a recession as evidenced by a decrease in Sales Tax Revenues, an increased unemployment rate, a decrease in total personal income and taxable sales, a drop in residential and commercial building permits, a decline in the rate of home sales and the median price of single-family homes and condominiums, an increase in notices of default on mortgage loans secured by homes and condominiums and an increase in foreclosures resulting from such defaults. For information relating to current economic conditions within the County and the State see "APPENDIX B COUNTY DEMOGRAPHIC AND ECONOMIC INFORMATION." [TO BE REVISED/UPDATED] Investments The Commission has significant holdings in a broad range of investments. Market fluctuations have affected and will continue to affect materially the value of those investments and those fluctuations may be and historically have been material. Recent market disruptions have exacerbated the market fluctuations, but as a result of stable investments in government securities, the Commission's portfolio has not suffered any major losses with respect to the principal amount of funds invested. The Commission has experienced a reduction in interest income on such investments as a result of current market conditions. There can be no guaranty that any future investment losses will not be material. No Acceleration Provision The Indenture does not contain a provision allowing for acceleration of the 2010 Bonds in the event of a default in the payment of principal of and interest on the 2010 Bonds when due. Upon a default by the Commission, each Holder of a 2010 Bond will have the rights to exercise the remedies set forth in the Indenture, subject to the limitations thereon. See "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." 55632660.4 24 • 59 • 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 2010 Bonds, would violate the Contracts Clause of the United States Constitution and, accordingly, would be precluded. The interpretation and application of Proposition 218 will ultimately be determined by the courts. 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 transactions or items subject to a Sales Tax. Loss of Tax Exemption As discussed under "TAX MATTERS," interest on the 2010 Bonds could become includable in federal gross income, possibly from the date of issuance of the 2010 Bonds, as a result of acts or omissions of the Commission subsequent to the issuance of the 2010 Bonds. Should interest become includable in federal gross income, the 2010 Bonds are not subject to mandatory redemption by reason thereof and may remain outstanding until maturity. Build America Bonds The 2010 Series B Bonds are being issued as "Build America Bonds." See "THE 2010 BONDS - Designation of 2010 Series B Bonds as "Build America Bonds" herein. [The amount of any Federal Subsidy payments to be received in connection with the 2010 Series B Bonds are subject to legislative changes by the United States Congress. Further, Federal Subsidy payments 55632660.4 25 60 will only be paid if the 2010 Series B Bonds continue to qualify as Build America Bonds. For the 2010 Series B Bonds to be an remain Build America Bonds, the Commission must comply with certain covenants and establish certain facts and expectations with respect to the 2010 Series B Bonds, the use and investment of proceeds thereof and the use of property financed. thereby. Thus, it is possible that the Commission may not receive the Federal Subsidy. Federal Subsidy payments are also subject to offset against amounts that may, for unrelated reasons, be owed by the Commission to any agency of the United States of America. The Commission does not believe that failure to receive the Federal Subsidy or any offset to the Federal Subsidy will materially and adversely impact the Commission's ability to pay interest on the 2010 Series B Bonds.] FINANCIAL STATEMENTS The financial statements of the Commission for the Fiscal Year ended June 30, 2010, 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, 2010. LITIGATION There is not now pending any litigation restraining or enjoining the issuance or delivery of the 2010 Bonds or questioning or affecting the validity of the 2010 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 2010 Series A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Code. In the further opinion of Bond Counsel, interest on the 20] 0 Series A Bonds is not a specific preference item for purposes of the federal individual and corporate alternative minimum taxes, nor is it included in adjusted current earnings when calculating corporate alternative minimum taxable income. Interest on the 2010 Bonds is exempt from State of California personal income taxes. Bond Counsel observes that interest on the 2010 Series B Bonds is not excluded from gross income for federal income tax purposes. Bond Counsel expresses no opinion regarding any other tax consequences relating to the ownership or disposition of, or accrual or receipt of interest on the 2010 Bonds. A complete copy of the proposed form of the opinion of Bond Counsel is set forth in APPENDIX E. 55632660.4 26 • 61 • Tax Matters Relating to the 2010 Series A Bonds To the extent the issue price of any maturity of the 2010 Series A Bonds is less ,than the amount to be paid at maturity of such 2010 Series A Bonds (excluding amounts stated to be interest and payable at least annually over the term of such 2010 Series A 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 2010 Series A 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 2010 Series A Bonds is the first price at which a substantial amount of such maturity of the 2010 Series A 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 2010 Series A Bonds accrues daily over the term to maturity of such 2010 Series A 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 2010 Series A Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such 2010 Series A Bonds. Beneficial owners of the 2010 Series A Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 2010 Series A Bonds with original issue discount, including the treatment of beneficial owners who do not purchase such 2010 Series A Bonds in the original offering to the public at the first price at which a substantial amount of such 2010 Series A Bonds is sold to the public. 2010 Series A 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 2010 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 2010 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 2010 Bond, will be reduced by the amount of amortizable bond premium properly allocable to such beneficial owner. Beneficial owners of Premium 2010 Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the 2010 Series A Bonds. The Commission has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the 2010 Series A 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 2010 Series A Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the 20] 0 Series A 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 20]0 Series A Bonds may adversely affect the value of, or the tax status of interest on, the 2010 Series A Bonds. Accordingly, the opinion of Bond Counsel is 556326604 27 62 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 2010 Series A Bonds is excluded from gross income for federal income tax purposes and that the interest on the 2010 Bonds is exempt from State of Califomia personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the 2010 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 2010 Series A 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. 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 2010 Series A Bonds. Prospective purchasers of the 2010 Series A 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 2010 Series A 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 2010 Series A Bonds ends with the issuance of the 2010 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 2010 Series A 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 2010 Series A Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the 2010 Series A Bonds, and may cause the Commission or the beneficial owners to incur significant expense. 55632660.4 28 63 • • • Tax Matters Relating to the 2010 Series B Bonds The following discussion summarizes certain U.S. federal tax considerations generally applicable to holders of the 2010 Series B Bonds that acquire their 2010 Series B Bonds in the initial offering. The discussion below is based upon laws, regulations, rulings, and decisions in effect and available on the date hereof, all of which are subject to change, possibly with retroactive effect. Prospective investors should note that no rulings have been or are expected to be sought from the IRS with respect to any of the U.S. federal income tax consequences discussed below, and no assurance can be given that the IRS will not take contrary positions. Further, the following discussion does not deal with all U.S. federal income tax consequences applicable to any given investor, nor does it address the U.S. federal income tax considerations applicable to categories of investors some of which may be subject to special taxing rules (regardless of whether or not such persons constitute U.S. Holders), such as certain U.S. expatriates, banks, REITs, RICs, insurance companies, tax-exempt organizations, dealers or traders in securities or currencies, partnerships, S corporations, estates and trusts, investors that hold their 2010 Series B Bonds as part of a hedge, straddle or an integrated or conversion transaction, or investors whose "functional currency" is not the U.S. dollar. Furthermore, it does not address (i) alternative minimum tax consequences or (ii) the indirect effects on persons who hold equity interests in a holder. In addition, this summary generally is limited to investors that acquire their 2010 Series B Bonds pursuant to this offering for the issue price that is applicable to such 2010 Series B Bonds (i.e., the price at which a substantial amount of the 2010 Series B Bonds are sold to the public) and who will hold their 2010 Series B Bonds as "capital assets" within the meaning of Section 1221 of the Code. As used herein, "U.S. Holder" means a beneficial owner of a 2010 Series B Bond that for U.S. federal income tax purposes is an individual citizen or resident of the United States, a corporation or other entity taxable as a corporation created or organized in or under the laws of the United States or any state thereof (including the District of Columbia), an estate the income of which is subject to U.S. federal income taxation regardless of its source or a trust where a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (as defined in the Code) have the authority to control all substantial decisions of the trust (or a trust that has made a valid election under U.S. Treasury Regulations to be treated as a domestic trust). As used herein, "Non-U.S. Holder" generally means a beneficial owner of a 2010 Series B Bond (other than a partnership) that is not a U.S. Holder. If a partnership holds 2010 Series B Bonds, the tax treatment of such partnership or a partner in such partnership generally will depend upon the status of the partner and upon the activities of the partnership. Partnerships holding 2010 Series B Bonds, and partners in such partnerships, should consult their own tax advisors regarding the tax consequences of an investment in the 2010 Series B Bonds (including their status as U.S. Holders or Non-U.S. Holders). For U.S. Holders. The 2010 Series B Bonds are not expected to be treated as issued with original issue discount ("OID") for U.S. federal income tax purposes because the stated redemption price at maturity of the 2010 Series B Bonds is not expected to exceed their issue price, or because any such excess is expected to only be a de minimis amount (as determined for tax purposes). 55632660 4 29 64 Prospective investors that are not individuals or regular C corporations who are U.S. persons purchasing the 2010 Series B Bonds for investment should consult their own tax advisors as to any tax consequences to them from the purchase, ownership and disposition of the 2010 Series B Bonds. Disposition of the 2010 Series B Bonds. Unless a nonrecognition provision of the Code applies, the sale, exchange, redemption, defeasance, retirement (including pursuant to an offer by the Commission) or other disposition of a 2010 Series B Bond, will be a taxable event for U.S. federal income tax purposes. In such event, in general, a U.S. Holder of a 2010 Series B Bond will recognize gain or loss equal to the difference between (i) the amount of cash plus the fair market value of property received (except to the extent attributable to accrued but unpaid interest on the 2010 Series B Bond which will be taxed in the manner described above) and (ii) the U.S. Holder's adjusted tax basis in the 2010 Series B Bond (generally, the purchase price paid by the U.S. Holder for the 2010 Series B Bond, decreased by any amortized premium). Any such gain or loss generally will be capital gain or loss. In the case of a noncorporate U.S. Holder of the 2010 Series B Bonds, the maximum marginal U.S. federal income tax rate applicable to any such gain will be lower than the maximum marginal U.S. federal income tax rate applicable to ordinary income if such U.S. holder's holding period for the 2010 Series B Bonds exceeds one year. The deductibility of capital losses is subject to limitations. For Non-U.S. Holders. Interest. Subject to the discussion below under the heading "Information Reporting and Backup Withholding," payments of principal of, and interest on, any 2010 Series B Bond to a Non-U.S. Holder, other than (1) a controlled foreign corporation, as such term is defined in the Code, which is related to the Commission through stock ownership and (2) a bank which acquires such 2010 Series B Bond in consideration of an extension of credit made pursuant to a loan agreement entered into in the ordinary course of business, will not be subject to any U.S. withholding tax provided that the beneficial owner of the 2010 Series B Bond provides a certification completed in compliance with applicable statutory and regulatory requirements, which requirements are discussed below under the heading "Information Reporting and Backup Withholding," or an exemption is otherwise established. Disposition of the Bonds. Subject to the discussion below under the heading "Information Reporting and Backup Withholding," any gain realized by a Non-U.S. Holder upon the sale, exchange, redemption, retirement (including pursuant to an offer by the Commission) or other disposition of a 2010 Series B Bond generally will not be subject to U.S. federal income tax, unless (i) such gain is effectively connected with the conduct by such Non-U.S. Holder of a trade or business within the United States; or (ii) in the case of any gain realized by an individual Non-U.S. Holder, such holder is present in the United States for 183 days or more in the taxable year of such sale, exchange, redemption, retirement (including pursuant to an offer by the Commission) or other disposition and certain other conditions are met. U.S. Federal Estate Tax. A 2010 Series B Bond that is held by an individual who at the time of death is not a citizen or resident of the United States will not be subject to U.S. federal estate tax as a result of such individual's death, provided that at the time of such individual's death, payments of interest with respect to such 2010 Series B Bond would not have been 55632660.4 30 • i 65 • effectively connected with the conduct by such individual of a trade or business within the United States. Information Reporting and Backup Withholding. U.S. information reporting and "backup . withholding" requirements apply to certain payments of principal of, and interest on the 2010 Series B Bonds, and to proceeds of the sale, exchange, redemption, retirement (including pursuant to an offer by the Commission) or other disposition of a 2010 Series B Bond, to certain noncorporate holders of 2010 Series B Bonds that are United States persons. Under current U.S. Treasury Regulations, payments of principal and interest on any 2010 Series B Bonds to a holder that is not a United States person will not be subject to any backup withholding tax requirements if the beneficial owner of the 2010 Series B Bond or a financial institution holding the 2010 Series B Bond on behalf of the beneficial owner in the ordinary course of its trade or business provides an appropriate certification to the payor and the payor does not have actual knowledge that the certification is false. If a beneficial owner provides the certification, the certification must give the name and address of such owner, state that such owner is not a United States person, or, in the case of an individual, that such owner is neither a citizen nor a resident of the United States, and the owner must sign the certificate under penalties of perjury. if a financial institution, other than a financial institution that is a qualified intermediary, provides the certification, the certification must state that the financial institution has received from the beneficial owner the certification set forth in the preceding sentence, set forth the information contained in such certification, and include a copy of such certification, and an authorized representative of the financial institution must sign the certificate under penalties of perjury. A financial institution generally will not be required to furnish to the IRS the names of the beneficial owners of the 2010 Series B Bonds that are not United States persons and copies of such owners' certifications where the financial institution is a qualified intermediary that has entered into a withholding agreement with the IRS pursuant to applicable U.S. Treasury Regulations. In the case of payments to a foreign partnership, foreign simple trust or foreign grantor trust, other than payments to a foreign partnership, foreign simple trust or foreign grantor trust that qualifies as a withholding foreign partnership or a withholding foreign trust within the meaning of applicable U.S. Treasury Regulations and payments to a foreign partnership, foreign simple trust or foreign grantor trust that are effectively connected with the conduct of a trade or business within the United States, the partners of the foreign partnership, the beneficiaries of the foreign simple trust or the persons treated as the owners of the foreign grantor trust, as the case may be, will be required to provide the certification discussed above in order to establish an exemption from withholding and backup withholding tax requirements. The current backup withholding tax rate is 28% (subject to future adjustment). In addition, if the foreign office of a foreign "broker," as defined in applicable U.S. Treasury Regulations pays the proceeds of the sale of a Bond to the seller of the 2010 Series B Bond, backup withholding and information reporting requirements will not apply to such payment provided that such broker derives less than 50% of its gross income for certain specified periods from the conduct of a trade or business within the United States, is not a controlled foreign corporation, as such term is defined in the Code, and is not a foreign partnership (1) one or more of the partners of which, at any time during its tax year, are U.S. persons (as defined in U.S. Treasury Regulations Section 1.1441-1(c)(2)) who, in the aggregate hold more than 50% of 55632660.4 31 66 • The ratings described above do not constitute a recommendation to buy, sell or hold the 2010 Bonds. The Commission has furnished to the rating agencies certain information respecting the 2010 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, suspension 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. The Commission and the Underwriters undertake no responsibility to oppose any such revision, suspension or withdrawal. Any downward revision, suspension or withdrawal of any rating may have an adverse effect on the market price of the 2010 Bonds or the ability to remarket the 2010 Bonds. UNDERWRITING Barclays Capital Inc. as representative of itself (the "Representative") and De La Rosa & Co., as underwriters of the 2010 Series A Bonds (the "Underwriters"), has agreed, subject to certain conditions, to purchase the 2010 Series A Bonds at a price of $ (representing the aggregate principal amount of the 2010 Series A Bonds, [plus/minus] an original issue [premium/discount] of $ , less an underwriters' discount of $ ). The Representative has agreed, subject to certain conditions, to purchase the 2010 Series B Bonds at a price of $ (representing the aggregate principal amount of the 2010 Series B Bonds, less an underwriters' discount of $ ). The Purchase Contract for the 2010 Bonds provides that the Underwriters will purchase all the 2010 Bonds if any are purchased. The 2010 Bonds may be offered and sold by the Underwriters to certain dealers and others at yields lower than the public offering yield indicated on the inside cover hereof, and such public offering yield may be changed, from time to time, by the Underwriters. FINANCIAL ADVISOR The Commission has retained Fieldman, Rolapp & Associates, Irvine, California, as Financial Advisor in connection with the authorization and delivery of the 2010 Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The Financial Advisor is an independent financial advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. Compensation paid to the Financial Advisor is contingent upon the successful issuance of the 2010 Bonds. CONTINUING DISCLOSURE The Commission has agreed to execute the Continuing Disclosure Agreement and will covenant therein for the benefit of the beneficial owners of the 2010 Bonds to provide certain financial information and operating data relating to the Commission and the Sales Tax by not later than nine months after the end of the Commission's prior fiscal year (the "Annual Reports"), and to provide notices of the occurrence of certain enumerated events (the "Listed Events"). The Annual Reports and notices of Listed Events will be filed with the MSRB. See 556326604 33 68 "APPENDIX G — FORM OF CONTINUING DISCLOSURE UNDERTAKING." The Commission has not, within the past five years, failed to comply in all material respects with any previous continuing disclosure undertaking pursuant to the Rule to provide annual reports or notices of material events. 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 ful{ 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 2010 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 to 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 2010 Bonds. 556326604 34 • 69 • The execution and delivery of this Official Statement has been duly authorized by the Commission. 556326604 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Executive Director 35 70 • 71 • • • 55632660.4 APPENDIX A COMMISSION AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2010 A-1 72 • • 73 • 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 is provided as general information and has been obtained from sources that the Commission believes to be reliable, but the Commission makes no representation as to the accuracy or completeness of the information included. The worsening of the economy at the County, State and national levels may not be reflected in the data presented below, as more recent information has not been made available to the Commission. The economy of the County is currently experiencing a recession as evidenced by an increased unemployment rate, a slowdown in total personal income and taxable sales, a drop in residential building permits, a decline in the rate of home sales and the median price of single- family homes and condominiums and an increase in notices of default on mortgage loans secured by homes and condominiums. Population According to the State Department of Finance, Demographic Research Unit, the County's population was estimated at 2,139,535 as of January 1, 2010, representing a 38.4% increase since the 2000 Census or a simple annual average of 3.8%. The County's population grew by over half a million since 2000, ranking it as one of the major growth areas in the nation. During this period, nine cities and the unincorporated County area each grew by over 20,000 persons. The city of Murrieta added the most residents (over 57,000) to its population. Murrieta is followed by Riverside (48,885), Temecula (47,313), Moreno Valley (46,156), Indio (34,559), Corona (25,450), Beaumont (22,833), Lake Elsinore (22,055) and La Quinta (20,727) by number of residents being added to their populations. The city of Beaumont's population on a percentage basis increased the most since 2000 (185%). Several areas in the unincorporated County area also grew rapidly. These include Eastvale, Temescal Canyon, the El Sobrante/Lake Mathews/Woodcrest area, Winchester, French Valley, and the unincorporated area north of Indio. Much of the growth in the city of Menifee occurred during this period while it was an unincorporated area. Recently, the growth in the County has slowed due to the economy. Between January 1, 2009 and January 1, 2010, the County population increased by 1.4%. Although this rate is far below the County average for the decade, it is above the Statewide average. 55632660.4 B-1 74 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: CITY COUNTY OF RIVERSIDE POPULATION OF CITIES WITHIN THE COUNTY (As of January 1) 2000 2005 2006 2007 2008 2009 2010 Banning 23,562 27,996 28,185 28,174 28,148 28,457 28,751 Beaumont 11,384 19,051 23,238 28,209 31,317 32,403 34,217 Blythe 20,465 22,052 22,234 22,608 21,627 21,329 21,812 Calimesa 7,139 7,491 7,475 7,435 7,423 7,498 7,555 Canyon Lake 9,952 10,950 10,983 10,955 10,994 11,128 11,225 Cathedral City 42,647 50,819 51,294 52,045 51,972 52,447 52,841 Coachella 22,724 30,879 35,354 38,437 40,317 41,000 42,591 Corona 124,966 144,600 145,265 145,847 146,698 148,597 150,416 Desert Hot Springs 16,582 20,820 23,459 24,856 25,939 26,552 26,811 Hemet 58,812 67,565 70,728 72,537 73,205 74,361 75,820 Indian Wells 3,816 4,796 4,885 4,934 5,000 5,093 5,144 Indio 49,116 66,358 71,949 77,046 80,962 82,230 83,675 Lake Elsinore 28,930 38,185 41,156 47,568 49,556 50,267 50,983 La Quinta 23,694 36,278 38,500 41,039 42,743 43,778 44,421 Menifee 0 0 0 0 0 67,705 68,905 Moreno Valley 142,379 165,935 175,294 180,228 182,945 186,301 188,537 Murrieta 44,282 85,328 93,221 97,031 99,576 100,714 101,487 Norco 24,157 26,783 27,355 27,329 27,143 27,160 27,370 Palm Desert 41,155 49,490 49,774 49,717 50,686 51,509 52,067 Palm Springs 42,805 45,877 46,629 46,796 47,019 47,601 48,040 Perris 36,189 44,758 47,335 50,597 53,340 54,323 55,133 Rancho Mirage 13,249 16,476 16,740 16,923 16,975 17,180 17,008 Riverside 255,166 286,563 288,984 291,812 296,191 300,430 304,051 San Jacinto 23,779 28,540 31,194 34,297 35,491 36,477 36,933 Temecula 57,716 81,681 93,673 97,141 99,873 102,604 105,029 Wildomar 0 0 0 0 0 31,321 31,907 TOTALS Incorporated 1,124,666 1,379,271 1,444,904 1,493,561 1,525,140 1,648,465 1,672,729 Unincorporated 420,721 504,464 517 110 536.754 553 461 459,188 466,806 County -Wide 1.545,387 1,883,735 1.962,014 2,030,315 2,078 601 2.107,653 2,139,535 California 33,873,086 36,676,931 37,086,191 37,472,074 37,883,992 38,292,687 38,648,090 Source: U.S. Census Bureau for 2000, State Department of Finance, Demographic Research Unit (with 2000 DRU Benchmark) for 2007-2010. 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 55632660.4 B-2 • • 75 • 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 2004 through 2008. Figures for 2009 are not available. 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 Effective Buying Effective Buying Households with Income ° Income Income over $50,000 2004 Riverside County $ 29,468,208 $40,275 37.1% California 705,108,410 43,915 42.5 2005 Riverside County 32,004,418 41,326 38.9 California 720,798,122 44,681 43.7 2006 Riverside County 35,656,620 43,490 41.8 California 764,120,082 46,275 45.6 2007 Riverside County 38,63I,365 45,310 44.3 California 814,894,437 48,203 479 2008 Riverside County 40,935,407 46,958 46.2 California 832,531,445 48,952 48.8 Source: "Survey of Buying Power," Sales & Marketing Management Magazine, dated 2004, 2005 and 2008, and Demographics USA, Trade Dimensions for 2006 and 2007. (') Estimated. (2) Dollars in thousands. 55632660.4 B-3 76 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. The following. table sets forth the annual average employment by industry for the PMSA. RIVERSIDE-SAN BERNARDINO-ONTARIO PMSA ANNUAL AVERAGE EMPLOYMENT BY INDUSTRY(') (In Thousands) INDUSTRY 2005 2006 2007 2008 2009 Agriculture 18.3 17.2 16.8 15.9 15.2 Construction 123.3 129.5 112.8 90.7 67.4 Finance, Insurance and Real Estate 49.0 51.8 50.1 46.7 43.6 Government 220.4 224.2 225.7 229.9 227.3 Manufacturing: 121.0 124.0 118.9 106.9 88.5 Nondurables 35.0 36.4 36.4 34.3 30.4 Durables 86.1 87.6 82.5 72.5 58.1 Natural Resources and Mining 1.4 1.4 1.4 1.2 1.2 Retail Trade 165.7 171.5 175.4 168.6 154.9 Prof., Educ. and other Services 416.5 436.2 446.3 440.7 419.6 Trans., Whse. and Utilities 60.2 63.8 66.7 70.2 66.5 Wholesale Trade 49.9 53.8 56.4 54.1 48.3 Information, Pub. and Telecom. 14.5 15.7 15.2 14.9 14.8 Total, All Industries 1,240.3 1,288.4 1,285.5 1,239.7 1,147.1 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. 556326604 B-4 • 77 • The following table sets forth an employment data comparison by industry for the period June 2008 and June 2009. June 2010 figures are preliminary. RIVERSIDE-SAN BERNARDINO-ONTARIO PMSA EMPLOYMENT BY INDUSTRY FOR JUNE 2008 AND JUNE 2009(1) (In Thousands) INDUSTRY June 2009 June 2010t2t Change Total Farm 20,900 20,700 (200) Total Nonfarm 1,138,600 1,106,600 (32,000) Mining and Logging 1,200 1,200 0 Construction 69,600 58,800 (10,800) Manufacturing 88,700 85,300 (3,400) Trade, Transportation & Utilities 268,800 262,900 (5,900) Information 14,900 14,400 (500) Financial Advisor 43,300 41,800 (1,500) Professional & Business Services 126,700 124,800 (1,900) Educational & Health Services 132,300 132,200 (200) Leisure & Hospitality 124,100 119,900 (4,200) Other Services 37,600 36,300 (1,200) Government 231,500 229,100 (2,400) Total All Industries 1,159,500 1,127,300 (32,200) Source: State Employment Development Department, Labor Market Information Division. (') Data not adjusted for seasonality. The employment figures by Industry which are shown above are not directly comparable to the "Total, All Industries" employment figures due to rounded data. (2) Preliminary, subject to change. 55632660.4 B-5 78 The following table sets forth certain of the ten major employers located in the County as of 2008: COUNTY OF RIVERSIDE CERTAIN MAJOR EMPLOYERS(1) (2010) No. of Local Company Name Product/Service Employees(2) County of Riverside County Government 18,456 March Air Reserve Base Government/Military 8,600 University of California, Riverside Education Institution 7,321 Stater Brothers Markets Supermarket Retailer 6,900 Wal-Mart Retail Store 6,550 Riverside Unified School District School District 5,099 Abbott Vascular Medical & Biotech Manufacturer 4,500 Pechanga Resort & Casino Casino/Resort 4,000 Kaiser Permanente Riverside Medical Center Healthcare 3,600 Temecula Valley Unified School District School District 2,752 Source: The Business Press 2010 Book of Lists. 10 Certain major employers in the County may have been excluded because of the data collection methodology used by The Business Press. (z) 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, STATE AND NATIONAL UNEMPLOYMENT DATA March 2005 2006 2007 2008 2009 2010 County(I) 5.4% 5.0% 6.0% 8.5% 13.6% 15.1%121 California(I) 5.4 4.9 5.3 7.2 11.4 13.0(2) United States 5.1 4.6 4.6 5.8 9.3 9.7131 Source: State of California Employment Development Department Labor Market Information Division; U.S. Bureau of Labor Statistics. (I) Data are not seasonally adjusted. z) Preliminary. (3) Data are seasonally adjusted. 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 55632660.4 B-6 • 79 • commercial centers in cities. There are five regional shopping malls in the County: Galleria at Tyler (Riverside), Hemet Valley Mall, Westfield Palm Desert Shopping Center, Moreno Valley Mall, and The Promenade in Temecula. There are also two factory outlet malls (Desert Hills Factory Stores and Lake Elsinore Outlet Center) and over 200 area centers in the County. Taxable Sales Transactions The following table sets forth taxable transactions in the County for the years 2004 through 2008. Figures for 2009 are unavailable. [UPDA rE WHEN AVAILABLE] Types of Business Apparel Stores General Merchandise Stores Drug Stores Food Stores Packaged Liquor Stores Eating and Drinking Places Home Furnishing and Appliances Building Materials and Farm Implements Auto Dealers Supplies Service Stations Other Retail Stores Retail Stores Total All Other Outlets Total All Outlets COUNTY OF RIVERSIDE TAXABLE SALES TRANSACTIONS(') (In Thousands) 2004 2005 2006 2007 2008 $ 867,276 $ 990,129 $ 1,080,385 $ 1,171,103 $ 1,121,543 2,756,019 3,021,908 3,250,377 3,272,665 3,081,989 270,316 282,566 303,177 320,469 307,947 1,079,972 1,197,438 1,309,782 1,352,609 1,254,366 98,338 1,940,610 2,157,801 2,316,422 2,338,039 2,340,554 862,551 964,629 948,217 843,945 816,379 2,476,092 2,756,280 2,738,153 1,961,911 1,435,337 4,179,940 4,474,566 4,326,040 4,301,385 3,115,036 1,855,263. 2,277,082 2,630,716 2,835,690 3,011,476 2,361,182 2,641,985 2,860,181 2,794,790 2,106,283 $18,715,949 $20,839,212 $21,842,345 $21,242,516 $18,689,249 6,521,199 7,417,279 7,973,892 7,781,093 7,314,346 $25,237,148 $28,256,491 $29,816,237 $29,023,609 $26,003,595 Source: California State Board of Equalization, Research and Statistics Division. 55632660.4 B-7 80 The following table sets forth taxable transactions in the County for first and second quarters of 2009. Annual 2009 figures unavailable. Type of Business COUNTY OF RIVERSIDE 2009 TAXABLE SALES TRANSACTIONSttI (In Thousands) First Quarter Second Quarter Motor Vehicle and Parts $612,423 $578,498 Furniture and home Furnishings 95,591 89,081 Electronics and Appliances 123,541 107,051 Bldg. and Garden Materials and Supplies 312,372 328,421 Food and Beverage Stores 298,034 329,766 Health and Personal Care 97,084 97,305 Gasoline Stations 478,046 596,811 Clothing and Accessories 299,946 313,286 Sporting Goods, Books and Music 107,324 93,058 General Merchandise 652,330 686,307 Miscellaneous 165,573 161,569 Nonstore Retailers 25,605 25,299 Food Services and Drinking Places 611,236 586,051 Total Retail and Food Services 3,879,106 3,965,502 All Other Outlets 1,567,104 1,547,852 Total All Outlets $5,446,210 $5,513,354 Source: California State Board of Equalization, Research and Statistics Division. t1t The taxable transaction figures by industry which are shown above may not be directly comparable to the "Total, All Outlets" figures due to rounded data. The categories for "Types of Business" are different from those in the prior table which sets forth taxable transactions in the County for the years 2004 through 2008. 55632660.4 B-8 81 • Building and Real Estate Activity The following tables set forth five-year summaries of building permit valuations and new dwelling units authorized in the County (in both incorporated and unincorporated areas) for the years 2005 through 2009. COUNTY OF RIVERSIDE BUILDING PERMIT VALUATIONS (In Thousands) 2005 2006 2007 2008 2009 RESIDENTIAL New Single -Family $6,243,790 $4,412,257 $2,207,520 $1,214,752 $ 891,825 New Multi -Family 407,429 431,579 238,316 243,741 76,717 Alterations and Adjustments 164,312 158.098 141,996 118,490 85,148 Total Residential $6,815,531 $5,001,934 $2,587,832 $1,576,983 $1,053,690 NON-RESIDENTIAL New Commercial $ 552,665 $ 648,068 $ 682,331 $ 539,944 $ 94,653 New Industry 120,366 288,353 184,506 70,411 12,278 New Otheri11 344,702 290,010 240,765 138,766 107,334 Alterations & Adjustments 274,339 303.407 350,539 292,694 162,557 Total Nonresidential $1,292,072 $1,529,838 $1,458,141 $1,041,815 $ 376,822 TOTAL ALL BUILDING $8,M7,603 S6,531,772 S4,045,973 S2,618,798 $1,430,512 Source: Construction Industry Research Board. 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 2005 2006 2007 2008 2009 Single Family 29,994 20,692 9,763 3,815 3,424 Multi -Family 4,140 4,519 2,690 22104 784 TOTAL 34,134 25,211 12,443 5,919 4,208 Source: Construction Industry Research Board. 55632660.4 B-9 82 The following table sets forth a comparison of median housing prices for Los Angeles County, Riverside County and Southern California as of March 2009 and March 2010. COUNTY OF RIVERSIDE COMPARISON OF MEDIAN HOUSING PRICES March March Percent 2009 2010 Change County of Riverside $187,000 $198,000 5.9% Los Angeles County 300,000 329,000 9.7% Southern California(1) 250,000 285,000 14.0% Source: MDA DataQuick Information Systems. (1) Southem California comprises Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura Counties. The following table sets forth a comparison of home and condominium foreclosures recorded in Los Angeles County, Riverside County, San Bernardino County and Southern California for the years and quarters indicated. Year 2005 2006 2007 2008 2009 COUNTY OF RIVERSIDE COMPARISON OF HOME FORECLOSURES San Los Angeles Riverside Bernardino 585 1,997 12,466 35,366 30,285 304 1,778 12,497 32,423 25,500 402 1,011 7,746 23,557 19,714 Southern California") 1,702 7,355 46,086 125,056 100,970 Source: MDA DataQuick Information Systems. (I) Southem California comprises Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura Counties. 12) First two quarters of 2009. 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 eastem border. The value of agricultural production in the County for the years 2005 through 2009 is set forth in the following table. 55632660.4 B-10 • 83 Citrus Fruits Trees and Vines Vegetables, Melons, Mi Field and Seed Crops Nursery Apiculture Aquaculture Products Total Crop Valuation Livestock and Poultry Valuation Grand Total Se. COUNTY OF RIVERSIDE VALUE OF AGRICULTURAL PRODUCTION 2005 2006 $ 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 $1,168,671,100 $1,104,291,000 Source: Riverside County Agricultural Commissioner. Transportation 2007 $ 121,387,100 189,286,500 234,854,700 94,492,000 272,326,200 3,948,900 9,829,200 $ 926,124,600 338,938,600 $1,265,063,200 2008 $ 135,759,000 173,678,000 266,414,900 123,545,400 230,416,200. 5,637,000 12,077,700 $ 947,529,000 321,060,000 $1,268,589,900 2009 $ 101,652,000 191,682,600 221,286,700 69,699,800 206,499,900 5,017,600 5 243,900 $ 801,082,500 214,672,800 $1,015,755,300 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. Interstates 15 and 215 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 three transcontinental railroads Union Pacific Railroad, 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, I lemet, Blythe and French Valley. The cities of Riverside, Corona and Banning also operate 55632660.4 B-1 1 84 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. 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 at Riverside, La Sierra University and California Baptist University. 556326604 B-12 • • 85 • • 556326604 APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE C-1 86 87 • APPENDIX D BOOK ENTRY SYSTEM The information in this Appendix D concerning The Depository Trust Company, New York, New York ("DTC'), and DTC's Book -Entry System has been obtained from DTC and the Commission, the Trustee and the Underwriters take no responsibility for the completeness or accuracy thereof. The Commission, the Trustee and the Underwriters cannot and do not give any assurances that DTC, DTC Participants or Indirect Participants or others will distribute any (a) payments of principal or purchase price or interest with respect to the 2010 Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the 2010 Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 2010 Bonds, or that they will do so on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix D. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. The Commission, the Trustee and the Underwriters are not responsible or liable for the failure of DTC or any DTC Participant to make any payment or give any notice to a beneficial owner with respect to the 2010 Bonds or an error or delay relating thereto. DTC will act as securities depository for the 2010 Bonds. The 2010 Bonds will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully - registered certificate will be issued for each maturity of the 2010 Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. 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 and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or 55632660.4 D- I 88 maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. The information set forth on such. websites is not incorporated by reference. Purchases of 2010 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2010 Bonds on DTC's records. The ownership interest of each actual purchaser of each 2010 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2010 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the 2010 Bonds, except in the event that use of the book -entry system for the 2010 Bonds is discontinued. To facilitate subsequent transfers, all 2010 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the 2010 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2010 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 2010 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the 2010 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2010 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2010 Bond documents. For example, Beneficial Owners of the 20] 0 Bonds may wish to ascertain that the nominee holding the 2010 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 55632660.4 D-2 • 89 • • Redemption notices shall be sent to DTC. If less than all of the 2010 Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.' Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the 2010 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Commission as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the 2010 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of principal or purchase price of and interest on the 2010 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Commission or the Trustee, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee, or the Commission, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal of, premium, if any, and interest evidenced by the 2010 Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Commission or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the 2010 Bonds at any time by giving reasonable notice to the Commission or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, security certificates are required to be printed and delivered. The Commission may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, security certificates will be printed and delivered to DTC. ' By written notice of the Trustee, DTC will modify its practice and observe a pro rata reduction of principal with respect to the 2010 Series B Bonds. 55632660 4 D-3 90 • • 91 556326604 APPENDIX E PROPOSED FORM OF BOND COUNSEL OPINION E-1 92 • • 93 • 55632660.4 APPENDIX F PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT F-1 94 • 95 • Fulbright & Jaworski L.L.P. — Draft 8/17/10 CONTINUING DISCLOSURE AGREEMENT by and between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Dissemination Agent Dated as of November 1, 2010 Relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2010 Series A (Tax -Exempt) and 2010 Series B (Taxable Build America Bonds) 901410843 F-1 96 • 97 • • • CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement"), dated as of November 1, 2010, is by and between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly established and existing under the laws of the State of California (the "Commission"), and Digital Assurance Certification, L.L.C., as Dissemination Agent (the "Dissemination Agent"). WITNESSETH: WHEREAS, the Commission has issued $ Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) 2010 Series A (Tax -Exempt) (the "2010 Series A Bonds") and $ Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) 2010 Series B (Taxable Build America Bonds) (the "2010 Series B Bonds" and, together with the 2010 Series A Bonds, the "2010 Bonds") pursuant to an Indenture, dated as of June 1, 2008, between the Commission and U.S. Bank National Association, as trustee (the "Trustee"), as supplemented, including as supplemented by a Third Supplemental Indenture, dated as of November 1, 2010, between the Commission and the Trustee (collectively, the "Indenture"); and WHEREAS, this Disclosure Agreement is being executed and delivered by the Commission and the Dissemination Agent for the benefit of the owners and beneficial owners of the 2010 Bonds and in order to assist the underwriters of the 2010 Bonds in complying with the Rule (as defined herein); NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows: Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. In addition, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the Commission pursuant to, and as described in, Sections 2 and 3 of this Disclosure Agreement. "Disclosure Representative" means the Chief Financial Officer of the Commission, or such other officer or employee of the Commission as the Executive Director of the Commission or the Chief Financial Officer of the Commission shall designate in writing to the Dissemination Agent and the Trustee from time to time. "Dissemination Agent" means an entity selected and retained by the Commission, or any successor thereto selected by the Commission. The initial Dissemination Agent shall be Digital Assurance Certification, L.L.C. "Listed Events" means any of the events listed in subsection (a) of Section 4 hereof. "MSRB" means the Municipal Securities Rulemaking Board. 90141084.3 F-2 98 "Participating Underwriters" means the underwriters of the 2010 Bonds required to comply with the Rule in connection with the offering of the 2010 Bonds. "Repository" means, until otherwise designated by the Securities and Exchange. Commission, the Electronic Municipal Market Access website of the MSRB located at http://emma.msrb.org. "Rule" means Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 2. Provisions of Annual Reports. (a) The Commission shall, or shall cause the Dissemination Agent to, not later than nine (9) months after the end of each Fiscal Year, commencing with the report for the Commission's fiscal year ended June 30, 2010, provide to each Repository copies of an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Commission may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Fiscal Year changes for the Commission, the Commission shall give notice of such change in the manner provided under Section 4 (f) hereof. (b) Not later than two (2) Business Days prior to the date specified in subsection (a) for providing the Annual Report to each Repository, the Commission shall provide the Annual Report to the Dissemination Agent. If by such date, the Dissemination Agent has not received a copy of the Annual Report from the Commission, the Dissemination Agent shall contact the Commission to determine if the Commission is in compliance with the first sentence of subsection (a). (c) If the Dissemination Agent is unable to verify that an Annual Report of the Commission has been provided to each Repository by the date required in subsection (a), the Dissemination Agent shall send a notice to each Repository in substantially the form attached hereto as Exhibit A. (d) If the Annual Report is delivered to the Dissemination Agent for filing, the Dissemination Agent shall: (i) determine each year, prior to the date for providing the Annual Report, the name and address of each Repository, and file the Annual Report so provided therewith; and (ii) upon verification of filing, file a report with the Commission and (if the Dissemination Agent is not the Trustee) the Trustee certifying that the Annual Report has been provided pursuant to the Disclosure Agreement, stating the date it was provided and listing the Repository or Repositories to which it was provided. 90141084.3 F-3 • 99 • • Section 3. Content of Annual Reports. The Commission's Annual Report shall contain or include by reference the following: (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 2(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The debt service schedule for the 2010 Bonds, if there have been any unscheduled redemptions, retirements or defeasances, and the debt service on any additional parity bonds issued, in each case during the prior Fiscal Year. (c) The actual Sales Tax Revenues for the prior Fiscal Year consistent with the information concerning Sales Tax Revenues set forth in the Official Statement under the caption "THE SALES TAX," including but not limited to an update of the table entitled "Historical Sales Tax Receipts" set forth in the Official Statement under the caption "THE SALES TAX - Sales Tax Receipts"; 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 Sales Tax Receipts. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Commission or public entities related thereto, which have been submitted to each Repository or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Commission shall clearly identify each such other document so included by reference. The contents, presentation and format of the Annual Reports may be modified from time to time as determined in the judgment of the Commission to conform to changes in accounting or disclosure principles or practices and legal requirements followed by or applicable to the Commission or to reflect changes in the business, structure, operations, legal form of the Commission or any mergers, consolidations, acquisitions or dispositions made by or affecting the Commission; provided that any such modifications shall comply with the requirements of the Rule. Section 4. Reporting of Significant Events. (a) Pursuant to the provisions of this Section, the Commission shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the 2010 Bonds, if material: 901410843 Principal and interest payment delinquencies. Non-payment related defaults. F-4 100 (3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial_ difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions or events affecting the tax-exempt status of the security. (7) Modifications to rights of security holders. (8) Contingent or unscheduled Bond calls. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities. (1 l) Rating changes. (b) The Commission shall, within one business day of obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Disclosure Representative, inform such person of the event, and request that the Commission promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (f) of this Section. (c) Whenever the Commission obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Dissemination Agent pursuant to subsection (b) of this Section or otherwise, the Commission shall as soon as possible determine if such event would be material under applicable Federal securities law. (d) If the Commission has determined that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Commission shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (f) of this Section. (e) If in response to a request under subsection (b) of this Section, the Commission determines that the Listed Event would not be material under applicable Federal securities law, the Commission shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f) of this Section. (f) 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 MSRB and each Repository. Notwithstanding the foregoing, notice of Listed Events described in paragraphs (8) and (9) of subsection (a) of this Section need not be given under this 90141084.3 F-5 • • 101 subsection any earlier than the notice (if any) of the underlying event is given to holders of affected 2010 Bonds pursuant to the Indenture. Section 5. Filings with the MSRB. All information, operating data, financial . statements, notices and other documents provided to the MSRB as Repository in accordance with this Disclosure Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. Section 6. Termination of Reporting Obligation. The Commission's obligations under this Disclosure Agreement shall terminate upon the legal defeasance or payment in full of all of the 2010 Bonds. If such termination occurs prior to the final maturity of the 2010 Bonds, the Commission shall give notice of such termination in the same manner as for a Listed Event under subsection (0 of Section 2 hereof. Section 7. Dissemination Agent. The Commission may, from time to time, appoint or engage another Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent; provided, it shall receive written notice of such designation at the time of such designation. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Commission may amend this Disclosure Agreement, 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 Agreement may be waived if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to the Commission 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 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Commission from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. Section 10. Default. In the event of a failure of the Commission or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee may (and, at the written direction of any Participating Underwriter or the holders of at least 25% of the aggregate amount of principal evidenced by Outstanding 2010 Bonds and upon being indemnified to its reasonable satisfaction, shall), or any holder or beneficial owner of the 2010 Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Commission or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event 6f Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Commission or the 901410843 F-6 102 Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The. Dissemination Agent shall not be responsible for the form or content of any notice of Listed Event. The Dissemination Agent shall receive reasonable compensation for its services provided under this Disclosure Agreement. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, 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 it may incur arising out of or in the exercise or performance of its 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 obligations of the Commission under this Section shall survive resignation or removal of the Dissemination Agent and payment of the 2010 Bonds. Section 12. Notices. Any notices or communications to or among any of the parties to the Disclosure Agreement or the Trustee may be given as follows: To the Commission: To the Dissemination Agent: Riverside County Transportation Mail: Commission 4080 Lemon Street, 3`1 Floor P.O. Box 12008 Riverside, California 92501 Riverside, California 92502 Tel: (951) 787-7926 Fax: (951) 787-7920 Digital Assurance Certification, L.L.C. 390 North Orange Avenue, Suite 1750 Orlando, Florida 32801 Tel: (407) 515-1100 Fax:(407) 515-6513 To the Trustee: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Corporate Trust Division Tel: (213) 615-6023 Fax: (213) 615-6197 Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent. Any notice or communication may also be sent by electronic mail, receipt of which .shall be confirmed. Section 13. Beneficiaries. This Disclosure Agreement 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 2010 Bonds, and shall create no rights in any other person or entity. 90141084.3 F-7 • 103 • • • Section 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first above written. 90141084.3 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Theresia Trevino Chief Financial Officer DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Dissemination Agent By: Authorized Representative F-8 104 • 105 • EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Riverside County Transportation Commission (the "Commission") Name of Issue: $ Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) 2010 Series A (Tax -Exempt) $ Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) 2010 Series B (Taxable Build America Bonds) Date of Issuance: , 2010 NOTICE IS HEREBY GIVEN that the Commission has not provided an Annual Report with respect to the above -named Bonds as required by this Continuing Disclosure Agreement dated as of , 2010, between the Commission and the Dissemination Agent. The Commission anticipates that the Annual Report will be filed by Dated: DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Dissemination Agent, on behalf of the Commission cc: Riverside County Transportation Commission 90141084.3 F-9 106 ATTACHMENT 2 NO.10-030 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF NOT TO EXCEED $150,000,000 AGGREGATE PRINCIPAL AMOUNT OF RIVERSIDE COUNTY . TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) IN ONE OR MORE SERIES, THE EXECUTION AND DELIVERY OF A THIRD SUPPLEMENTAL INDENTURE, A PURCHASE CONTRACT, AN OFFICIAL STATEMENT AND CONTINUING DISCLOSURE AGREEMENT, AND THE TAKING OF ALL OTHER ACTIONS NECESSARY IN CONNECTION THEREWITH WHEREAS, the Riverside County Transportation Commission (the "Commission") is a county transportation commission duly organized and existing pursuant to the County Transportation Commissions Act, being Division 12 of the Public Utilities Code of the State of California (Section 130000 et seq.); WHEREAS, the Commission is authorized pursuant to the Riverside County Transportation Sales Tax Act, being Division 25 of the Public Utilities Code of the State of California (Section 240000 et seq.) (the "Act'), to, among other things, and with voter approval, levy a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the California Revenue and Taxation Code (the "Sales Tax Law") and to issue limited tax bonds payable from the proceeds of such tax; WHEREAS, the Commission adopted Ordinance No. 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 one-half of one percent (1/2%) commencing July 1, 2009 and continuing for a period not to exceed thirty (30) years; WHEREAS, by its terms, the Ordinance became effective at the close of the polls on November 5, 2002, the day of the election at which the proposition imposing the Sales Tax was approved by more than two-thirds of the electors voting on the measure; WHEREAS, the Ordinance empowers the Commission to sell or issue, from time to time, on or before the collection of the Sales Tax, bonds, or other evidences of indebtedness, in the aggregate principal amount at any one time outstanding not to exceed $500 million for capital expenditures for various purposes, including to carry out the transportation projects described in the Riverside County Transportation Improvement Plan, adopted as part of the Ordinance, including any future amendments thereto (the "Expenditure Plan"); WHEREAS, the Commission is authorized by Section 240309 of the California Public Utilities Code to issue from time to time limited tax bonds (defined to include 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"); OHS Wesc260964477.3 107 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 desires to decrease the aggregate principal amount of CP Notes authorized to be issued and outstanding at any one time to an amount not to exceed $120,000,000; WHEREAS, the Commission has heretofore issued its Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series A, 2009 Series B and 2009 Series C (collectively, the "Series 2009 Bonds") in the aggregate principal amount of $185,000,000 pursuant to an Indenture, dated as of June 1, 2008, as amended and supplemented, including by a Second Supplemental Indenture, dated as of October 1, 2009 (collectively, and as subsequently amended from time to time, the "Indenture"), each by and between the Commission and U.S. Bank National Association, as trustee (the "Trustee"), which Series 2009 Bonds are currently outstanding in the aggregate principal amount of $181,000,000; WHEREAS, the Commission has heretofore executed and delivered interest rate swap agreements in an aggregate notional amount of $185 million (the "Existing Swaps"), which Existing Swaps became effective on October 1, 2009 and are currently outstanding in an aggregate notional amount of $181,000,000; 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 fifty million dollars ($150,000,000) and payable on a parity with the Series 2009 Bonds is necessary in order to finance (i) funds for projects authorized in the Expenditure Plan, (ii) the refunding of all or a portion of the outstanding CP Notes, (iii) capitalized interest and a reserve fund for such bonds, if any, and (iv) 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), Series 2010" (the "Series 2010 Bonds"); WHEREAS, the Commission finds and determines that issuing one or more series of the Series 2010 Bonds as taxable bonds which qualify the Commission to receive federal subsidy payments under Sections 54AA and 6431 of the Internal Revenue Code of 1986 (the "Code") or any other provisions of the Code that create, in the determination of the Executive Director of the Commission, a similar direct -pay subsidy program (collectively, the "Build America Bonds"), could produce economic benefits for the Commission; WHEREAS, the Commission hereby further determines that the Series 2010 Bonds shall be issued pursuant to a Third Supplemental Indenture, amending and supplementing the Indenture (the "Third Supplemental Indenture"), by and between the Commission and the Trustee; OHS West:260964477.3 -2- • 108 • WHEREAS, there has been prepared and presented to the Commission a proposed form of Third Supplemental Indenture; WHEREAS, in order to set forth the terms of sale of the Series 2010 Bonds, the Commission proposes to enter into a bond purchase agreement (the "Purchase Contract') with Barclays Capital Inc., as representative, acting on behalf of itself and the other underwriters, including E.J. De La Rosa & Co., Inc. (collectively, the "Underwriters"); WHEREAS, the Underwriters have caused to be prepared and submitted to the Commission a proposed form of the Purchase Contract; WHEREAS, there has been prepared and presented to the Commission a proposed form of official statement in preliminary form to be distributed in connection with the offering and sale of the Series 2010 Bonds (the "Official Statement'); WHEREAS, there has been prepared and presented to the Commission a proposed form of Continuing Disclosure Agreement (the "Continuing Disclosure Agreement') to be executed and delivered by the Commission to assist the Underwriters in satisfying their obligations under Rule 15c2-12 promulgated by the Securities and Exchange Commission; WHEREAS, the Commission has been presented with proposed forms of the Third 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 issuance of the Series 2010 Bonds and 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 Third Supplemental Indenture, the Purchase Contract, the Official Statement in final form and the Continuing Disclosure Agreement for the purposes, in the manner and upon the terms provided; 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 $150,000,000 aggregate principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), Series 2010, in accordance with the provisions set forth in the Indenture, in one or more series or subseries, is hereby authorized and approved. OHS West. 260964477.3 -3- 109 Section 3. The proposed form of Third 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), federally taxable or tax-exempt fixed interest rate or rates (such federally taxable interest rate or rates, if any, not to exceed a maximum of 8% per. annum and ]such federally tax-exempt interest rate or rates, if any, not to exceed a maximum of 6% per annum) or methods of determining the same, interest payment dates, forms, registration privileges, place or places of payment, terms of redemption, mandatory purchase, additional series designation and number thereof and other terms of the Series 2010 Bonds shall be (subject to the foregoing limitations) as provided in the Indenture and the Third 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 Third Supplemental Indenture, in substantially said form, with such changes therein, including without limitation changes necessary to designate one or more series of the Series 2010 Bonds as Build America Bonds, 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 the Purchase Contract presented to this meeting and the terms 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 2010 Bonds to the Underwriters pursuant to a Purchase Contract, with the Underwriters' compensation not to exceed [ 1% of the principal amount of the Series 2010 Bonds and the costs of issuance to be financed with respect to any series of Series 2010 Bonds designated as Build America Bonds not to exceed 2% of the proceeds of the sale of such series of Series 2010 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 proposed form of Official Statement presented to this meeting is hereby approved. The Executive Director is hereby authorized and directed to execute and deliver the Official Statement in substantially said form with such changes, insertions and deletions as may be approved by the Executive Director, said execution being conclusive evidence of such approval; and the Executive Director is hereby authorized to execute a certificate confirming that the Official Statement in preliminary form is "deemed final" by the Commission for purposes of Securities and Exchange Commission Rule 15c2-12. The distribution by the Underwriters of copies of the Official Statement in final form to all actual purchasers of the Series 2010 Bonds and the distribution by the Underwriters of the Official Statement in preliminary form to potential purchasers of the Series 2010 Bonds are hereby authorized and approved. Section 6. The proposed form of Continuing Disclosure Agreement presented to this meeting is hereby approved. If the Executive Director determines that doing so is in the best interests of the Commission, 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 OHS West 260964477.3 -4- 110 • • • same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 7. The Executive Director is hereby authorized to negotiate with financial institutions and/or insurance companies, as applicable, 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 on such terms as the Executive Director, with the advice of the Financial Advisor, determines are appropriate such insurance policy or surety bond in order to secure payment of the principal of, or interest on, the Series 2010 Bonds or to fund any bond reserve fund established pursuant to the Indenture or the Third Supplemental Indenture. Section S. The Executive Director is hereby authorized to enter into or to instruct the Trustee to enter into one or more investment agreements (hereinafter collectively referred to as the "Investment Agreement") providing for the investment of moneys in any of the funds and accounts created under the Indenture or the Third Supplemental Indenture, on such terns as the Executive Director shall deem appropriate. Pursuant to Section 5922 of the California Government Code, the Commission hereby finds and determines that the Investment Agreement will reduce the amount and duration of interest rate risk with respect to amounts invested pursuant to the Investment Agreement and is designed to reduce the amount or duration of payment, rate, spread or similar risk or result in a lower cost of borrowing when used in combination with the Series 2010 Bonds or enhance the relationship between risk and return with respect to investments. Section 9. The maximum aggregate principal amount of the Commission's CP Notes issued and outstanding at any one time shall not exceed $120,000,000. Section 10. All approvals, consents, directions, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution, the CP Notes or the Existing Swaps, whether before or after the issuance of the Series 2010 Bonds, including, without limitation, any amendment of any of the documents authorized by this Resolution or other agreement related thereto or related to the Existing Swaps or the CP Notes, and any of the foregoing that may be necessary or desirable in connection with any reserve facility, any investment of proceeds of the Series 2010 Bonds, or in connection with the addition, substitution or replacement of underwriters, 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 the Commission, and each Authorized Representative is hereby authorized and directed to give any such approval, consent, direction, notice, order, request, or other action and to execute such documents and take any such action which such Authorized Representative may deem necessary or desirable to further the purposes of this Resolution. 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 2010 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 OHS West260964477.3 -5- 111 Director. The Chair of the Board of Commissioners or, in his absence, a Vice Chair of the Board of Commissioners, is hereby authorized to execute and deliver the Series 2010 Bonds. The Chief Financial Officer of the Commission shall act as the Auditor -Controller of the Commission for execution of the Series 2010 Bonds and is hereby authorized to execute and attest to the - execution of such Series 2010 Bonds. The Clerk of the Board of the Commission is hereby authorized to attest to the execution by the Executive Director or the Deputy Executive Director or the Chief Financial Officer of any of such documents as said officers deem appropriate. The 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, signature certificates, certificates concerning the contents of the Official Statement and the representations and warranties in the Purchase Contract, any tax certificates or agreements, any insurance commitments or any agreements required in connection with obtaining a surety bond or an insurance policy, 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 2010 Bonds and otherwise to carry out, give effect to and comply with the terms and intent of the Ordinance, this Resolution, the Series 2010 Bonds and the documents approved hereby. Section 12. This Resolution shall take effect immediately upon its adoption and approval. APPROVED AND ADOPTED by the Riverside County Transportation Commission at its meeting on October 13, 2010. ATTEST: By: Clerk of the Board of the Commission OHS West260964477.3 By: Chair, Board of Commissioners -6- i • 112 • 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 October 13, 2010, of which meeting all of the members of said Commission had due notice. I further certify that I have carefully compared the foregoing copy with the original minutes of said meeting on file and of record in my office; that said copy is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes; and that said resolution has not been amended, modified, rescinded or revoked in any manner since the date of its adoption, and the same is now in full force and effect. I further certify that an agenda of said meeting was posted at least 72 hours before said meeting at a location in Riverside, California, freely accessible to the public and a brief general description of the resolution to be adopted at said meeting appeared on said agenda. IN WITNESS WHEREOF, I have executed this certificate hereto as of this date, , 2010. OHS West:2609644773 By Clerk -7- 113 ATTACHMENT 3 THIRD SUPPLEMENTAL INDENTURE between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of November 1, 2010 Relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) 2010 SERIES A (TAX-EXEMPT) AND 2010 SERIES B (TAXABLE BUILD AMERICA BONDS) (Supplementing the Indenture Dated as of June 1, 2008) OHS West :2609649832 114 • • 115 • ARTICLE XXVI DEFINITIONS Section 26.01. Definitions 1 Section 26.02. Rules of Construction 5 ARTICLE XXVIII FINDINGS, DETERMINATIONS AND DIRECTIONS Section 27.01. Findings and Determinations 5 Section 27.02. Recital in Bonds 5 Section 27.03. Effect of Findings and Recital 5 ARTICLE XXVIII AUTHORIZATION OF 2010 BONDS Section 28.01. Principal Amount, Designation and Series 6 Section 28.02. Purpose and Application of Proceeds 6 Section 28.03. Form, Denomination, Numbers and Letters 7 Section 28.04. Date, Maturities and Interest Rates 7 Section 28.05. Tax Covenants for 2010 Series B Bonds 8 ARTICLE XXIX REDEMPTION AND PURCHASE OF 2010 BONDS Section 29.01. Optional Redemption of 2010 Series A Bonds 9 Section 29.02. Optional Redemption of 2010 Series B Bonds 10 Section 29.03. Mandatory Redemption of 2010 Bonds From Mandatory Sinking Account Payments 10 Section 29.04. Selection of Bonds for Redemption 13 Section 29.05. Purchase In Lieu of Redemption 14 ARTICLE XXX ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF Section 30.01. Funds and Accounts 14 Section 30.02. 2010 Bonds Project Fund 14 Section 30.03. 2010 Costs of Issuance Fund 15 ARTICLE XXXI MISCELLANEOUS Section 31.01. Severability 15 Section 31.02. Parties Interested Herein 16 Section 31.03. Headings Not Binding 16 Section 31.04. Notice Addresses 16 Section 31.05. Notices to Rating Agencies 16 Section 31.06. Indenture to Remain in Effect 16 Section 31.07. Effective Date of Third Supplemental Indenture 16 Section 31.08. Execution in Counterparts 17 OHS West:260964983. 2 j 116 EXHIBITS • EXHIBIT A FORM OF 2010 Bond A-1 EXHIBIT B NOTICE ADDRESSES B-1 EXHIBIT C FORM OF 2010 BONDS PROJECT FUND REQUISITION C-1 • OHS West:260964983.2 II 117 • • • THIRD SUPPLEMENTAL INDENTURE THIS THIRD SUPPLEMENTAL INDENTURE, dated as of November 1, 2010 (this "Third 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"): WITNESSETH: WHEREAS, this Third 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; WHEREAS, the Commission has heretofore issued its Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series A, 2009 Series B and 2009 Series C, in the aggregate principal amount of $185,000,000, secured by the pledge of Revenues and other monies as set forth in the Indenture; and WHEREAS, the Commission desires to provide at this time for the issuance of (i) an additional Series of Bonds to be designated "Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2010 Series A (Tax -Exempt)" (the "2010 Series A Bonds"); and (ii) an additional Series of Bonds to be designated "Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2010 Series B (Taxable Build America Bonds)" as Build America Bonds (the "2010 Series B Bonds" and, together with the 2010 Series A Bonds, the "2010 Bonds") all for the purpose of providing funds to pay for a portion of the Costs of the Project, to retire $ principal amount of the Commission's Outstanding Notes and to pay costs of issuance, all as provided in this Third Supplemental Indenture; NOW, THEREFORE, the parties hereto hereby agree as follows: ARTICLE XXVI DEFINITIONS Section 26.01. Definitions. (a) Definitions. Unless the context otherwise requires, or as otherwise provided in subsection (b) and (c) of this Section, all terms which are defined in Section 1.02 and Section 19.01 of the Indenture shall have the same meanings in this Third Supplemental Indenture. OHS West:260964983.2 118 (b) Additional Definitions. Unless the context otherwise requires, the following terms shalt, for all purposes of this Third Supplemental Indenture, have the following meanings: "Authorized Denominations" means, with respect to 2010 Bonds, $5,000 and any integral multiple thereof. "Comparable Treasury Issue" means, with respect to any 2010 Series B Bond to be redeemed, the United States Treasury security selected by the Independent Banking Institution as having a maturity comparable to the remaining term to maturity of the 2010 Series B Bond being redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term to maturity of the 2010 Series B Bond being redeemed. "Comparable Treasury Price" means, with respect to any date on which a 2010 Series B Bond or portion thereof is being redeemed, either (a) the average of five Reference Treasury Dealer quotations for the date fixed for redemption, after excluding the highest and lowest such quotations, and (b) if the Independent Banking Institution is unable to obtain five such quotations, the average of the quotations that are obtained. The quotations will be the average, as determined by the Independent Banking Institution, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of principal amount) quoted in writing to the Independent Banking Institution, at 5:00 p.m. New York City time on the third business day preceding the date fixed for redemption. "Comparable Treasury Yield" means, with respect to any 2010 Series B Bond to be redeemed, the yield which represents the weekly average yield to maturity for the preceding week appearing in the most recently published statistical release designated "H.15(519) Selected Interest Rates" under the heading "Treasury Constant Maturities," or any successor publication selected by the Independent Banking Institution that is published weekly by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded United States Treasury securities adjusted to constant maturity, for the maturity corresponding to the remaining term to maturity of the 2010 Series B Bond being redeemed. The Comparable Treasury Yield will be determined as of the third business day immediately preceding the applicable date fixed for redemption. If the H.15(519) statistical release sets forth a weekly average yield for United States Treasury securities that have a constant maturity that is the same as the remaining term to maturity of the 2010 Series B Bond being redeemed, then the Comparable Treasury Yield will be equal to such weekly average yield. In all other cases, the Comparable Treasury Yield will be calculated by interpolation on a straight-line basis, between the weekly average yields on the United States Treasury securities that have a constant maturity (i) closest to and greater than the remaining term to maturity of the 2010 Series B Bond being redeemed; and (ii) closest to and less than the remaining term to maturity of the 2010 Series B Bond being redeemed. Any weekly average yields calculated by interpolation will be rounded to the nearest 1/100th of 1 %, with any figure of I/200th of 1 % or above being rounded upward. If, and only if, weekly average yields for United States Treasury securities for the preceding week are not available in the H.15(519) statistical release or any successor publication, then the Comparable Treasury Yield will be the rate of interest per annum equal to the OHS West.260964983.2 2 • • • 119 • semiannual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal amount) at the Comparable Treasury Price (each as defined herein) as of the date fixed for redemption. "Independent Banking Institution" means, with respect to any 2010 Series B Bond to be redeemed, an investment banking institution of national standing which is a primary United States government securities dealer in the City of New York designated by the Commission (which may be one of the underwriters of the 2010 Series B Bonds) [or an independent financial advisor designated by the Commission]. If the Commission fails to appoint an Independent Banking Institution at least 45 days prior to the date fixed for redemption, or if the Independent Banking Institution appointed by the Commission is unwilling or unable to determine the Comparable Treasury Yield, the Comparable Treasury Yield will be determined by an Independent Banking Institution designated by the Trustee. "Interest Payment Date" means, with respect to 2010 Bonds, June 1 and December 1 of each year until the redemption or maturity of such 2010 Bonds, commencing with June 1, 2011. "Issue Date" means, with respect to the 2010 Bonds, the date on which the 2010 Bonds are first delivered to the purchasers thereof. "Make -Whole Premium" means, with respect to any 2010 Series B Bond to be redeemed, an amount calculated by an Independent Banking Institution (as defined herein) equal to the positive difference, if any, between: (1) The sum of the present values, calculated as of the date fixed for redemption of: (a) Each interest payment that, but for the redemption, would have been payable on the 2010 Series B Bond or portion thereof being redeemed on each regularly scheduled interest payment date occurring after the date fixed for redemption through the maturity date of such 2010 Series B Bond (excluding any accrued interest for the period prior to the date fixed for redemption); provided, that if the date fixed for redemption is not a regularly scheduled interest payment date with respect to such 2010 Series B Bond, the amount of the next regularly scheduled interest payment will be reduced by the amount of interest accrued on such 2010 Series B Bond to the date fixed for redemption; plus (b) The principal amount that, but for such redemption, would have been payable on the maturity date of the 2010 Series B Bond or portion thereof being redeemed; minus (2) The principal amount of the 2010 Series B Bond or portion thereof being redeemed. The present values of the interest and principal payments referred to in (1) above will be determined by discounting the amount of each such interest and principal payment from the date that each such payment would have been payable but for the redemption to the date fixed for redemption on a semiannual basis (assuming a 360-day year consisting of twelve (12) 30-day months) at a discount rate equal to the Comparable Treasury Yield (as defined herein), plus [ ] ([ ]) basis points. OIIS Wese260964983.2 3 120 "Record Date" means, with respect to the 2010 Bonds, the fifteenth (15th) day (whether or not a Business Day) of the month preceding the month in which such Interest Payment Date occurs. "Redemption Price" means, with respect to any 2010 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 Third Supplemental Indenture. "Reference Treasury Dealer" means, with respect to any 2010 Series B Bond to be redeemed, a primary United States Government securities dealer in the United States appointed by the Commission and reasonably acceptable to the Independent Banking Institution (which may be one of the underwriters of the 2010 Series B Bonds). If the Commission fails to select the Reference Treasury Dealers within a reasonable period of time, the Trustee will select the Reference Treasury Dealers in consultation with the Commission. "Tax Law Change" means legislation has been enacted by the Congress of the United States or passed by either House of the Congress, or a decision has been rendered by a court of the United States, or an order, ruling, regulation (final, temporary or proposed) or official statement has been made by or on behalf of the Treasury Commission of the United States, the Internal Revenue Service or other governmental agency of appropriate jurisdiction, the effect of which, as reasonably determined by the Commission, would be to suspend, reduce or terminate the Subsidy Payments from the United States Treasury to the Commission or the Trustee as its agent with respect to the 2010 Series B Bonds, or to state or local government issuers generally with respect to obligations of the general character of the 2010 Series B Bonds, pursuant to Sections 54AA or 6431 of the Code of an amount equal to 35% of the interest due thereon on each interest payment date; provided, that such suspension, reduction or termination is not due to a failure by the Commission to comply with the requirements under the Code to receive the Subsidy Payments. "Third Supplemental Indenture" means this Third Supplemental Indenture, between the Commission and the Trustee, as amended and supplemented from time to time. "2010 Bonds" means, collectively, the 2010 Series A Bonds and the 2010 Series B Bonds authorized by Article XXVIII of this Indenture. "2010 Bonds Project Fund" means the fund by that name established pursuant to Section 30.01(a). "2010 Bonds Tax Certificate" means the Tax Certificate executed on behalf of the Commission in connection with the issuance of the 2010 Bonds. "2010 Costs of Issuance Fund" means the fund by that name established pursuant to Section 30.01(b). "2010 Credit Enhancement" means any Credit Enhancement provided with respect to the 2010 Bonds. "2010 Credit Provider" means the Credit Provider issuing a 2010 Credit Enhancement. OHS West :260964983.2 4 121 • • • • "2010 Series A Bonds" shall mean the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2010 Series A (Tax -Exempt), authorized by Article XXVIII of this Indenture. "2010 Series B Bonds" shall mean the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2010 Series B (Taxable Build America Bonds), authorized by Article XXVIII of this Indenture. Section 26.02. 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 XXVI. The terms "hereby," "hereof," "hereto," "herein," "hereunder," and any similar terms, as used in this Third Supplemental Indenture, refer to the Indenture. ARTICLE XXVII FINDINGS, DETERMINATIONS AND DIRECTIONS Section 27.01. Findings and Determinations. The Commission hereby finds and determines that the 2010 Bonds shall be issued pursuant to Article XXVIII and Section 3.01, Section 3.02 and Section 3.03 of the Indenture, and upon the issuance of the 2010 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 27.02. Recital in Bonds. There shall be included in each of the definitive 2010 Bonds, and also in each of the temporary 2010 Bonds, if any are issued, a certification and recital 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 2010 Bond, and in the issuing of that 2010 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 2010 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 2010 Bond attached hereto as Exhibit A. Section 27.03. Effect of Findings and Recital. From and after the issuance of the 2010 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 2010 Bonds is at issue. OHS West-260964983.2 5 122 ARTICLE XXVIII AUTHORIZATION OF 2010 BONDS Section 28.01. 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 $( 1. 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), 2010 Series A (Tax -Exempt)." 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 $1 1. 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), 2010 Series B (Taxable Build America Bonds)." 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 each Series of 2010 Bonds in the aggregate principal amount set forth above. Section 28.02. Purpose and Application of Proceeds. The 2010 Bonds are issued for the purpose of providing funds to pay for a portion of the Costs of the Project and to retire $ principal amount of the Commission's Outstanding Notes. In addition, a portion of the proceeds of the 2010 Bonds will be applied to pay Costs of Issuance of the 2010 Bonds. The net proceeds from the sale of the 2010 Series A 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 funds shall be deposited in the 2010 Series A Account which the Trustee shall establish and maintain within the 2010 Bonds Project Fund. (b) $ of such proceeds shall be transferred to the Notes Trustee for deposit upon the order of the Commission; and (c) $ Fund. of such proceeds shall be deposited in the 2010 Costs of Issuance The net proceeds from the sale of the 2010 Series B Bonds in the amount of $ shall be received by the Trustee, and the Trustee shall deposit or transfer such funds as follows: (d) $ of such funds shall be deposited in the 2010 Series B Account which the Trustee shall establish and maintain within the 2010 Bonds Project Fund. (e) $ of such proceeds shall be transferred to the Notes Trustee for deposit upon the order of the Commission; and OHS West:260964983.2 6 • 123 • (i $ Fund. of such proceeds shall be deposited in the 2010 Costs of Issuance Section 28.03. Form, Denomination, Numbers and Letters. Each Series of 2010 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 Series of 2010 Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A. Section 28.04. Date, Maturities and Interest Rates. The 2010 Series A Bonds shall be issued as Current Interest Bonds in the aggregate principal amount of $ . The 2010 Series A Bonds shall be dated their Issue Date, shall bear interest from that date at the following rates per annum, computed on the basis of a 360-day year comprised of twelve 30-day months, and shall mature on June 1 in the following years and in the following amounts: Maturity Date (June 1) Principal Amount Interest Rate * Tenn Bond Final Maturity The 2010 Series B Bonds shall be issued as Current Interest Bonds in the aggregate principal amount of $ . The 2010 Series B Bonds shall be dated their Issue Date, shall bear interest from that date at the following rates per annum, computed on the basis of a 360-day year comprised of twelve 30-day months, and shall mature on June 1 in the following years and in the following amounts: Maturity Date (June 1) Principal Amount Interest Rate * Tenn Bond Final Maturity Interest on each 2010 Bond shall be payable on each Interest Payment Date for such 2010 Bond until the principal sum of such 2010 Bond has been paid; provided, however, that if at the maturity date of any 2010 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 OHS Wese260964983.2 % 1244 redemption thereof, in full accordance with terms of the Indenture, such 2010 Bond shall then cease to bear interest. Each 2010 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. As long as the 2010 Bonds are Book -Entry Bonds, principal of and interest on the 2010 Bonds shall be payable by wire transfer to DTC in lawful money of the United States of America. Principal of the 2010 Bonds shall be payable when due upon presentation and surrender thereof at the Principal Office of the Trustee. Each 2010 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 2010 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 2010 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. Section 28.05. Tax Covenants for 2010 Series B Bonds. (a) The Commission hereby irrevocably elects to apply the provisions of Section 54AA(d) of the Code to the 2010 Series B Bonds and intends that the 2010 Series B Bonds be treated as Build America Bonds. In addition, the Commission hereby irrevocably elects to treat the 2010 Series B Bonds as "Qualified Bonds" within the meaning of Section 54AA(g)(2) of the Code such that the 2010 Series B Bonds will be eligible for direct payment by the federal government of the Subsidy Payments with respect to the 2010 Series B Bonds. (b) The Commission will not use or permit the use of any proceeds of the 2010 Series B Bonds or any funds of the Commission, directly or indirectly, to acquire any securities or obligations that would adversely affect the receipt of the Subsidy Payments, and will not take or permit to be taken any other action or actions, which would cause any such 2010 Series B Bond to be an "arbitrage bond" within the meaning of Section 148 of the Code or "federally guaranteed" within the meaning of Section 149(b) of the Code and any such applicable regulations promulgated from time to time thereunder. The Commission will observe and not violate the requirements of Section 148 of the Code and any such applicable regulations. The Commission will comply with all requirements of Sections 148 and 149(b) of the Code to the extent applicable to the 2010 Series B Bonds. OHS West260964983.2 8 • 125 • (c) The Commission will comply with the provisions and procedures of the 2010 Bonds Tax Certificate. (d) The Commission will not use or permit the use of any proceeds of the 2010 . Series B Bonds or any funds of the Commission (so long as such proceeds or other funds are under its control) or any funds held by the Trustee under the Indenture, directly or indirectly, in any manner, and will not take or omit to take any action, that would adversely affect the receipt of the Subsidy Payments. (0 The Trustee shall, within the 45-day period beginning on the date that is 90 days before the next Interest Payment Date with respect to the 2010 Series B Bonds, file Form 8038-CP or any successor form designated by the federal government, requesting payment of the Subsidy Payments with respect to the next interest payment on the 2010 Series B Bonds. The Commission shall provide all information and assistance to the Trustee as may be required to facilitate the timely filing of all documentation required to enable the Trustee to collect and receive the Subsidy Payments with respect to the 2010 Series B Bonds on the Commission's behalf. Immediately upon receipt of any Subsidy Payments with respect to the 2010 Series B Bonds, the Trustee shall deposit such amounts into the Revenue Fund. (0 Notwithstanding any provisions of this Section 28.05 or the 2010 Bonds Tax Certificate, if the Commission shall provide to the Trustee an Opinion of Bond Counsel to the effect that any specified action required under this Section 28.05 is no longer required or that some further or different action is required to maintain the receipt of the Subsidy Payments with respect to the 2010 Series B Bonds, the Trustee and the Commission may conclusively rely on such opinion in complying with the requirements of this Section, and, notwithstanding any other provision of this Indenture or the 2010 Bonds Tax Certificate, the covenants hereunder shall be deemed to be modified to that extent. ARTICLE XXIX REDEMPTION AND PURCHASE OF 2010 BONDS Section 29.01. Optional Redemption of 2010 Series A Bonds. (a) Optional Redemption of 2010 Series A Bonds. The 2010 Series A Bonds maturing on or before June 1, 20_ shall not be subject to redemption prior to their respective stated maturities. The 2010 Series A Bonds maturing on or after June 1, 20_ shall be subject to redemption prior to their respective stated maturities, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after June 1, 20_ at the principal amount of 2010 Series A Bonds called for redemption plus accrued interest to the date fixed for redemption, without premium. (b) Sufficient Funds Required for Optional Redemption. Any optional redemption of 2010 Series A Bonds and notice thereof shall 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 2010 Series A Bonds called for redemption. OHS West:260964983.2 9 126 (c) Notice of Optional Redemption- Rescission. Any notice of optional redemption of the 2010 Series A Bonds shall be delivered in accordance with Section 4.02 and may be rescinded as provided in Section 4.02. Section 29.02. Optional Redemption of 2010 Series B Bonds. (a) [Optional Redemption of 2010 Series B Bonds. The 2010 Series B Bonds of each maturity will be subject to redemption prior to their respective stated maturity dates, at the option of the Commission, from any source of available funds, as a whole or in part by lot in authorized denominations of $5,000 and any integral multiple thereof, on any date at a redemption price equal to 100% of the principal amount of 2010 Series B Bonds to be redeemed plus the Make -Whole Premium (as defined herein), together with accrued interest, if any, to the date fixed for redemption.] [Optional Redemption of 2010 Series B Bonds. The 2010 Series B Bonds maturing on or before June 1, 20 shall not be subject to redemption prior to their respective stated maturities. The 2010 Series B Bonds maturing on or after June 1, 20 shall be subject to redemption prior to their respective stated maturities, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after June 1, 20 at the principal amount of 2010 Series B Bonds called for redemption plus accrued interest to the date fixed for redemption, without premium.] (b) Extraordinary Optional Redemption of 2010 Series B Bonds. The 2010 Series B Bonds shall be subject to redemption prior to maturity at the option of the Commission upon the occurrence of a Tax Law Change, from any source of available funds, as a whole or in part, on any date, at a Redemption Price equal to 100% of the principal amount of 2010 Series B Bonds to be redeemed plus the Make -Whole Premium (using a discount rate equal to the Comparable Treasury Yield plus [ ] basis points), if any, plus accrued interest to the date fixed for redemption. (c) Sufficient Funds Required for Optional Redemption. Any optional redemption of 2010 Series B 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 2010 Series B Bonds called for redemption. (d) Notice of Optional Redemption; Rescission. Any notice of optional redemption of the 2010 Series B Bonds shall be delivered in accordance with Section 4.02 and may be rescinded as provided in Section 4.02. Section 29.03. Mandatory Redemption of 2010 Bonds From Mandatory Sinking Account Payments. (a) Mandatory Redemption of 2010 Series A Bonds. The 2010 Series A Bonds maturing on June 1, 20 , June 1, 20_, and June 1, 20 , respectively, shall also be subject to mandatory redemption prior to their respective stated maturities, in part, by lot, from Mandatory Sinking Account Payments on each June 1 a Mandatory Sinking Account Payment is due as OHS West :260964983.2 10 i 127 • specified in Section 29.03(a)(1), Section 29.03(a)(2) and Section 29.03(a)(3), in the principal amount equal to the Mandatory Sinking Account Payment due on such date and at a redemption price equal to 100% of the principal amount thereof, plus accrued but unpaid interest to the redemption date, without premium. (1) 2010 Series A Term Bonds Due June 1, 20( 1. The Mandatory Sinking Account Payments for the 2010 Series A Term Bonds maturing on June 1, 20_ shall be due in the amounts and on the dates as follows: Mandatory Sinking Account Mandatory Payments Dates Sinking Account (June 1) Payments *Final Maturity (2) 2010 Series A Term Bonds Due June 1, 20[ 1. The Mandatory Sinking Account Payments for the 2010 Series A Term Bonds maturing on June 1, 20 shall be due in the amounts and on the dates as follows: Mandatory Sinking Account Mandatory Payments Dates Sinking Account (June 1) Payments *Final Maturity (3) 2010 Series A Term Bonds Due June 1, 20[ 1. The Mandatory Sinking Account Payments for the 2010 Series A Term Bonds maturing on June 1, 20_ shall be due in the amounts and on the dates as follows: Mandatory Sinking Account Mandatory Payments Dates Sinking Account (June 1) Payments *Final Maturity OHS West:2609649832 11 128 (b) Mandatory Redemption of 2010 Series B Bonds. The 2010 Series B Bonds maturing on June 1, 20� June 1, 20_, and June 1, 20respectively, shall also be subject to mandatory redemption prior to their respective stated maturities, in part, by lot, from Mandatory Sinking Account Payments on each June 1 a Mandatory Sinking Account Payment is due as. specified in Section 29.03(b)(1), Section 29.03(b)(2) and Section 29.03(b)(3), in the principal amount equal to the Mandatory Sinking Account Payment due on such date and at a redemption price equal to 100% of the principal amount thereof, plus accrued but unpaid interest to the redemption date, without premium. (1) 2010 Series B Term Bonds Due June 1, 20f 1• The Mandatory Sinking Account Payments for the 2010 Series B Term Bonds maturing on June 1, 20_ shall be due in the amounts and on the dates as follows: Mandatory Sinking Account Mandatory Payments Dates Sinking Account (June 1) Payments *Final Maturity (2) 2010 Series B Term Bonds Due June 1, 20f 1. The Mandatory Sinking Account Payments for the 2010 Series B Term Bonds maturing on June 1, 20_ shall be due in the amounts and on the dates as follows: Mandatory Sinking Account Mandatory Payments Dates Sinking Account (June I) Payments *Final Maturity (3) 2010 Series B Tenn Bonds Due June I, 20f 1. The Mandatory Sinking Account Payments for the 2010 Series B Term Bonds maturing on June I, 20_ shall be due in the amounts and on the dates as follows: OHS West-260964983.2 12 • 129 • • • Mandatory Sinking Account Mandatory Payments Dates Sinking Account (June 1) Payments *Final Maturity Section 29.04. Selection of Bonds for Redemption. (a) Selection of 2010 Series A Bonds for Redemption. The Commission shall designate which maturities of any 2010 Series A Bonds are to be called for optional redemption pursuant to Section 29.01(a). If less than all 2010 Series A Bonds maturing by their terms on any one date are to be redeemed at any one time, the Trustee shall select the 2010 Series A Bonds of such maturity date to be redeemed in any manner that it deems appropriate and fair and shall promptly notify the Commission in writing of the numbers of the 2010 Series A Bonds so selected for redemption. For purposes of such selection, 2010 Series A Bonds shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. In the event of an optional redemption of the 2010 Series A Term Bonds pursuant to Section 29.01(a), the Commission shall designate the Mandatory Sinking Account Payments under Section 29.03(a), or portions thereof, in an aggregate amount equal to the principal amount of 2010 Series A Term Bonds so optionally redeemed, that are to be reduced as allocated to such redemption, and such Mandatory Sinking Account Payments shall be reduced accordingly. (b) Selection of 2010 Series B Bonds for Redemption. The Commission shall designate which maturities of any 2010 Series B Bonds are to be called for optional redemption pursuant to Section 29.02(a). (1) Non -Book -Entry Bonds. If the 2010 Series B Bonds are not registered in book -entry only form, any redemption of less than all of a maturity of the 2010 Series B Bonds shall be effected by the Trustee among owners on a pro-rata basis subject to minimum Authorized Denominations. The particular 2010 Series B Bonds to be redeemed shall be determined by the Trustee, using such method as it shall deem fair and appropriate. (2) Book -Entry Bonds. If the 2010 Series B Bonds are registered in book - entry only form and so long as DTC or a successor securities depository is the sole registered owner of the 2010 Series B Bonds, if less than all of the 2010 Series B Bonds of a maturity are called for prior redemption, the particular 2010 Series B Bonds or portions thereof to be redeemed shall be selected on a "Pro Rata Pass -Through Distribution of Principal" basis in accordance with DTC procedures, provided that, so long as the 2010 Series B Bonds are held in book -entry form, the selection for redemption of such 2010 Series B Bonds shall be made in accordance with the operational arrangements of DTC then in effect that currently provide for adjustment of the principal by a factor provided pursuant to DTC operational arrangements. If the Trustee does not provide the necessary information and identify the redemption as on a Pro OI-IS West 260964983.2 13 130 Rata Pass -Through Distribution of Principal basis, the 2010 Series B Bonds shall be selected for redemption by lot in accordance with DTC procedures. Redemption allocations made by DTC, the DTC Participants or such other intermediaries that may exist between the Commission and the Beneficial Owners are to be made on a "Pro Rata Pass -Through Distribution of Principal" basis as described above. If the DTC operational arrangements do not allow for the redemption of the 2010 Series B Bonds on a Pro Rata Pass -Through Distribution of Principal basis as described above, then the 2010 Series B Bonds shall be selected for redemption by lot in accordance with DTC procedures. (3) 2010 Series B Term Bonds. In the event of an optional redemption of the 2010 Series B Term Bonds pursuant to Section 29.02(a) or Section 29.02(b), the Commission shall designate the Mandatory Sinking Account Payments under Section 29.03(b), or portions thereof, in an aggregate amount equal to the principal amount of 2010 Series B Term Bonds so optionally redeemed, that are to be reduced as allocated to such redemption, and such Mandatory Sinking Account Payments shall be reduced accordingly. Section 29.05. Purchase In Lieu of Redemption. The Commission reserves the right at all times to purchase any of its 2010 Bonds on the open market. In lieu of mandatory redemption, the Commission may surrender to the Trustee for cancellation 2010 Bonds purchased on the open market, and such 2010 Bonds shall be cancelled by the Trustee. If any 2010 Bonds are so cancelled, the Commission may designate the Mandatory Sinking Account Payments or portions thereof within such Series of the 2010 Bonds so purchased that are to be reduced as a result of such cancellation. ARTICLE XXX ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF Section 30.01. Funds and Accounts. The following funds and accounts are hereby established in connection with the 2010 Bonds: (a) To ensure the proper application of such portion of proceeds from the sale of the 2010 Bonds to be applied to pay a portion of the Costs of the Project, there is hereby established the 2010 Bonds Project Fund, such fund to be held by the Trustee. (b) To ensure the proper application of such portion of proceeds from the sale of the 2010 Bonds to be applied to pay the Costs of Issuance of the 2010 Bonds, there is hereby established the 2010 Costs of Issuance Fund, such fund to be held by the Trustee. Section 30.02. 2010 Bonds Project Fund. The monies set aside and placed in the 2010 Bonds Project Fund shall be expended for the purpose of paying a portion of the Costs of the Project and shall not be used for any other purpose whatsoever. Pursuant to Section 5.11 of the Indenture, all interest, profits and other income received from the investment of moneys in the 2010 Bonds Project Fund shall be deposited in the 2010 Bonds Project Fund. OHS West:2609649832 14 • • 131 • • (a) Before any payment from the 2010 Bonds Project Fund shall be made by the Trustee, the Commission shall file or cause to be filed with the Trustee a requisition of the Commission in the form attached hereto as Exhibit C (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 paid; (iv) the purpose by general classification for which each obligation to be paid was incurred; (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 2010 Bonds Project Fund and has not been previously paid from said fund; (vi) the account within the 2010 Bonds Project Fund from which such payment will be made; and (vii) that there has not been filed with or served upon the Commission notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the amounts payable to any of the persons named in such Requisition, which has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen's or mechanics' liens accruing by mere operation of law. (b) When the Commission determines that the portion of the Project funded with any Series of 2010 Bonds has been completed, a Certificate of the Commission shall be delivered to the Trustee by the Commission stating: (i) the fact and date of such completion; (ii) that all of the costs thereof have been determined and paid (or that all of such costs have been paid less specified claims that are subject to dispute and for which a retention in the proper account within the 2010 Bonds Project Fund is to be maintained in the full amount of such claims until such dispute is resolved); and (iii) that the Trustee is to transfer the remaining balance in the account within the 2010 Bonds Project Fund relating to such Series of 2010 Bonds, less the amount of any such retention, to the Revenue Fund. Section 30.03. 2010 Costs of Issuance Fund. The monies set aside and placed in the 2010 Costs of Issuance Fund shall be expended for the purpose of paying the Costs of Issuance of the 2010 Bonds. Before any payment from the 2010 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 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 2010 Costs of Issuance Fund and has not been previously paid from said fund. On 1, 2011 any remaining amounts in the 2010 Costs of Issuance Fund shall be transferred to the Revenue Fund and the 2010 Costs of Issuance Fund shall be closed. OHS West:260964983.2 15 132 ARTICLE XXXI MISCELLANEOUS Section 31.01. Severabilitv. If any covenant, agreement or provision, or any portion. thereof, contained in this Third Supplemental Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Third 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 Third Supplemental Indenture and the 2010 Bonds issued pursuant hereto shall remain valid, and the Holders of the 2010 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 31.02. Parties Interested Herein. Nothing in this Third 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 Credit Provider, if any, and the Holders of the 2010 Bonds, any right, remedy or claim under or by reason of this Third Supplemental Indenture or any covenant, condition or stipulation hereof; and all the covenants, stipulations, promises and agreements in this Third Supplemental Indenture contained by and on behalf of the Commission shall be for the sole and exclusive benefit of the Commission, the Trustee, each Credit Provider, if any, and the Holders of the 2010 Bonds. Section 31.03. Headings Not Binding. The headings in this Third 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 Third Supplemental Indenture. Section 31.04. 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. Section 31.05. Notices to Rating Agencies. The Trustee shall provide notice to the Rating Agencies of the following events with respect to the 2010 Bonds: (1) Change in Trustee; (2) Amendments to the Indenture; (3) Provision, Expiration, Termination, substitution or extension of a 2010 Credit Enhancement, if any, or any 2010 Credit Provider thereunder; and (4) Redemption or defeasance of any 2010 Bonds. OHS West260964983.2 16 133 • Section 31.06. Indenture to Remain in Effect. Save and except as amended and supplemented by this Third Supplemental Indenture, the Indenture shall remain in full force and effect. Section 31.07. Effective Date of Third Supplemental Indenture. This Third Supplemental Indenture shall take effect upon its execution and delivery. Section 31.08. Execution in Counterparts. This Third 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. Ot IS West 260964983.2 17 134 • 135 i IN WITNESS WHEREOF, the parties hereto have executed this Third Supplemental Indenture by their officers thereunto duly authorized as of the day and year first written above. (Seal) A 1"1'EST: Clerk of the Riverside County Transportation Commission APPROVED AS TO FORM: By: General Counsel OHS West2609649832 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Executive Director U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 18 136 • 137 • EXHIBIT A FORM OF 2010 BOND No. R-- $ Riverside County Transportation Commission Sales Tax Revenue Bond (Limited Tax Bond) 2010 Series INTEREST RATE MATURITY ISSUE DATE June 1, 20_ , 2010 REGISTERED OWNER: Cede & Co. PRINCIPAL AMOUNT: [TO COME] OHS Wese260964983.2 A-1 CUSIP Dollars 138 • • 139 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 and its seal to be affixed hereto all as of the Issue Date set forth above. (Seal) Attest: RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Chair of the Board of Commissioners Auditor -Controller [FORM OF CERTIFICATE OF AUTHENTICATION] This Bond is one of the 2010 Series _ Bonds described in the within mentioned Indenture and was authenticated on the date set forth below. Date of Authentication: OHS Wes12609649832 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer A-2 140 • [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 appoints to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature: SIGNATURE GUARANTEED: Notice: Signature must be guaranteed by an eligible guarantor firm. OHS West:260964983.2 (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. A-3 142 • 143 • • INDEX TO EXHIBITS EXHIBIT B NOTICE ADDRESSES To the Commission: Riverside County Transportation Commission Street Address: 4080 Lemon Street, 3`d Floor Riverside, California 92501 Mailing Address: P.O. Box 12008 Riverside, California 92502 Attention: Chief Financial Officer Telephone: (951) 787-7926 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 OHS West:260964983.2 B-1 To the Rating Agencies: Standard & Poor's Ratings Services 55 Water Street, 38th Floor New York, New York 10041 Telephone: (212) 438-2000 Fax: (212)438-2157 Moody's Investors Service MSPG Surveillance 7 World Trade Center, 25th Floor 250 Greenwich Street New York, New York 10007 Fitch Ratings 33 Whitehall Street New York, New York 10004 144 • 145 OHS Wesc260964983 2 INDEX TO EXHIBITS EXHIBIT C FORM OF 2010 BONDS PROJECT FUND REQUISITION [TO COME] C-I 146 ATTACHMENT 4 Stradling Yocca Carlson & Rauth Draft dated August 17, 2010 RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) 2010 SERIES A (TAX EXEMPT) AND 2010 SERIES B (TAXABLE BUILD AMERICA BONDS) BOND PURCHASE AGREEMENT ,20I0 Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92502 Ladies and Gentlemen: The undersigned, Barclays Capital Inc., as representative (the "Representative"), acting on behalf of itself and the underwriter listed in Exhibit A hereto, (collectively, the "Underwriters"), offers to enter into this Bond 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), 2010 Series A (Tax Exempt) (the "Series A Bonds"), and 2010 Series B (Taxable Build America Bonds) (the "Series B Bonds" and together with the Series A Bonds, 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 as of June 1, 2008 (the "First Supplemental Indenture"), the Second Supplemental Indenture, dated as of October I, 2009 (the "Second Supplemental Indenture") and the Third Supplemental Indenture, dated as of November 1, 2010 (the "Third Supplemental Indenture"). The Original Indenture, the First Supplemental Indenture, the Second Supplemental Indenture and the Third 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 Standard 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 terns 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 to (i) fund a portion of the cost of the Project, as defined in the Indenture (ii) fund the retirement of all or a portion of the commercial paper .program outstanding at the time of the issuance of the Bonds, (iii) fund a reserve fund for the Bonds, and (iv) pay costs of issuance of the Bonds. The Commission will undertake, pursuant to the Indenture and a Continuing Disclosure Agreement with the Trustee dated 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 DOCSOC/ 1427909v3/029999-0000 147 requirements of any prior continuing disclosure undertaking. A description of this undertaking is set forth in the Official Statement. 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 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 the Closing Date. The Underwriters agree to purchase the Bonds at the aggregate purchase price of $ (consisting of the aggregate principal amount of the Bonds less $ Underwriters' discount). The Bonds mature in the years and principal amounts and bear interest at the rates set forth in Exhibit B hereto and shall be substantially in the form described in the Indenture, 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 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. Subsequent to 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 , 2010 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)(l) 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 final pricing information on the Bonds on a timely basis, (2) disseminate to the Underwriters copies of the final Official DOC SOC/ 1427909v3/029999-0000 2 • 148 • Statement, including any supplements prepared by the Commission, and (3) promptly file a copy of the final Official Statement, including any supplements prepared by the Commission, with the Municipal Securities Rulemaking Board. 4. The Closing. At 5:00 a.m., California time, on , 2010, 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 cause to be delivered the Bonds in book -entry form through the Trustee via the F.A.S.T. delivery book -entry system of The Depository Trust Company ("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, San Francisco, California ("Bond Counsel") or another place to be mutually agreed upon by the Commission and the Representative. The Representative, 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 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 information conceming DTC and the book -entry system (collectively, the "Excluded Information"), as to which no representations or warranties are made), in the form delivered to the Underwriters, 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 the 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 of the Commission in conformity with and entitled to the benefit and security of the Indenture, except as enforcement of such obligations may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors rights generally, DOCSOC/ 1427909v3/029999-0000 3 149 the application of equitable principles, the exercise of judicial discretion and the limitations on legal remedies against public entities in the State of California; (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 terns, 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; (f) the Commission is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States of America or any applicable judgment, decree, resolution, contract or other instrument or any agreement 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 or any agreement 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 of competent jurisdiction, 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. of the Commission adopted on October 13, 2010 (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 the consummation of the transactions contemplated hereby or thereby or which might materially DOC S OC/ 14 27 909v3/029999-0000 4 • 150 • 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, or information becomes known, 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; (1) for a period of 25 days subsequent to the Closing Date (the "Delivery Period"), if an event occurs which might or would cause the Official Statement, 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; (m) 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 DOCSOC/ 1427909v3/029999-0000 5 151 therefrom the Excluded Information, 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; and (n) between the date of this Purchase Agreement and the date of Closing, except for issuances of commercial paper under the Commission's existing commercial paper program, 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. 5. The Representative, on behalf of itself and the Underwriters, has entered 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, 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 of securities in general 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; DOCSOC/ 1427909v3/029999-0000 6 • 152 • • • (f) Subsequent to the date hereof, up to and including the Closing, the California State Board of Equalization (`BOE") shall not have suspended or advised the Commission of suspension of the collection of the Sales Tax or the escrow of any proceeds thereof by the BOE, 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 by the BOE or have any question as to the validity of the Sales Tax; (g) 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; (h) 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 "THE 2010 BONDS," "SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS," "TAX MATTERS," "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 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 not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (iv) The opinion of Fulbright & Jaworski L.L.P. ("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 the 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 Appendices [A and BJ thereto, as to which no view need to be expressed); DOCSOC/ I 427909v 3/029999-0000 7 153 (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 of competent jurisdiction, 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 bankruptcy, 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 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 Excluded Information) 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 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 DOC SOC/ 1427909v3/029999-0000 8 • • • 154 • 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; (iv) 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; (v) 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; (vi) the Bond Resolution, the Commission's Documents and the Bonds conform in all material respects to the descriptions thereof in the Official Statement; (vii) 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; (viii) 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 of competent jurisdiction: (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 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; (ix) 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; (x) 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; (xi)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 D OCSOC/ 1427909v3/029999-0000 9 155 Bonds, and the Underwriters are hereby authorized to distribute copies of the Official Statement in connection with the resale of the Bonds; and (xii) 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, that: (A) the Trustee 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 the Indenture and perform its duties under the Indenture and the Continuing Disclosure Agreement (together, the "Trustee Documents"); (B) the Trustee is duly authorized to enter into the Indenture and Trustee has duly executed and delivered the Indenture; (C) the execution and delivery of the Indenture and compliance with the provisions on the Trustee's part contained in the Trustee Documents, 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 Trustee 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 any of the, properties or assets held by the Trustee 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 Trustee Documents; (D) to the best of the knowledge of the Trustee, 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 the Trustee, as such but not in its individual capacity, affecting the existence of the Trustee, 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 Indenture, or contesting the powers of the Trustee 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 Indenture; and (E) the Trustee 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 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; DOCSOC/ 1427909v3/029999-0000 10 • 156 (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) A tax certificate relating to the Bonds in form satisfactory to Bond Counsel and the Representative; (xiv) 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; (xv) 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; (xvi) 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" contains any untrue statement of a material fact or omits 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; (xvii) 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 conceming results of the November 5, 2002 election; (xviii) 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; (xix) A copy of the Blanket Letter of Representation to DTC relating to the Bonds signed by DTC and the Commission; (xx) On or prior to the Closing Date, the 2009 Liquidity Facility shall have been delivered to the Trustee; (xxi) A certificate of the 2009 Liquidity Provider dated the Closing Date, in the form attached hereto as Exhibit A; (xxii) An opinion or opinions of counsel to the 2009 Liquidity Provider, dated the Closing Date, addressed to the Underwriters and the Commission, in form and substance acceptable to the Underwriters and the Commission, and satisfactory to Bond Counsel, (i) relating to the authority of the 2009 Liquidity Provider to issue the 2009 Liquidity Facility, (ii) to the effect that the 2009 Liquidity Facility has been executed and issued and is valid and binding on the 2009 DOCSOC/ I427909v3/029999-0000 11 157 Liquidity Provider enforceable in accordance with its terns, and (iii) confirming the accuracy of the disclosure contained under the caption "THE LIQUIDITY FACILITIES" in the Official Statement; (xxiii) A verification report by Causey, Demgen & Moore, Inc.; (xxiv) A defeasance opinion from Bond Counsel, dated the Closing Date and addressed to the Trustee, the 2009 Liquidity Provider and the Underwriters to the effect that the obligations of the Commission with respect to the 2008 Bonds have ceased, terminated, become void and be completely discharged and satisfied except as expressly set forth in the Indenture; (xxv) An executed copy of the Continuing Disclosure Agreement; and (xxvi) Such additional certificates, legal opinions of Bond Counsel, Disclosure Counsel or other counsel and such other instruments or documents as Stradling Yocca Carlson & Rauth, a Professional Corporation ("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. 6. 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 Official Statement except for the Excluded Information or the omission (other than omissions in the Excluded Information) to state in the Official Statement a material fact necessary to make the statements therein relating to the Commission, in the light of the circumstances under which they were made, not misleading. 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 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. DOC SOC/ 1427909v3/029999-0000 12 • 158 • 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 Official Statement furnished to the Commission in writing by such Underwriter for inclusion in the Official Statement. 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 any statement of a material fact contained in the Official Statement or results in an omission of a material fact necessary to make the statements made 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 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 or marketability 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 sale of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration D O C S O C/ 14 27 909v 3/029999-0000 13 159 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 or 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 or marketability 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 or marketability of the Bonds; or (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 or marketability 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, placed on credit watch, assigned a negative outlook or announced to be under review by a rating agency, which, in the Representative's reasonable opinion, materially adversely affects the market price or marketability 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; or (xi) a material adverse change has occurred or becomes known in the operations or finances of the Commission. 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 and the Official Statement 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 DOCSOC/ 1427909v3/029999-0000 14 • 160 • 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. 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; (d) the fees and expenses of Underwriters' Counsel; (e) CUSIP number costs; and (f) any fees assessed upon the Underwriters with respect to the Series Bonds by the Municipal Securities Rulemaking Board or the National Association of Securities Dealers. Any meals or traveling expenses of the Issuer paid by the Underwriters were included as reimbursement of expenses as part of the Underwriters' discount. 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 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 Barclays Capital Inc., 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. 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. DOCSOC/ 1427909v3/029999-DODO 15 161 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. 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 govemed by the laws of the State of California. Very truly yours, BARCLAYS CAPITAL INC., on behalf of itself and as Representative of the Underwriters By: John McCray-Goldsmith Authorized Representative The foregoing is hereby agreed to and accepted as of the date first above written: RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Authorized Representative DOC SOC/ 1427909v 3/029999-0000 16 162 • • • 1. Barclays Capital Inc. 2. E. J. De La Rosa & Co. DOCSOU] 427909v3/029999-0000 EXHIBIT A UNDERWRITERS A-1 163 • • • EXHIBIT B MATURITY SCHEDULE Maturity Date Principal Amount Interest Rate DOCSOC/ 1427909v3/029999-0000 A- I 165 0 1.OZ `EZ Tsn Ony aapwwoo uopluauaaldwi ig leBpn8 of uopwasald aDueuid Jo ueld OTOZ nnainianp ma v aanseaW si.oafoad pund • wea6oad dO ai.eu!wiej • d0 Ile aaila?:1 • puos ZkOZ anaasaa pund • spefoad pund • dO 9a40?:1 • uoil w spuos 09 3-9E 11 • 600 spuos 0 weiBoad d suopaapisuoo Tqaa PpciAH („s9V9„) spuog eopewV Pl!nEl enexei uoneJTsp!wPd aoueiiduaoo suoueaapisuoa 6uloueug Iloi }soo }salaTul le�o� peseaaoul eopues map lenuue Jamoi a6eaanoo eavues lgap aat46!H lsoo �saaa�ul eopues Nap lenuue Jay61H a6eaanoa aoln.ras spuo8 jo uaaal • • -at MN paddeJAA ampftijs aovues S8b'8 aol saanlead Deo 59tl8 IIeO Jed JeaA-Oi laN— s8d8 IleD al04M-aleW laN — lduaax3-xel® 01, 01' 01 0'L 01 0A, 01' 01 0'L 0'L 01 0'L 01 0'L 01 01 0'L 01 01 0'L 01, 01' 0•L 01' 0'L 01 01, 01 01 01' 0�0 4 4�`' �4' 44. 4 4 4 4 .4 O°` 4 41' �'l. 41. 4 4 41' 4 ti1' 4 Oti 4�' �1' 4�, 4ti 4 ti° titi titi %000'0 •� I ispnal 001 el41-11e OpOTSN aeau aae saiea Tseiew! amexel pue idwexe-xel %OOTO MOOS %OKI %000' Z %00 S' Z %000'£ %005' £ %Na b MO51, %000'S sanano pieR Tuauno a mluapui iquawaiddns pi 2 aansolosia 6uinupoo peiwoo aseyoind puo8 uoRniosaH swauanooa Bupueuu aaguaanoN j.o pua asoia . JagwenoN-pica eopd . suoiiewasaad aoisanu i . swewnoop asinaa pua ampruis Tgap ieuil euitmelea . 6uReew aagopo le sump wasaad . saiouabe 6uii.ea of wasaad . sisAieue anuiwoa . uoilowip p eo8 )iaas . • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: August 23, 2010 TO: Budget and Implementation Committee FROM: Shirley Medina, Programming and Planning Manager THROUGH: Cathy Bechtel, Project Development Director SUBJECT: Funding for Interstate 215 From Murrieta Hot Springs Road to Scott Road Widening Project STAFF RECOMMENDATION: This item is for the Committee to: 1) Approve the use of $9 million in Measure A Western County Community and Environmental Transportation Acceptability Program (CETAP) funds for the 1-215 widening project until reimbursement of state funds are authorized and allocated by the California Transportation Commission (CTC); 2) Approve a letter of no prejudice (LONP) for Corridor Mobility Improvement Account (CMIA) funds; 3) Approve a SB 184 request for State Transportation Improvement Program (STIP) funds; and 4) Forward to the Commission for final action. BACKGROUND INFORMATION: The 1-215 widening project from Murrieta Hot Springs Road to Scott Road was approved for Proposition 1 B CMIA funds in 2007. The CMIA funds were approved for the construction phase in the amount of $38.57 million. Additionally, $16.53 million of STIP Regional Improvement Program (RIP) funds have been programmed for the construction phase. The 1-215 CMIA project is ready to list and the allocation request for both CMIA and STIP-RIP funding was submitted for allocation at the August 2010 CTC meeting. However, due to the state budget impasse, the CTC does not have the authority to allocate STIP funds, and Proposition 1 B bonds cannot be issued without an adopted state budget. CMIA baseline agreements were executed between the Commission and the CTC. These agreements identify project schedules and milestones and are monitored quarterly by CTC staff to ensure that the projects meet the specified milestones and delivery dates. Given that the CTC could not allocate the CMIA and STIP-RIP funds for the 1-215 widening project at its August meeting, the project will not meet its December 2010 construction award milestone unless alternative funding Agenda Item 9 166 can be identified. Staff has explored reimbursement arrangements that would maintain the project's award milestone and provide the much needed jobs and mobility improvements sooner. Staff recommends that the Commission approve using Measure A CETAP funds to initiate the project, and approve reimbursement mechanisms allowed under AB 672 and SB 184 for the CMIA and STIP funds, respectively. • AB 672 — LONP allows the project sponsor to expend its own local funds and be eligible for reimbursement when the CMIA funds are available. Staff anticipates that a bond sale that includes CMIA projects would be issued within the fiscal year. The LONP will be submitted for approval at the September 2010 CTC meeting. • SB 184 — STIP-RIP funds can be reimbursed under SB 184, which allows the project sponsor to expend its own funds prior to the CTC's approval of the STIP allocation. Although there is no guarantee on the timing of the reimbursement, staff has been informed that it will be tied to future Proposition 1 B bond sales. CTC approval of the SB 184 letter request will coincide with the AB 672 LONP approval. Another course of action the Commission may consider is to wait until the state budget is adopted and the sale of the Proposition 1 B bond that includes CMIA projects. However, this would delay the project schedule by six to twelve months, or longer. There is sufficient Measure A CETAP funding that can sustain the construction contract until reimbursements are received. Staff is confident that this temporary use of CETAP funds will not impact future CETAP projects. As previously noted, the total programmed amount is $55.1 million ($38.57 million of CMIA and $16.53 million of STIP). Recently the estimate was revised to reflect market conditions and the current construction estimate is now $39.2 million. Agenda Item 9 167 • 1-215, Add Mixed Flow lanes (1-15/Murrieta Hot Springs to Scott Road) Construction Expenditure Plan $ 1000's FUNDS FY 2010/11 FY 2011/12 FY 2012/13 FY 2013/14 TOTAL CMIA/LONP $6,300 $ 9,800 $ 9,800 $1,540 $27,440 STIP-RIP $2,700 $ 4,200 $ 4,200 $ 660 $11,760 TOTAL $9,000 $14,000 $14,000 $2,200 $39,200 Any savings resulting from the award of the construction contract will be returned to the originating program. For example, the STIP savings will be returned to Riverside County's share, and CMIA savings will return to the CMIA program. CMIA savings can be proposed for reprogramming and staff will work with the Southern California Consensus Group on the appropriate use for reprogramming savings from the 1-21 5 widening project. Financial Information In Fiscal Year Budget: No Year: FY 2010/11 Amount: $9,000,000 Source of Funds: CETAP Measure A Budget Adjustment: Yes GL/Project Accounting No.: 003022 97001 00000 0000 261 31 97001 003022 59001 00000 0000 262 31 59001 Fiscal Procedures Approved: t44 Date: 08/10/10 Agenda Item 9 168 • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: August 23, 2010 TO: Budget and Implementation Committee FROM: Martha Durbin, Staff Analyst Fina Clemente, Transit Manager THROUGH: Robert Yates, Multimodal Services Director SUBJECT: Proposition 1 B Fiscal Year 2009/10 California Transit Security Grant Program - California Transit Assistance Fund and Supporting Resolutions STAFF RECOMMENDATION: This item is for the Committee to: 1) Approve discretionary allocations from the California Transit Security Grant Program - California Transit Assistance Fund (CTSGP-CTAF) population funds in the amount of $1,553,821 to the Riverside County transit operators; 2) Adopt Resolution No. 10-028, "Resolution of the Riverside County Transportation Commission Approving the Allocation of FY 2009/10 Proposition 1B-6261-0002 California Transit Security Grant Program - California Transit Assistance Fund (CTSGP-CTAF) - Population Funds"; 3) Adopt Resolution No. 10-029, "Resolution of the Riverside County Transportation Commission Appointing Individuals to Act on Behalf of the Commission for the Purpose of Applying and/or Accepting Grants Awarded to the Commission's Rail Program'; and 4) Forward to the Commission for final action. BACKGROUND INFORMATION: The Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006, approved by the voters as Proposition 1 B in November 2006, includes a program of funding in the amount of $1 billion to be deposited in the Transit System Safety, Security, and Disaster Response Account (TSSSDRA). The FY 2009/10 appropriation includes $60 million statewide (subject to available bond funding) for the CTSGP-CTAF, which is administered by the California Emergency Management Agency (Cal EMA). Agenda Item 10 169 The Commission expects to receive a total of $1,785,042 in CTSGP-CTAF funds, which consists of $1,553,821 in discretionary funding (population based) per Public Utilities Code (PUC) Section 99313 and $231,221 in non -discretionary funding (revenue based) directly allocated by the State Controller per PUC Section, 99314. The Commission is responsible for calculating discretionary eligible amounts for each transit operator under its authority. The operator funding amounts are identified in Attachment 3. These funds are designated to be used for transit capital projects that provide increased protection against a security or safety threat including, but not limited to the following: • Construction or renovation projects that enhance security of public transit stations or other transit facilities; • Explosive devise mitigation and remediation equipment; • Chemical, biological, radiological, and nuclear explosives search, rescue, or response equipment; • Interoperable communications equipment; • Physical security enhancement equipment; • Installation of fencing, barriers, etc. to improve security at transit stations or other transit facilities; and • Other security and safety related projects approved by Cal EMA. Funds will be allocated directly to the transit operators upon Commission approval and will be disbursed as available by the State Controller directly to the operators. These funds are to be expended by the operators within three years after receipt of funds. Cal EMA requires a resolution from the Commission regarding discretionary funds per PUC Section 99313 and a resolution appointing individuals to act on behalf of the Commission's Commuter Rail Program. These resolutions are needed in order to successfully complete the grant submittal process. Resolution No. 10-028 is to approve and authorize PUC Section 99313 funds to the Riverside County transit operators. Resolution No. 10-029 is to appoint the Rail Manager to act on behalf of the Commission for the purpose of applying for and/or accepting grants awarded to the Commission's Commuter Rail Program. Attachment 3 is a summary of all CTSGP-CTAF funding allocations by operator in Riverside County. Financial Impact Since the funds are directly disbursed to the transit operators by the State Controller, the only financial impact to the Commission is the allocation of funds to its Commuter Rail Program, estimated at $347,496, which is comprised of $263,476 of population funds per PUC Section 99313 and $84,020 of operator Agenda Item 10 • • 170 • funds per PUC Section 99314. These funds have been included in the FY 2010/11 Commission budget. Financial Information In Fiscal Year Budget: Yes Year: FY 2010/11 Amount: $ 347,496 Source of Funds: Prop 1 B CTSGP-CTAF Funds Budget Adjustment: No GLA No.: 004012 415 41507 0000 265 33 41501 Fiscal Procedures Approved: \44,440 Date: 08/11/10 Attachments: 1) Resolution No. 10-028 of Approval and Authorization for PUC Section 99313 Funds 2) Resolution No 10-029 of Approval and Authorization for Commuter Rail Program Appointees 3) Recommended Proposition 1 B-Security Fund Allocations By Operator Agenda Item 10 171 • ATTACHMENT 1 RESOLUTION NO. 10-028 RESOLUTION OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION APPROVING THE ALLOCATION OF FY 2009/10 PROPOSITION 1B-6261-0002 CALIFORNIA TRANSIT SECURITY GRANT PROGRAM- CALIFORNIA TRANSIT ASSISTANCE FUNDS CCTSGP-CTAF) — POPULATION FUNDS WHEREAS, the Riverside County Transportation Commission (RCTC) is the designated regional transportation planning agency for Riverside County, and is therefore, eligible to receive and allocate funds under Government Code 8879.58(a)(2) (Public Utilities Code Section 99313) based upon population; and WHEREAS, RCTC has been identified as the recipient of Proposition 1 B CTSGP-CTAF Population Funds in the amount of $1,553,821; and WHEREAS, RCTC approves the allocation of the Population Funds to eight local transit agencies for the purpose of enhancing safety and security on public transit systems throughout Riverside County; NOW, THEREFORE IT BE RESOLVED, that the Riverside County Transportation Commission hereby finds that: RCTC approves the allocation of $1,553,821 in Proposition 1B CTSGP-CTAF Population Funds to the following entities in the following amounts: Western Riverside County - • City of Banning $ 17,468 • City of Beaumont 17,468 • City of Corona 35,871 • City of Riverside 44,745 • Riverside Transit Agency 818,589 • RCTC Commuter Rail 263,476 Coachella Valley - • SunLine Transit Agency 334,408 Palo Verde Valley - • Palo Verde Valley Transit Agency 21,796 TOTAL: $ 1,553,821 172 APPROVED AND ADOPTED this 8' day of September, 2010. Bob Buster, Chair Riverside County Transportation Commission ATTEST: Jennifer Harmon, Clerk of the Board Riverside County Transportation Commission • 173 ATTACHMENT 2 RESOLUTION NO. 10-029 RESOLUTION OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION APPOINTING INDIVIDUALS TO ACT ON BEHALF OF THE COMMISSION FOR THE PURPOSE OF APPLYING AND/OR ACCEPTING GRANTS AWARDED TO THE COMMISSION'S RAIL PROGRAM WHEREAS, the California Emergency Management Agency requires a resolution regarding appointing individuals to act on behalf of the Riverside County Transportation Commission's Commuter Rail Program related to the FY 2009/10 Proposition 1B-6261-0002 California Transit Assistance Security Grant Program Funds — Commuter Rail Program. NOW, THEREFORE IT BE RESOLVED, that the Riverside County Transportation Commission hereby finds that the Rail Manager is hereby authorized to execute for and on behalf of the Riverside County Transportation Commission, a public entity established under the laws of the State of California, any actions necessary for the purpose of obtaining FY 2009/10 Proposition 1 B California Transit Security Grant Program -California Transit Assistance Fund (CTSGP-CTAF) Grant Funds provided by the California Emergency Management Agency. APPROVED AND ADOPTED this 8th day of September, 2010. Bob Buster, Chair Riverside County Transportation Commission ATTEST: Jennifer Harmon, Clerk of the Board Riverside County Transportation Commission 174 • • • ATTACHMENT FY 2009/10 Proposition 1B (6261-0002) Funding Allocation Governor's Office of Homeland Security -California Emergency Management Agency FY 2009/10 Transit Security Grant Program / California Transit Assistance Fund (CTSGP-CTAF) Western Riverside Amount Available ActUal Amount Applied for Coachella Valley Amount Available h AppJied#�7� Palo Verde Valley Amount Available Amount Available Total 1,197,617 521.760 334,408 334;40$ 21,796 !2 1,553,821 City of Banning City of Beaumont City of Corona' City of Riverside" Riverside Transit Agency' RCTC's Commuter Rail Bus (78%) Subtotal Rail (22%) Subtotal IN 17,468 17,468 17,468 17,468 35,871 44,745 818,589 223,348' 263,476 263,476<; 934,141 258,284 263,476 263,476 158,475 153,571 City of Banning City of Beaumont City of Corona" City of Riverside" Riverside Transit Agency RCTC's Commuter Rail ;Il 1,182 1,162 717 717 2,577 2,327 67,652 67,652 84,020 84102E 1,356, 092 7 71,808 406,216 71'806 938 22,734 938; 231,221 1,785,042 226411 Population Source: California Department of Finance, Demographic Research Unit (1/1/08) Area Western Coachella Valley Palo Verde Valley Total Population % Share 1,609,588 77.08% 449,441 21.52% 29,293 1,40%a 2,088,322 100 % Operator plans to request remaining funds at a later date Projects: Banning Radios and Security Cameras for Buses Beaumont Bus Shelter Upgrades RTA Transit Center Security Systems/Lighting Systems Rail Station Surveillance and Security Upgrades SunLine Safety and Security Enhancements PVVTA Security Cameras 175 • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: August 23, 2010 TO: Budget and Implementation Committee FROM: Aaron Hake, Government Relations Manager THROUGH: John Standiford, Deputy Executive Director SUBJECT: Agreement with Smith, Watts & Company, Legislative Advocacy Services LLC for State STAFF RECOMMENDATION: This item is for the Committee to: 1) Award Agreement No. 10-14-105-00 to Smith, Watts & Company, LLC for the provision of state legislative advocacy services for a two-year term, and two, two-year options to extend the agreement in an amount not to exceed $408,000; . 2) Authorize the Chair, pursuant to legal counsel review, to execute the agreement, including option years, on behalf of the Commission; and 3) Forward to the Commission for final action. BACKGROUND INFORMATION: The Commission has required an increasingly robust government relations program in Sacramento over the last several years. The Commission has sought authorizing legislation for the State Route 91 and Interstate 15 projects and design -build authority. The Commission has also needed to fend off attempts by the Legislature to raid transportation funding to balance the state's budget and to keep state - funded projects moving forward despite the state's fiscal condition. Implementation of the Proposition 1 B bond program and ensuring that Riverside County receives its adequate share has required a strong presence in the Capitol. All of the above speaks to the need to have daily representation in Sacramento by a transportation policy and political expert working on behalf of the Commission. The Commission's current contract for state legislative advocacy services with Smith, Watts, & Company, LLC expires September 30, 2010. While staff has been exceedingly pleased with the performance of Smith, Watts & Company, LLC the Commission recently issued a competitive request for proposal (RFP) in order to ensure that the Commission continues to receive premium representation at a value that reflects current economic conditions. The RFP sought firms with political as well as technical expertise in the transportation field. The Commission's advocacy Agenda Item 11 176 program requires a proactive and savvy approach that is built on a strong knowledge base of the mechanics of state transportation funding, the legislative process, the California Transportation Commission (CTC), and other state offices. The Commission sought firms that could demonstrate a mastery of infrastructure issues. Relationships to key decision -makers on both sides of the aisle in Sacramento that are relevant to the Commission's agenda were also a priority. Procurement Process The Commission sought a competitive solution to meet the foregoing requirement for state legislative advocacy services. Staff determined that the issuance of a negotiated solicitation, or RFP, would be in the Commission's best interest as it affords staff the opportunity to evaluate and discuss price and other technical factors with proposers. Non -price factors used to evaluate the proposers under this RFP included elements such as experience, the relative qualifications of the firms, references, and the firms' relative ability to provide the services set forth under the terms of the RFP. Price comprised 15% of the maximum possible points under the evaluation criteria. Staff released RFP No. 10-14-105-00 on May 20, 2010 to secure services from a qualified firm to represent the Commission in matters of state government. The item was advertised in a local newspaper of general circulation, made available for download on the Commission website, and forwarded directly via e-mail to approximately 25 legislative advocacy firms. Commission staff responded to all questions submitted by potential proposers prior to the June 8 deadline date. Two firms submitted responsive and responsible proposals prior to the June 17 proposal deadline date. Utilizing the evaluation criteria set forth in the RFP, the firms' proposals were evaluated and scored by an evaluation committee comprised of Commission staff and a representative from the Orange County Transportation Authority (OCTA). Smith, Watts & Company, LLC earned the highest total evaluation score. The respective evaluation ranking, inclusive of pricing, and separate price rankings were as follows: Firm Overall Rank Price Rank Smith, Watts & Company, LLC 151 1s` Ecoconsult 2nd 2' Smith, Watts & Company, LLC earned the highest total evaluation score among the proposers and also offered the most advantageous pricing terms. The technical, non -price factors that earned Smith, Watts & Company, LLC the high score were related to its reference, experience, qualifications, and technical personnel. Pricing was evaluated based upon the firms' fixed fees. Agenda Item 11 • • 177 • As a result, staff recommends the award of Agreement No. 10-14-105-00 to Smith, Watts & Company, LLC for the provision of state legislative advocacy services for a two-year term, and two, two-year options to extend the agreement, for a total period of up to six years, in an amount not to exceed $408,O0O. The parties will utilize the Commission's standard form professional services agreement. Smith, Watts & Company's, LLC rates are considered fair and reasonable based upon adequate price competition and historical costs incurred by the Commission for comparable services. Smith, Watts & Company, LLC has provided services for the Commission and performed satisfactorily. In addition, the firm has successfully provided similar professional services for a variety of transportation entities located throughout the State of California, including OCTA and Placer County Transportation Planning Agency, and San Bernardino Associated Governments. Financial Information In Fiscal Year Budget: Yes N/A Year: FY 2010/11 FY 2011/12+ Amount: 545,000 $75,000 (base period only) Source of Funds: Measure A Budget Adjustment: No GL/Project Accounting No.: 001001 65506 00000 0002 101 14 65520 Fiscal Procedures Approved: \44,440,14/, Date: 08/12/10 Attachment: Smith, Watts & Company, LLC — Statement of Work Agenda Item 11 178 • STATEMENT OF WORK AGREEMENT NO. 10-45-105-00 STATE LEGISLATIVE ADVOCACY SERVICES 1.0 GENERAL INFORMATION 1.1 Introduction 1.1.1 The Riverside County Transportation Commission (ROTC) is a county transportation planning agency governed by the representatives of the twenty six cities and the five members of the Board of Supervisors within Riverside County. 1.1.2 The Commission provides short and long-term planning services relating to transportation, air quality, congestion management, and freeway call boxes. The Commission allocates Local Transportation Funds and the State Transit Assistance funds provided for support of public transit and local streets. 1.1.3 The Commission is responsible for the administration of Riverside County Measure A, the voter -approved half cent transportation transactions' and use tax for funding major freeway construction, commuter rail services, local street and road improvements, specialized transit service for the elderly and persons with disabilities population and traffic management and environmental enhancement efforts. In 2002, Riverside County voters approved a 30-year extension of Measure A by more than a two-thirds margin. 1.1 General Scope of Services 1.1.1 The Consultant shall represent the Commission in matters of state government. Activities will include, but not limited to, presenting policy recommendations to agencies and elected officials; monitoring legislation and policy as it pertains to Commission programs and administration; securing public sector funding; and influencing legislation. 1.1.2 The Consultant(s) must have sound knowledge of public policy, clear understanding of the legislative process, solid political networks, knowledge of key agency programs and staff, familiarity with current state issues, effective communication skills, and a successful track record in securing appropriations on behalf of similar public sector clients. They should also have demonstrated experience in bipartisan relationships with a network of access to legislators, administrative and relevant agency staff, representatives in the Office of the Governor, and current gubernatorial candidates. 1.1.3 The scope of the consultant's services shall consist of, but not be limited to, ensuring that the Commission maintains a visible presence in Sacramento. The Commission's primary advocacy priorities are to protect state transportation funding for projects in Riverside County and promote policies that enable the efficient delivery of projects, respect local control, and "reward self-help" counties. The Commission places a high emphasis on having a Sacramento -based advocate who 179 is knowledgeable of the technical and political aspects of transportation funding and also has strategic relationships with key legislators from all political parties, the Califomia Transportation Commission (CTC), and the Administration. 2.0 CONSULTANT'S RESPONSIBILITIES 2.1 The scope of services will include, but is not limited to, the following requirements: • Regular communication and collaborative interaction with Riverside County legislative delegation, their staffs, and members and staff of relevant committees concerning the Commission's legislative interests; • Remaining up-to-date with the Commission's legislative plafform, board actions, and positions on bills, budget proposals, and items before the CTC; • Coordination of overall advocacy strategy and tactics at the state level; • Testifying on behalf of the Commission at legislative hearings, or preparing testimony for Commissioners or staff; • Scheduling meetings with key offices and individuals for Commissioners and staff; • Timely, insighfful analysis and tracking of relevant legislation, budget proposals, and actions by the CTC and Administration; • Providing occasional verbal reports to the Commission as needed; • Providing leadership and coordination on Commission -sponsored bills; • Building alliances and coalitions with like-minded entities to advance the Commission's legislative interests; • Developing public relations and communications strategies to promote and support the Commission's legislative interests; • Developing an annual work plan identifying objectives, barriers, approach, strategy, tactics, budgets, milestones and metrics; • Developing and implementing appropriate State legislative agenda and strategy for the Commission; • Arranging for facilitated meetings with key policymakers, staff, and others in state government; lead the preparation for those meetings and conduct those meetings, as appropriate, with agency and/or departmental representatives in Sacramento and elsewhere; provide assistance coordinating activities during Commission representative visits to stakeholders, 180 • • Arranging for Commission representatives to participate in the legislative process including arranging or preparing for testimony, meetings, and/or written communications with legislators and agency boards and directors; • Maintaining direct contact with the legislature, state departments, agency staffs, and boards and commissions; - • Advising the Commission on effective lobbying strategies; • Monitoring state legislation and regulations affecting the Commission and keeping the Commission and staff regularly informed on these matters; • Reviewing and analyzing proposed legislation and regulations to determine if they may be beneficial or adverse to Commission and advise Commission of such legislation. Work with Commission to determine Commission's position and seek to carry out the Commission's position; • Assisting the Commission with introduction and passage of legislation sponsored by Commission, as needed, to address agency funding or operational matters. This may include necessary actions to prepare draft legislation, obtain legislative sponsorship of bills, support committee analysis, obtain witnesses, and lobby appropriate officials as necessary to pass such bills; • Monitoring key agencies such as the Department of Transportation, California Air Resources Board and CTC; • Coordinating with other lobbying groups and individuals with similar legislative needs; Identifying potential partnerships with other public entities or other organizations with an interest in Commission or common transportation matters; and • Working to restore, preserve and expand state and regional transportation capital and operating funds that could be used to support Commission projects and programs. 2.2 Consultant shall comply with all state lobbying disclosure requirements and maintain the highest ethical standards both, publicly and privately, including the avoidance of conflicts of interest. 2.3 Consultant shall provide other services within the individual's and/or firm's ability as requested. 2.4 The Commission reserves the right to competitively bid any or all portions of work addressed in this agreement. 3.0 RECORDS AND AUDIT Contractor(s) shall maintain records and books of account showing all costs and expenses incurred by the contractor for the contract. The Commission shall have the right, upon reasonable notice, to audit the books, records, documents, and other evidence and the 181 accounting procedures and practices, where needed, to verify the costs and expenses claimed. The Commission retains this right for at least three years after final payment and until all disputes, appeals, litigation, or claims have been resolved. This right to audit shall also include inspection at reasonable times of the consultant's office or facilities which are engaged in the performance of the contract. In addition, the consultant shall, at no cost or expense to the Commission, furnish reasonable facilities and assistance for such an audit. Audit findings shall, to the extent allowed by law, be treated by the Commission as confidential. End of Statement of Work • 182 • • RIVERS/DE COUNTY TRANSPORTATION COMMISSION DATE: August 23, 2010 TO: Budget and Implementation Committee FROM: Aaron Hake, Government Relations Manager THROUGH: John Standiford, Deputy Executive Director SUBJECT: State and Federal Legislative Update STAFF RECOMMENDATION: This item is for the Committee to: 1) Receive and file an update on state and federal legislation; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: State Route 91 Design -Build Legislation Update At the time this report was written, negotiations continued in Sacramento regarding the fate of design -build legislation for the SR-91 Corridor Improvement Project. The regular session of the Legislature ends on August 31; all bills must be passed by that time. Staff will provide an oral report on the status of design -build legislation, given the situation remains fluid. The Commission is grateful to the members of the Legislature and its business and labor allies who continue to support this effort in Sacramento. FREIGHT Act Introduced to Fund National Goods Movement Projects Senator Frank Lautenberg (D-NJ), chair of the Subcommittee on Surface Transportation, Merchant Marine Infrastructure, Safety and Security, has introduced the Focusing Resources, Economic Investment, and Guidance to Help Transportation (FREIGHT Act). This bill would establish a National Freight Transportation Policy and strategic plan and provide for national -freight infrastructure investment grants to achieve the goals of the policy and strategic plan. Staff finds the bill to be an encouraging step in the process of ensuring a greater role for goods movement in the next surface transportation authorization bill. The FREIGHT Act creates an objective merit -based framework to award federal grants Agenda Item 12 183 to nationally significant goods movement projects, with a focus on performance outcomes relating to economic competitiveness, congestion, pollution, the environment, energy, and public health. The bill closely follows the principles for national freight investment advocated by the Coalition for America's Gateways and Trade Corridors, of which the Commission is a member. Missing from the bill is a revenue title, meaning that there is no mention of how large this freight program would be or where the funds would come from to pay for it. The bill only focuses on policy, while leaving the money details to the Senate Finance Committee. The bill also does not seem to indicate that grade separations are eligible for national freight infrastructure investment grants. This issue will be of serious concern to the Commission as the bill moves forward. The FREIGHT Act will more Hilly become a part of the full surface transportation authorization bill, when it is written, rather than a stand-alone bill. It is also likely that this bill will have to be reintroduced in 2011, in the new session of Congress. Therefore, staff is not recommending that the Commission take a position on the bill. Instead, Commission staff and lobbyists will work with the Senate Commerce Committee to discuss the issue of grade separation eligibility. The Commission retains a support position on Representative Ken Calvert's (R-CA) On Time Act, which provides a return -to -source freight investment program that actually includes a revenue mechanism to fund goods movement projects, including grade separations. Eventual support for the FREIGHT Act, if amended to include grade separations, would not necessarily be in conflict with support for Representative Calvert's legislation. Congress Makes Progress on Fiscal Year 2011 Appropriations The House of Representatives have approved its FY 2011 appropriations bill for Transportation, Housing, and Urban Development (THUD). The Senate Appropriations THUD subcommittee has reported out a bill that is awaiting a vote by the full Senate. Both bills contain $23.49 million of Federal Transit Administration Small Starts funds for the Perris Valley Line (PVL) Metrolink extension. The President has requested these funds for PVL, and is supported by Senators Barbara Boxer and Dianne Feinstein. This represents the final installment of Small Starts funding for the project; a total of $75 million can be granted per project under the Small Starts program. The Senate subcommittee bill contains $1 million for Metrolink's positive train control (PTC) project. The House bill contains $75 million nationally for PTC projects to be awarded by the Federal Railroad Administration. The Rail Safety and Improvement Act of 2009 originally authorized only $50 million per year for PTC, so it is encouraging to see higher levels of PTC funding being proposed for this new Agenda Item 12 • • • 184 • safety technology. Credit is owed to many members of the Southern California legislative delegation for pushing for greater investment in PTC. Also of note is that both bills propose another Transportation Investment Generating Economic Recovery (TIGER) competitive grant program. This concept began with the American Recovery and Reinvestment Act (ARRA) in 2009, with a $1.5 billion program; a second installment of funding was provided in FY 2010 at a much lower level of $600 million. The House proposes $600 million for FY 2011 and the Senate proposes $800 million. Regardless, the national infrastructure deficit far outweighs the small amount of funding provided by these competitive discretionary programs at U.S. Department of Transportation. It is not clear when a final FY 2011 THUD appropriation bill will be passed by Congress. Many theories abound as to whether a Conference bill can be approved prior to the November general election, in a "lame duck" session this winter, or even next calendar year. Funds will not be available under the final Conference bill receives the President's signature. Agenda Item 12 185