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Home My Public Portal About19921118 - Agendas Packet - Board of Directors (BOD) - 92-30 Open Space di '4 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Meeting 92-30 SPECIAL MEETING BOARD OF DIRECTORS A G E N D A 7 : 30 P.M. 330 Distel Circle Wednesdav Los Altos , California, November 18 , 1992 (7 : 30) ROLL CALL ORAL COMMUNICATIONS -- Public ADOPTION OF AGENDA ADOPTION OF CONSENT CALENDAR -- R. McKibbin APPROVAL OF MINUTES , October 28 , 1992 (Consent Item) November 4 , 1992 (Consent Item) November 9 , 1992 (Consent Item) WRITTEN COMMUNICATIONS (Consent Item) BOARD BUSINESS (7 : 45) 1 . Final Interviews of Applicants for the Position of Director - Ward 1 -- J. Fiddes Resolution Appointing Ward 1 Director Administration of oath of office (9 : 00) 2. Issuance of 1992 Promissory Notes -- M. Foster Resolution Authorizing Issuance of $8 , 000 , 000 Principal Amount of Midpeninsula Regional Open Space District 1992 Promissory Notes and Providing for the Form, Execution and Repayment of Said Notes Resolution Authorizing the Execution and Delivery of a Purchase Contract Relating to $8 , 000 , 000 Principal Amount of Midpeninsula Regional Open Space District 1992 Promissory Notes and Approving the Preliminary official Statement and the Official Statement and Other Documents Relating to Said Notes Open Space . . . for room to breathe - 20th Anniversary - 1972-1992 330 Distel Circle 4 Los Altos, California 94022-1404 - Phone: 415-691-1200 - FAX: 415-691-0485 0 General Manager:Herbert Grench Board of Directors:Katherine Duffy,Robert McKibbin,Teena Henshaw,Ginny Babbitt,NonetteHanko,Betsy Crowder,Richard Bishop 3. Monterey Peninsula Regional Park District ' s 20th Anniversary -- H. Grench (Consent Item) Resolution Commending the Monterey Peninsula Regional Park District on Its 20th Anniversary (9: 15) INFORMATIONAL REPORTS -- Directors and Staff REVISED CLAIMS (Consent Item) CLOSED SESSION (Litigation.- Land Negotiations , Labor Negotiations , and Personnel Matters) ADJOURNMENT RNOTE: Times are estimated and items may appear earlier or later than listed. Agenda is subject to change of order. To ADDRESS THE BOARD: The Chair will invite public comment on agenda items at the time each item is considered by the Board of Directors. You may address the Board concerning other matters during oral communications. Each speaker will ordinarily be limited to 3 minutes. When recognized, please begin by stating your name and address. Please fill out the speaker's form so your name and address can be accurately included in the minutes. Alternately, you may comment to the Board by a written communication, which the Board appreciates. *** All items on the consent calendar shall be approved without discussion by one motion unless a Board member removes an item from the consent calendar for separate discussion. A member of the public may request under oral communications that an item be removed from the consent calendar. NOTICE OF PUBLIC NEETINGS The Gifts Policy Committee will meet Tuesday, November 17, 1992 beginning at 3:00 p.m. at the District office. The purpose of the meeting will be to review and revise the District's Gift Policy. The Budget Committee will meet on Monday, November 23, 1992 beginning at 5:00 p.m. at the District office. The purpose of the meeting will be to continue the committee's review of the 1992-1993 fiscal year budget. The Trail Committee will meet on Monday, November 30, 1992 beginning at 7:30 p.m. at the District office. The purpose of the meeting will be to consider the draft of the Trail Use Guidelines. NOVENBER 25 MEETING CANCELLED There will be no Board meeting on Yednesday, November 25, 1992 because of the Thanksgiving Holiday. Open Space ------------------------- MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Meeting 92-26 REGULAR MEETING BOARD OF DIRECTORS October 28 . 1992 MINUTES I. ROLL CALL President Robert McKibbin called the meeting to order at 7 : 34 P.M. Members Present: Katherine Duffy, Nonette Hanko, Richard Bishop, Robert McKibbin, Teena Henshaw, Ginny Babbitt, and Betsy Crowder. Personnel Present: Herbert Grench, Craig Britton, Jean Fiddes, John Escobar, Randy Anderson, and Malcolm Smith. ORAL COMMUNICATIONS J. Fiddes relayed notes from a telephone communication from Jeffry Harris, 22700 Prospect Road, Saratoga, resident at Fremont Older Open Space Preserve, who called on October 23 , 1992 regarding the continuing problems with bicyclists at Fremont Older Open Space Preserve. The Board requested a written text of Mr. Harris ' s statement, and J. Escobar stated that he would call Mr. Harris to discuss his concerns. Linda Stuckey, 22600 Prospect- Road, Saratoga, another resident at Fremont Older Open Space Preserve, stated that she felt most bicyclists are courteous and noted that she would rather have bicyclists on the preserve than a large number of houses. K. Duffy read a note she had received from Mary Ann and Walter Curl thanking her and all the members of the Board for preserving open space and providing hiking trails. K. Duffy thanked Linda Stuckey for her efforts to preserve the Fremont Older house and surrounding land that became Fremont Older Open Space Preserve. III . ADOPTION OF AGENDA R. McKibbin stated that the agenda was adopted by Board consensus. IV. ADOPTION OF CONSENT CALENDAR G. Babbitt noted that corrections to the minutes of September 23 , 1992 shown in the October 14 , 1992 minutes should have included her statement requesting that her informational report on page four should be corrected to read " . . .Barry Friedman indicated that the Romp and Stomp may no longer be needed. . . " Open Space . . . for room to breathe - 20th Anniversary - 1972-1992 330 Distel Circle - Los Altos, California 94022-1404 - Phone:415-691-1200 - FAX: 415-691-0485 e General Manager:Herbert Grench Board of Directors:Katherine Duffy,Robert McKibbin,leena Henshaw,Gin ny Babbitt,Norrette Han ko,Betsy Crowder,Richard Bishop Meeting 92-26 Page 2 Motion: B. Crowder moved that the Board adopt the consent calendar including approval of the minutes of October 14 , 1992 ; the responses to written communications from Harry Haeussler and John Kowaleski; November Meeting Schedule; Report R-92-109, and Revised Claims 92-18 . G. Babbitt seconded the motion. The motion passed 7 to 0. V. BOARD BUSINESS A. Appointment of Unopposed Candidates in Wards 3 , 4 , and 7 (Report R-92-110) In response to a question from K. Duffy, J. Fiddes clarified that the unopposed candidates being appointed would begin their terms of office in January, 1993 . Motion: R. McKibbin moved that the Board adopt Resolution 92-45, a Resolution of the Board of Directors of the Midpeninsula Regional Open Space District Appointing Director - Ward 3 to the Board of Directors of the Midpeninsula Regional Open Space District. N. Hanko seconded the motion. The motion passed 7 to 0. Motion: N. Hanko moved that the Board adopt Resolution 92- 46, a Resolution of the Board of Directors of the Midpeninsula Regional Open Space District Appointing Director - Ward 4 to the Board of Directors of the Midpeninsula Regional Open Space District. R. McKibbin seconded the motion. The motion passed 7 to 0. Motion: R. McKibbin moved that the Board adopt Resolution 92-47 , a Resolution of the Board of Directors of the Midpeninsula Regional Open Space District Appointing Director - Ward 7 to the Board of Directors of the Midpeninsula Regional Open Space District. G. Babbitt seconded the motion. The motion passed 7 to 0. J. Fiddes administered the oath of office to Teena Henshaw, Ginny Babbitt, and Wim de Wit. B. Report by Phyllis Cangemi, Whole Access, on the Ivth World Congress on National Parks and Protected Areas -- Caracas, Venezuela (Report R-92-112) Using slides to illustrate her report, Phyllis Cangemi, Executive Director of Whole Access, briefed the Board on the World Congress that she attended February 10 - 21 in Caracas, Venezuela. VI. INFORMATIONAL REPORTS N. Hanko stated that she felt Board members attending the Special Districts Not-So-Annual Conference in Monterey should cover any overnight expenses personally, as members of the management team were going to do. There was no disagreement expressed to N. Hanko ' s statement. Meeting 92-26 Page 3 B. Crowder reported on the Twentieth Anniversary Committee's activities, focusing her report on the November 7 dinner. In behalf of the committee, she requested that the members of the Board agree to underwrite the cost of hors d'oeuvres for the event, and Board members agreed. B. Crowder distributed flyers about the Bay Trail Forum to be held at Coyote Point Museum on October 31. R. Bishop called to the Board' s attention the need to appoint a director to replace him on the Bay Area Trail Council after he leaves office. H. Grench read a note he had received from Garnetta Annable thanking him and open space planner Mary Gundert for the District' s efforts in helping her place a memorial bench dedicated to her deceased husband Rod by his family on Long Ridge Open Space Preserve. H. Grench briefed the Board on the placement of 1992 note issue related items on the agenda for the November 4 Rescheduled Regular Meeting, as well the November 18 Special Meeting agenda. He also reported that 24 Ward 1 vacancy applications had been requested and that one completed application had been returned. J. Fiddes reviewed the paper saving option discussed with the Board at the previous meeting regarding the number of copies of agenda materials put out at meetings. Board members agreed to try a new system of having agendas and three binders of the agenda materials for public review, with the district clerk determining whether additional copies of a Board report should be photocopied in advance for a particular agenda item. R. McKibbin reported on the October 26 Trails Committee meeting, noting that the next meeting would be held at the end of November and that the committee would be continuing its review of the preliminary draft of the Trail Use Guidelines and Mitigation Measures working document. J. Fiddes reported on the tracking system for critical dates developed by staff. C. Britton stated that escrow has closed on the two-acre Cullen property and since no public comments had been received, there would be no second reading. He also reported that the trail project through Foothills Park with the City of Palo Alto would not be included on a future federal trails grant projects agenda item since the city' s attorney had concluded that a federal Land and Water Conservation Fund grant agreement would be in violation of covenants made with the citizens of Palo Alto regarding the use of Foothills Park. J. Escobar reported on an October 14 solo bicycle accident with injuries on the Priest Rock Trail at St. Joseph' s Hill Open Space Preserve. Meeting 92-26 Page 4 R. Andersen said that the complete draft of the District's Americans with Disabilities Act (ADA) plan was available for review and was being reviewed by staff and the ADA committee. He briefed the Board on the status of the Lexington mitigation project and the potential of additional mitigation restoration projects on District land. He said that a meeting would be held on November 5 with staff from the water department of the City and County of San Francisco on ways the District could work with the department on their masterplan, particularly for watershed areas. B. Crowder reported that she, Jay Thorwaldsen, and Jim Warren had hiked Mr. Warren's property in the Skyline area and toured his home. At the request of G. Babbitt, the Board discussed the scheduling of a Special Meeting to conduct the general manager's mid-year performance evaluation. Motion: R. Bishop moved that the Board schedule a Special Meeting beginning at 7: 00 P.M. on Monday, November 9 at the District office for the purpose of having a closed session to conduct the general manager's interim performance evaluation. T. Henshaw seconded the motion. The motion passed 7 to 0. VII. CLOSED SESSION H. Grench announced that the litigation matter to be discussed in Closed Session fell under Government Code Section 54956. 9 (bl) - John Hughes vs. M.R.O. S.D. C. Britton announced that land negotiations to be discussed were Santa Clara County assessor' s parcel numbers 558-01-023 and 562- 03-001, owner General Convention of New Jerusalem, negotiated with Edwin Capon; Santa Clara County assessor ' s parcel number 562-06-011, owner Linda Johnson et al. , negotiated with Gary Beck; Santa Clara County assessor' s parcel number 558-34-005, owner Kathy Lyles, negotiated with Jim Lyles; San Mateo County assessor 's parcel number 078-150-040, owner Sal Pantano, negotiated with Dennis Pantano; San Mateo County assessor' s parcel numbers 078-210-130 and 078-210-230, owners George and Adele Norton, negotiated with George and Adele Norton; San Mateo County assessor ' s parcel number 080-410-150, owner William and Virginia Fowkes, negotiated with William and Virginia Fowkes; Santa Clara County assessor's parcel number 331-017-047 and 331- 017-048, owned by Daniel and Merel Blaubiger, negotiated with Merel Blaubiger; San Mateo County assessor' s parcel number 080- 410-190 and 085-130-010, owned by Eugene Acronico, negotiated with Robert Pasquinelli. The Board recessed to Closed Session on litigation, land acquisition, and personnel matters at 8 : 55 P.M. VIII. The meeting was adjourned at 11: 04 P.M. Jean H. Fiddes District Clerk Claims No. 92-18 Meeting 92-26 Date: Oct. 28, 1992 REVISED MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Name Description --------------------------------------------------------------------------------------------------- 3296 125.00 Acme & Sons Sanitation, Inc. Sanitation Services 3297 25.00 Asbestest, inc. Asbestos Test 3298 22,826-96 AT&T Equipment Agreement 3299 2, 184 .49 Birnie Lumber Building Supplies 33100 20.00 City of Brisbane Legislators' Meeting 3301 1 ,402.50 Building Abatement Analytics Asbestos Survey 3302 160.00 California Park & Recreation Membership & Society, Inc. Advertisement 30303 293.30 California Solvent Recycling Corp. Hazardous Waste Removal 3304 209.90 California Water Service Water Service 3305 220.00 Cline & Associates Lights & Locks-330 Distel <3306 51 .43 Consolidated Electrical Building Supplies Distributors 3307 577. 50 William Cotton & Associates Engineering Services 3308 214 . 78 Crest Copies Bluelines & Copying 3309 310,04 Alice Cummings Plant Symposium 3310 1 .816.65 Design Concepts Design, Typeset , Produce Fact Sheet , Newsletters 3311 2.376.00 Divine Catering Staff Recognition Event 3312 100.00 Jean Fiddes Reimbursement--Staff Recognition Event 3313 4 .64 Foster Brothers Kevs 3314 137.99 Goodco Press Business Cards 3315 218.00 Herbert Grench Travel Expenses-Sacramento 33 16 55.65 Heritage Arts Volunteer Publications 3317 100.00 La Honda Vista Water Co. Water Service 118 317.42 Langley Hill Quarry Building Supplies 3319 45.00 Brian Malone Reimbursement--Workshop 3320 37 .810.00 S.P. McClenahan Co. , Inc. Tree Surgery ,3 3 2 1 211 .09 McGrath RentCorp Temporary Office Buildinq Rental '1322 180.00 Metro Publishing, Inc. Legal Ad--Ward I Vacancy" 3323 640.00 National Interpreters Workshop Conference Registrations '3 324 341 .50 Orchard Supply Hardware Field Supplies 3325 53.96 Pacific Aerial Surveys Aerial Photo Enlargement ",326 1 ,126.06 Page & Turnbull , Inc. Architectural Service--Picchetti 327 49. 10 Loro Paterson Reimbursement--Field Supplies - ,28 2, 152. 14 Pacific Gas & Electric Electrical & Gas Service 3329 19.49 Peninsula Community Newspapers Subscription 3330 607.79 PIP Printing Printing 3331 159. 17 Pitney Bowes Credit Corp. Postage Machine 3332 5, 757.00 Plan Construction Co. Picchetti. Barn Restoration 3333 1 29.25 Rayne Water Conditioning Water Service 334 235.77 Rich's Tire Service Vehicle Expense 3305 349. 41 Roy' s Repair Service Vehicle Expense 3336 425.60 County of San Mateo Plan Check Building Department 3337 2,452. 41 Scriber Graphics Newsletter Printing 3338 669.94 Signs of the Times Signs 3339 690.24 Smith Equipment Tractor Parts 3340 5. 291 .05 The Steinberg Group Architectural Services 3341 94 7. 19 Teater & Etc. Artwork * Emergency check issued Oct. 20, 1992 Claims No. 92-18 Meeting 92-26 Date: Oct. 284 . 1992 REVISED MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Name Description ------------------------------------------------------------------------------------------------- 3342 19.58 United Parcel Service Delivery Service 3343 381 .56 Value Business Products Office Supplies 3344 77 .94 West Coast Rebar Co . Building Supplies 3345 1 , 216.55 Whitmore, Johnson & Bolanos Legal Services 3346 299 .63 Alpine Recreation Parts for Equipment 3347 65 .00 Fidelity National Title Company Reconveyance Fees 3348 219.43 Petty Cash Local Meeting Expense, Office Supplies . Resource Documents . and Privaze Vehicle Expense Open Space MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Meeting 92-27 REGULAR MEETING BOARD OF DIRECTORS November 4 , 1992 MINUTES I . ROLL CALL President Robert McKibbin called the meeting to order at 7 : 30 P .M. Members Present : Ginny Babbitt , Richard Bishop, Betsy Crowder , Kav Duffy, Nonette Hanko , Teena Henshaw, and Robert McKibbin . Personnel Present : Herbert Grench , Craig Britton, Jean Fiddes , Malcolm Smith , John Escobar , Del Woods , Michael Foster , and Deborah Morvay-Zucker. IT . ORAL COMMUNICATIONS There were no oral communications . III . SPECIAL ORDER OF THE DAY R . McKibbin honored K. Duffy for twenty years of dedication and accomplishments as director of Ward 1 . Linda Stuckey, 22600 Prospect Road , Saratoga , also spoke of K. Duffy ' s contribution to the community as Ward 1 director and to her own open space experiences , in particular. Notion: N. Hanko moved that the Board adopt Resolution 92-48 , a Resolution of the Board of Directors of the Midpeninsula Regional Open Space District Honoring Katherine (Kay) Duffy. B . Crowder seconded the motion . The motion passed 6 to 0 , with K. Duffy abstaining. TV. ADOPTION OF AGENDA H. Grynch requested the removal of the agenda item on the proposed agreement with the Los Gatos Redevelopment Agency from the consent calendar and the addition of an urgency item adopting a resolution to Honor the Marin County Regional Open Space District ' s twentieth anniversary. He said that C . Britton would present the resolution at the District ' s anniversary dinner on Thursday, November 5 . R. McKibbin stated that the agenda as amended was adopted by Board consensus . Motion : N. Hanko moved that the Board adopt Resolution 92-49 , a resolution of the Board of Directors of the Midpeninsula Regional Open Space District Commending the Marin County Open Space District on Its 20th Anniversary. B. Crowder seconded the motion . The motion passed 7 to 0 . Open Space . . . for room to breathe - 20th Anniversary - 1972-1992 330 Distel Circle - Los Altos, California 9402TI 404 - Phone:415&91 d 200 * FAX: 415-691-0485 General Manager:Herbert Crench Board of Directors:Katherine Duffy,Robert McKibbin,Teena Henshaw,Ginny Babbitt,Nonette Hanko,Betsy Crowder,Richard Bishop Meeting 92-27 Page 2 4 V. ADOPTION OF CONSENT CALENDAR Motion : G. Babbitt moved that the Board adopt the consent calendar, including Resolution 92-50 , A Resolution of the Board of Directors of the Midpeninsula Regional Open Space District Approving the Application for Land and Water Conservation Funds for the Saratoga Summit Gateway Acquisition Project; Resolution 92-51 , A Resolution of the Midpeninsula Regional Open Space District Approving the Application for Land and Water Conservation Funds for the Windy Hill Open Space Preserve Public Access Project; Resolution 92-52 , a Resolution of the Board of Directors of the Midpeninsula Regional Open Space District Approving the Application for Environmental Enhancement and Mitigation Program Funds Under Section 164 . 56 of the Streets and Highways Code for the Sierra Azul Open Space Preserve Trailhead Acquisition Project ; staff authorization to solicit bids for Picchetti Ranch blacksmith shop restoration project ; and Revised Claims 92-19 . R . Bishop seconded the motion. The motion passed 7 to 0 . VT . BOARD BUSINESS A. Issuance of 1992 Promissory Notes -(Report R-92-113) M. Foster reviewed the details of his report , including the need for additional funding in 1992-1993 to complete the purchase of the Vidovich property on December 31 , 1992, the District ' s ability to repay new debt based on cash flow models presented in the report, marketability and recommended fixed rate structure of the notes , and a schedule for completion of the sale of 1992 notes . He stated that presentations would be made to rating agencies , Standard & Poor ' s and Moody' s , on Friday, November 13 , 1992 . He said that underwriters expected that the District ' s A+ rating , the highest rating for a single purpose district , would remain unchanged . Motion : N. Hanko moved that the Board authorize staff to take all actions necessary to arrange the issuance of $8 million of twenty year notes . B. Crowder seconded the motion . The motion passed 7 to 0 . B . Proposal for Sale of Surplus Real Property at Teague Hill Open Space Preserve (Report R-92-111 ) C . Britton summarized the background, details , and procedures of the proposal to sell two approximately 35-acre parcels at auction , with a minimum bid of $1 , 500 , 000 for parcel T and a minimum bid of $2 , 000 , 000 for parcel IT . He stated that the auction would be scheduled for the Board ' s April 14 , 1993 Regular Meeting. He stated that the resolution to be approved included a declaration of the property as surplus and the District ' s Meeting 92-27 Page 3 intention to sell the Property. He stated that successful bidders would be declared at the end of the auction . He said that the minimum bid was set at the Properties ' December 1989 appraised values . N. Hanko stated that it was the Board ' s intention at the time of the acquisition of the 624-acre property, to eventually sell the two developable parcels . C . Britton stated that the offer to Purchase would include , as a condition of title , the requirement for a public trail connection for local neighborhood access to the District ' s adjoining Teague Hill Open Space Preserve as approved by the District and the Town of Woodside . Motion : B . Crowder moved that the Board adopt Resolution 92-53 , a Resolution of the Board of Directors of the MidPeninsula Regional Open Space District Declaring Intention to Sell Surplus Real Property of the District Pursuant to Public Resources Code Section 5540 et seq. (Teague Hill Parcels) . R. Bishop seconded the motion. The motion Passed 7 to 0 . C . Informational Report to the Board on the Public Affairs Plan and Program Implementation (Report R--9 �114_?_ 14 ) M. Smith reported on the objectives of the draft public affairs plan for the District and presented an overview and certain emphases of the plan and its implementation . He stated that he would return to the Board in about a month to request approval of the final plan . D. Proposed Agreement. with Los Gatos Redevelopment Agencv (Report R- 92 115) H. Grench stated that the agreement was the result of negotiations between Los Gatos Redevelopment Agency' s staff and the District ' s . He said that Los Gatos Town Council requested that only the northern part , but not the rest , of Cathedral Oaks Area of Sierra Azul Open Space Preserve and a part of El Sereno Open Space Preserve be included , and that staff included St . Joseph ' s Hill Open Space Preserve . C . Britton showed the Proposed modifications to the boundaries initially proposed . H. Grench recommended the adoption of the resolution with modified boundaries , noting that staff still needed to determine the exact area to be included in Exhibit A. Pete Siemens , 69 Ellenwood Avenue, Los Gatos , stated that one of the Los Gatos Town Council members was very concerned about gaining access to El Sereno open Space Preserve from the town . Meeting 92-27 Page 4 o Motion : K. Duffy moved that the Board adopt Resolution 92-54 , a Resolution of the Board of Directors of the Midpeninsula Regional Open Space District Approving and Authorizing Execution of "Agreement Between the Los Gatos Redevelopment Agency and the Midpeninsula Regional Open Space District Pursuant to Community Redevelopment Law and Health and Safety Code Section 33000 et seq . " R. Bishop seconded the motion. The motion passed 7 to 0 . VTT . INFORMATIONAL REPORTS B . Crowder reported that she made a presentation to the Millbrae Kiwanis Club about the District . H. Grench reported that the election results included 64% of the voters in Los Angeles County voting in favor a parcel assessment to fund the Los Angeles County Regional Open Space District . He stated that a similar measure in Napa County was defeated two to one . H. Grench also reported on his November 4 trip to Sacramento, including a California Parks and Recreation Society legislative committee meeting and a meeting with Ralph Heim of Jackson , Barish Associates regarding the state budget . J . Fiddes stated that the District had received 11 applications for director of Ward I prior to closing at 5 : 00 P .M. November 4 . VTTT . CLOSED SESSION C . Britton announced that the land negotiation to be discussed was Santa Clara County assessor ' s parcel number 558-34-005 , owner Kathy Lyles , negotiated with Jim Lyles . The Board recessed to Closed Session on the land acquisition matter at 9 : 00 P .M. TV ADJOURNMENT The meeting was adjourned at 9 : 40 P .M. Deborah Morvay-Zucker Secretary Open Space ------------------------ MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Meeting 92-28 SPECIAL MEETING BOARD OF DIRECTORS November 9 , 1992 MINUTES I . ROLL CALL President Robert McKibbin called the meeting to order at 7 : 28 P.M. Members Present: Nonette Hanko, Robert McKibbin, Teena Henshaw, Ginny Babbitt, and Betsy Crowder. Member Absent: Richard Bishop. Personnel Present: Herbert Grench. II. CLOSED SESSION The Board recessed to Closed Session to conduct the performance evaluation of the General Manager. III. ADJOURNMENT The meeting was adjourned at 9:40 P.M. Herbert Grench General Manager Open Space . . . for room to breathe - 20th Anniversary - 1972-1992 330 Distel Circle • Los Altos, California 94022-1404 • Phone: 415-691-1200 • FAX: 415-691-0485 @ G-eneral,klanager:Herb"Grench Board of Directors:Katherine Duffy,Roben McKihbin,Teena Henshaw,Ginny Babbitt,Nonette H a nko,Betsy Crowder,Richard Bishop ODIL4 I Space MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Meeting 92-29 SPECIAL MEETING BOARD OF DIRECTORS November 12 , 1992 MINUTES I. ROLL CALL President R. McKibbin called the meeting to order at 7: 30 P.M. Members Present: Robert McKibbin, Nanette Hanko, Richard Bishop, Teena Henshaw, Ginny Babbitt, and Betsy Crowder. Personnel Present: Herbert Grench and Jean Fiddes. II. BOARD BUSINESS A. Initial Interviews of Applicants for the Position of Director Ward 1 J. Fiddes informed the Board that Nancy Symons had withdrawn her application. She stated that David Doyle would not be present at the meeting and that Stan Bogosian would not be in attendance until approximately 9: 00 p.m. Applicant Darby McSorley was not present at the meeting. She reviewed the Board's procedure to be used during the first round of interviews. Board discussion centered on the number of candidates for whom a Board member could vote. R. McKibbin stated the Board' s consensus to narrow the field of applicants to five, with each Board member able to vote for up /to five final candidates. The order of opening statements was as follows: 1. Charles Walton 2 . David Doyle (not present) 3 . Richard Gaines 4 . Fran Franklin 5. Peter Siemens 6 . Jan Garrod 7 . Darby McSorley (not present) 8 . Robert Levy 9 . Meredith Wigglesworth 10. Stan Bogosian (not present for this portion of the meeting) Following opening statements, there was round robin questioning of the applicants by the Board. The order of final statements was as follows: 1. Darby McSorley (not present) 2 . Richard Gaines 3 . Peter Siemens 4 . Jan Garrod 5. David Doyle (not present) 6. Charles Walton 7 . Meredith Wigglesworth 8 . Fran Franklin 9 . Robert Levy 10. Stan Bogosian The Board recessed for a break at 9 : 20 P.M. and the meeting reconvened at 9 : 35 P.M. The results of the voting to select the five final candidates were as follows: Ballot #1 Ballot-#2 Ballot-#3 Bogosian 4 votes 4 votes 4 votes Franklin 4 votes 3 votes Gaines 5 votes 4 votes 5 votes Garrod 4 votes 3 votes 2 votes Levy 5 votes 4 votes 3 votes Siemens 6 votes 5 votes 5 votes Applicants David Doyle, Darby McSorley, Charles Walton, and Meredith Wigglesworth did not receive any votes. Based on the above vote, the top five candidates (Stan Bogosian, Richard Gaines, Jan Garrod, Robert Levy, and Peter Siemens) were selected to participate in the final interview process on Wednesday, November 18, 1992 . II . CLOSED SESSION C. Britton announced that land negotiations to be discussed were Santa Clara County assessor's parcel numbers 558-01-023 and 562- 03-001, owner General Convention of New Jerusalem, negotiated with Edwin Capon; Santa Clara County assessor's parcel number 562-06-011, owner Linda Johnson et al. , negotiated with Gary Beck; Santa Clara County assessor's parcel number 558-34-005, owner Kathy Lyles, negotiated with Jim Lyles; San Mateo County assessor' s parcel numbers 078-210-130 and 078-210-230, owners George and Adele Norton, negotiated with George and Adele Norton; San Mateo County assessor' s parcel number 080-410-190 and 085- 130-010, owned by Eugene Acronico, negotiated with Robert Pasquinelli. The Board recessed to Closed Session on land negotiations and personnel matters at 9 : 45 P.M. IV. The meeting was adjourned at 10: 55 P.M. Jean H. Fiddes District Clerk Open Space MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Meeting 92-30 SUMMARY OF NOVEMBER 18 , 1992 SPECIAL MEETING Final Interviews of Applicants for the Position of Director - Ward I - The Board adopted Resolution 92-58 appointing Peter W. Siemens of Los Gatos as the new Director of Ward 1 . After administration of the oath of office, Mr. Siemens took office immediately. He will complete the remaining two years of Katherine Duffy' s unexpired term. Issuance of 1992 Promissory Notes - The Board adopted Resolution 92-55 appointing bond counsel and underwriter for the note issue, Resolution 92-56 authorizing the issuance of $8 , 000 , 000 principal amount of promissory notes to be used for the final payment of the Vidovich property, and Resolution 92-57 authorizing execution and delivery of a purchase contract relating to the note issue. Monterev Peninsula Regional Park District ' s 20th Anniversary - The Board adopted Resolution 92-59 commending the Park District on its 20 years of preserving open space. Jean H. Fiddes District Clerk Open Space . . . for room to breathe 20th Anniversary - 1972-1992 330 Distel Circle - Los Altos, California 94022-1404 Phone: 415-691-1200 - FAX:415-691-0485 Qt General Manager:Herbert Grench Board of Directors:Katherine Duffy,Robert McKibbin,Teena Henshaw,Ginny Babbitt,Nonette Han ko,Betsy Crowder,Richard Bishop Claims No. 92-20 Meeting 92-30 Date: Nov. 18, 1992 REVISED MIDPENINSULA REGIONAL OPEN SPACE DISTRICT # Name Description ------------------------------------------------------------------------------------------------- 3390 510.31 Acme & Sons Sanitation Sanitation Services 3391 2,557.25 Alves Petroleum, Inc. Fuel 3392 691.39 Ace Fire Equipment Service Company Fire Extinguisher Maintenance 3393 1 ,739.58 American Printing & Copy Printing 3394 6,268.50 George Bianchi Construction, Inc. Construction Services--Sausal Dam 3395 152.51 Bimark, Inc. Recognition Pins 3396 392.52 Binkley Associates Consulting Services--Skyline Water Systet 3397 191 .09 Bridge Radio Services, Inc. Base Station Repair 3398 1 ,299.90 Building Abatement Analytics Asbestos Abatement Supervision 3399 237.38 California Mosquito and Vector Lyme Disease Brochures Control Association, Inc. 3400 20.95 Clark's Auto Parts/Machine Shop Vehicle Parts 3401 20.41 R. V. Cloud Company Field Supplies 3402 352.01 Crest Copies, Inc. Photocopying 3403 450.09 Alice Cummings Reimbursement--Prints and Training Expenses 3404 1,100.00 Delcon Heating and Air Flashing_ for Roof--Distel Circle Conditioning 3405 58.37 ** Four Wheel Parts Wholesaler Equipment Part 3406 107.43 Egghead Software Computer Software 3407 442.47 Expedite Grpahic Products Signs 3408 508.16 Farrelle Communications Radio Equipment 3409 60.07 Film to Frame Slides 3410 3,765.17 David B. Fisher Legal Services 3411 47. 19 * Garden Equipment Equipment Repair 3412 4,357.06 General Electric Mobile Radio Equipment Communications Distribution 3413 3,730.00 Geoforensics, Inc. Geologic Investigation--Rancho Ranger Yall 3414 39.51 Gibson Studios Prints 3415 163.14 Goodco Press, Inc. Printing 3416 96.33 Mary Gundert Private Vehicle Expense 3417 4,141.24 Harrington & Associates Consulting Services--20th. Anniversary 3418 4.94 Keeble & Shuchat Photography Slide Processing 3419 461 .65 Konica Business Machines Maintenance Agreement 3420 544.81 Langley Hill Quarry Base Rock 3421 64.69 Judy Law Reimbursement--Frames 3422 520.00 Lopez Gardening Service Gardening Service 3423 161 .78 Los Altos Garbage Company Dumpster Rental 3424 850.00 Magana's Building Maintenance Janitorial Services 3425 330.20 Minton's Lumber & Supply Field Supplies 3426 99.53 Moffett Supply Company Sanitation Supplies 3427 406.02 Monogram Sanitation Sanitation Supplies 3428 62.75 Mountain View Optometry Safety Glasses--M. Ken 3429 20.61 Noble Ford Equipment Part 3430 122.40 Stanley Norton September Expenses 3431 299.73 Orchard Supply Hardware Field Supplies 3432 1 ,720.48 Pacific Bell Telephone Service 3433 174.32 Page & Turnbull , Inc. Architectural Services--Picchetti 3434 54.00 Personnel News Subscription 3435 143.00 Peninsula Newspaper Group Advertisement * Emergency check issued on November 9, 1992. **Emergency check issued on November 13, 1992. Claims No. 92-20 Meeting 92-30 Date: Nov. 18, 1992 REVISED MIDPENINSULA REGIONAL OPEN SPACE DISTRICT # Name Description ------------------------------------------------------------------------------------------------- 3436 100.00 Warren Phillips Reimbursement--Training Registration 3437 128.81 Pine Cone Lumber Company, Inc. Field Supplies 3438 9.87 Precision Engravers, Inc. Brass Namebadge 3439 68.00 Regal Dodge, Inc. Vehicle Repair 3440 690.42 Rich's Tire Service Tires 3440 3,055.00 Robertson, Alexander, Luther, Legal Services Esselstein, Shiells & Wright 3441 1 ,027.88 Roy's Repair Service Tires 3442 15.62 S & W Equipment Equipment Repair 3443 86.33 Safety Kleen Corporation Solvent Tank Service 3444 375.00 Santa Clara County Health Permits Department 3445 51 .70 *** Susan Schultheis Reimbursment--Office Supplies 3446 365.00 Sequoia Analytical Lab Testing 3447 97.41 Sears Camera Equipment 3448 98.35 Skyline County Water District Water Service 3449 150.19 Malcolm Smith Private Vehicle Expense 3450 1,560.15 The Steinberg Group Architectural Services 3451 259.38 The Stove Works Stove Pipe for Ranger Residence 3452 183.00 Sunnyvale Medical Clinic Medical Services 3453 218.40 Taylor Rental Equipment Rental 3454 18.22 United Parcel Service Delivery Services 3455 2, 158.00 Western Exterminator Company Termite Extermination Service 3456 843.75 Whitmore, Johnson & Bolanos Legal Services 3457 76.91 WMI Services: Port-o-Let Sanitation Services 3458 48. 17 Joan Young Reimbursment--Refreshments for volunteers 3459 1,381 .60 Clark Equipment Company Field Equipment 3460 473. 16 Electrical Distributors Company Electrical Parts 3461 86.66 Jeff Bergman Road Agreement Repairs 3462 239.53 David Sanguinetti Reimbursement--Field Supplies 3463 327.92 Petty Cash Office and Field Supplies, Local and Out-of-Town Meeting Expenses. Postage, Volunteer Expenses, and Private Vehicle Expense ***Emergency check issued on November 10, 1992. Mr. Herbert Grench Midpeninsula open Space District 330 Distel Circle Los Altos, CA 94022- 1404 NOV 8 1992 I%jovember 14, 1992 Dear Mr. Grench, It has come to my attention that Mr. Stan Bogosian of Saratoga is applying for the position of Ward I Director, and I wish to place on record my recommendation that he be accepted. I have known Mr. Bogosian for several years as a person of utmost integrity, and as a strong voice in the environmental movement. I am sure his contributions will be appreciated by all the members of your organization. If you wish further to discuss Mr. Bogosian's qualifications, please do not hesitate to call me, preferably before ID a.m. any morning. Sincerely, Werner Bara5ch 23049 Santa Cruz Hwy. Los Gatos, CA 95030 Ph (408) 353-1894 NOV 16 1992 15195 Park 'rive Saratoga, CA 95070 November 14 , 1992 .,4r . Heraert Granc4l General Mana.;erj War6 I Open Space District FAX (415) 691-0485 Dear Sir : I am ho),)aful i:ha"-- you will seriously consider the appointing of Mr . Star, Bagosian to the ;-.7ard 1 , Open Space District . I have known .,Sr . P-ogosian for several years . During the time tlia t I was Vice Nayor and then Mayor of Saratogat 1989-911 Rr .. Bogosian was one of our most valuable environment-al resource people . He serval on our Planning Coinmission and was ona of the key appointaos to the Cocciardi Investigation Commission . On both 1,)odies , leis work was outstanding . fie is very intelligent , industrious , has th-1 ability to rapidly analyze a,-,13 resolve problems and, above all, is a de.-Iicatec. a.n v i ro rime n ta 1 i j .- * I was deliglitad to fin that lie was extremely interested in �:1 1 1-occupyin"., t 1,��, Vacated seat in 11 te Open Spaca District . It i is selecteat you will fin- hiii all of the above and more . sincerely, F .L. Stitt an, *I.O . r P41I.D . NORMAN Y. MINETA WASHINGTON OFFICE: MEMBER OF CONGRESS 2360 RAY6uRN HOUSE 0001CC BUILDING ME ME DISTRICT,CONGRESS CALIFORNIAWASHIwaTON,OC 20516-0613 TI"PHONE(202)225-2831 DEPUTY WHIP Congress of the �ffittd ebtatts pISTRITE OFFICE: Congress VI �1` SuItE3ta 1245 SOUTH WINCHESTER BOULEVARD COMMITTEES: .�'p y� SAN JOSE,CA 95 1 28-3963 PUBLIC WORKS AND Mouse of �}tprestntaducs TELEPHONE(408)984-6045 TRANSPORTATION SUBCOMMITTEE ON SURfACE TRANSPORTATION CHAIRMAN v aShi flgtOtl* DO 205 1 5-05 1 3 SCIENCE, SPACE,AND TECHNOLOGY November 16, 1992 Mr. Robert J. MCKibbin President, Board of Directors Midpeninsula Regional Open Space District 330 Distel Circle Los Altos, California 94022-1404 Dear Mr. McKibbin: I would like to recommend Mr. Richard (Dick) Gaines for the position of representative for Ward 1 on the Board of Directors of the Midpeninsula Regional Open Space District. I have known Dick for many years and have always valued his input on environmental matters. In addition to bringing important local issues to my attention, Dick has testified before the Aviation Subcommittee of the U.S. House of Representatives on the subject of air pollution. I consider him a valuable resource; he thoroughly substantiates his information with supporting facts and consistently follows up on outstanding issues and questions. Even when running into Dick at an unrelated event, I know I can count on him to give me a quick update on the status of saving Mono Lake. Dick' s dedication to open space makes him a natural candidate for your Board of Directors. His administrative and management experience from previous boards has provided him with expertise in leadership. His hard-working nature and attention to detail make him the kind of candidate who is not simply seeking a title, but who truly wishes to serve. I place a high value on serving one ' s community, and Dick Gaines is not only a person dedicated to such service, he is a professional who knows how to do it successful.ly- I hope you will give Mr. Gaines every consideration. Please do not hesitate to contact me if you have any questions. ncerely , Norman Y. 'lie a Member of o ress � Robert L. Sturdivant, AIM Urban Planner NOV 181992 5136 CARM AVENUE SAN JOSE, CA 95124 (408)266-6715 November 15, 1992 Board of Directors Mid Peninsula Open Space District 330 Distel Circle Los Altos, CA 94022 Dear Board of Directors, This is a letter of recommendation on behalf of the candidacy of Dick Gaines to be appointed to your Board.to fill the vacancy of the position held by Kay Duffy. I've known Dick in various capacities for at least 15 years. The most notable of our relationships occurred in the mid 1970's when Dick was a member of the County's Urban Development/Open Space Committee. He represented the American Lung Association at that time. I staffed the committee and so I came to know Dick very well. In the late 1970's he was also on the County's Solar Energy Technical Advisory Committee which I also staffed. Through these experiences I have come to know Dick Gaines as a tireless fighter for the preservation of open space as well as many other environmental causes. He is a person that maintains high principles, stands for what he believes in, sometimes against great odds, and is still able to maintain his sense of humor and sense of balance. He would be an excellent addition to your Board. Sin rely, Robert L. Sturdivant Chief Planning Officer Santa Clara County November 17, 1992 To: Board of Directors Midpeninsula Regional Open Space District From: Douglas Sporleder Subject: Endorsement of Jan GarTod I am very pleased to recommend Jan Garrod to you for appointment to the Nfidpei-dnsula Regional Open Space District Board of Directors. Jan, as well as other members of his family, has long been active within the community contributing countless hours to the public good. He is very conversant with the issues Surrounding open space and the need for public commitment to its preservation. If you need further clarification of my endorsement, please contact me at either my office (408-378-4010) or my home (408-358-2523). Thank you. County of Santa Clara GOUn'T� Office of the Board of Supervisors County Government center,East wing 70 West Hedding Street San Jose,California 951 10 (408)299-2323 �� Rod Diridon Supervisor,Fourth District November 17 , 1992 Mr . Robert McKibbin, President Board of Directors Midpeninsula Regional Open Space District 330 Distel Circle Los Altos , California 94022 Dear Bob and Board Members : I 've just learned of Pete Siemens ' application for appointment to the Midpeninsula Regional Open Space District to fill the seat vacated by Kay Duffy. This is to let you know of my strong personal support for Pete ' s candidacy. Having known and worked with Pete for countless years now, I can fully attest to his commitment to environmental protection efforts ranging from reducing air pollution through mass transit to preserving hillsides against encroaching development . Further , he understands the growth issues challenging our valley and the process for addressing them. While no one can possibly fill the void left by Kay, Pete would be an outstanding addition to your Board . If I can offer further information that would be helpful in your selection process , please let me know. Very sincerely, D RI ON , Supervisor Fourth District RD: f ,�of SA4, °M CITY OF SAN JOSE, CALIFORNIA 801 NORTH FIRST STREET SAN JOSE,CA 86110 �9L�FOR 1` (408)277.5275 JAMES T.BEALL,JR. Councilmember November 16, 1992 Mid-Peninsula Open Space District Board 330 Distel Circle Los Altos, CA 94022 Dear Board Members: I would like to recommend that Mr. Pete Siemens be appointed to the Mid-Peninsula Open Space District Board. I have known Mr. Siemens since the 1970s when I was a Staff Planner for the Town of Los Gatos, and have continued to work with him through my 12 years as a Councilmember for the City of San Jose. During this time I have known Mr. Siemens to be a knowledgeable and active supporter of open space issues. Mr. Siemens is dedicated to preserving the remaining open space in Santa Clara County and would be an excellent trustee for the Mid-Peninsula Open Space District. Thank you for your consideration. Sincerely, 111,YnAl., 7 JAMES T. BEALL, JR. Councilmember JTB: lb LAW OFFICES OF BRENT N. VENTURA 405 ALBERTO WAY • SUITE 2 LOS GATOS, CA 95032 (408)356-6171 November 16, 1991 Board of Directors Mid-Peninsula Regional Open Space District 330 Distel Circle Los Altos, CA 94022 Dear Honorable Board Members: Please accept this communication as my unqualified recommendation in support of your appointment of Peter Siemens to serve the board seat being vacated by Kay Duffy. I have known and worked with Mr. Siemens for 16 years. Mr. Siemens has a wealth of knowledge, experience, and unwavering commitment to the preservation or our environmental resources. His recent leadership on the St. Joseph Open Space Preserve road issue demonstrates his outstanding capabilities in this regard. I submit this letter not on behalf of the Los Gatos Town Council, but only as one councilmember. You would be providing an outstanding service to the residents of this district by appointing Peter Siemens to continue to provide the outstanding service demonstrated by retiring board member Kay Duffy. Please do not hesitate to contact me if I can be of any further service in this regard. Very truly yours, BRENT N. VENTURA BNV/kck Los Gatos Town Councilmember Douglas Lincoln 100 Olde Drive Los Gatos, CA 95032 November 16, 1992 Board of Directors Midpeninsula Regional Open Space District 330 Distel Circle Los Altos, CA 94022 Subject: In Support of Pete Siemens For Director, Ward 1 Dear Board Member; It is my opinion that Pete Siemens would serve admirably on the MPROSD board of directors. As you know, Pete has demonstrated consistent and politicly well dimensioned support for the acquisition and protection of local open space lands and hill side planning. Over the last four years it has been my opportunity to work with Pete as a fellow board member of a local citizens group dedicated to keeping the Saint Joseph's Hill Preserve intact. A primary goal of our group was that it proceed in a rational and professional manner -- a mode of operation which you can expect from Pete. Pete's ideas and procedural knowledge contributed substantially in presenting our concerns to various governmental agencies and in rallying public support for our cause. Respectfully Submitted; Douglas n ////i LAW OFFICES OF GARY L.OLIMPIA A PROFESSIONAL CORPORATION MICHAELA.WHELAN DAVID W.LIVELY 152 NORTH THIRD STREET DAVIDJ.RUDE NINTH FLOOR LINDA J.LEZOTTE MARJORIE A.MARDIS SAN JOSE, CALIFORNIA 95142-5560 JAMES J.DER,JR. (408) 971-7252 FAX: (408)971-6618 JOHN DANIEL CARD LYNNE L.BENTLEY STEVEN JUDE SIBLEY LYNN R.TOMA November 18, 1992 Board of Directors Mid-Peninsula Regional Open Space District 330 Distel Circle Los Altos, California 94022 Re: Recommendation of Pete Siemens for Board of Directors Dear Board of Directors : The purpose of this letter is to recommend Pete Siemens of Los Gatos for nomination to the Mid-Peninsula Board of Directors . My experience with Pete is based on my work with him on the campaign to prevent the construction of a major roadway through the St . Joseph' s Hill Mid-Peninsula Preserve above the Novitiate in Los Gatos . I incorporated and represented the Citizens for the Preservation of St . Joseph' s Hill and Pete Siemens was a member of the Board of Directors . As this Board is well aware, the diligent efforts of the members of the Board of Directors of the Citizens for the Preservation of St . Joseph' s Hill, as well as all the other citizens who supported the effort, ultimately resulted in preventing the preserve from being decimated by a major roadway. Pete was not only one of the most active supporters of the effort, but was also one of the most effective in mobilizing community support for the campaign to preserve the open space . Although I worked with the Town' s attorneys in taking the legal action all the way to the California Supreme Court, that effort proved unsuccessful and it was the overwhelming community opposition presented to the Water District Board that ultimately was successful in killing plans to construct the road through the open space. Pete was a major player in mobilizing that community support and his dedication and sensitivity to the environmental issues presented left me with the strong conviction that he would be an ideal candidate for your Board of Directors . & LAW OFFICES OF A PROFESSIONAL CORPORATION November 18, 1992 Page 2 Thank you for considering Pete and for considering my opinion. Very truly yours, OLIMPIA, WHELAN & LIVELY A2 DAVID JV KUDE DJR/er Countyof Santa ClarapERN if Office of flee Board of SUpervisors Cot it <3owernntent C;cnte�r last Wing p _ 0 West st F ieddit ig Strc et, I oil Floor Sim Jose, California 951 10 v��;,r j ,••�O (408)299 2323 (408)683 41 15 Fax(408)298-8460 Mid wel M. F icxuia Supervisor. First District November 18, 1992 Board of Directors Mid-Penninsula Regional Open Space District 330 Distel Circle Los Altos, CA 94022 Dear Board Members : I would like to recommend that Mr. Pete Siemens be appointed to the Mid-Penninsula Regional Open Space District Board. I have personally worked with Mr. Siemens when he served as a member of Citizens for the Preservation of St. Joseph' s Hill. Mr. Siemens worked hard and was successful in preserving this scenic area from development. In my experience, Mr. Siemens has worked diligently to preserve open space in Santa Clara County, and has shown dedication and professionalism. I believe he will serve as an enthusiastic and effective advocate for the preservation of open space and will serve the District well. Thank you for your consideration. Sincerely, Michael M. Honda Supervisor, First District MMH:cmh i F ,' TZMAN, M. . Ili r' 'w 1 1 ti Open Space R-92-119 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Meeting 92-30 November 18, 1992 AGENDA ITEM Final Interviews of Applicants for the Position of Director - Ward 1 GENERAL MANAGER'S RECOMMENDATION After completing your interview process, adopt the attached resolution appointing the Ward 1 director. The District Clerk will administer the oath of office for the new Ward 1 director after your appointment. Discussion: At the conclusion of your November 12 Special Meeting, you selected the following candidates to participate in the second round of interviews for the position of Director - Ward 1: 1. Stan Bogosian 4. Robert Levy 2 . Richard Gaines 5. Peter Siemens 3 . Jan Garrod The procedures to be followed for the second round of interviews are: 1. Random drawing for order of appearance. 2 . Each finalist allotted 20 minutes for answering questions posed by the Board. 3 . Random drawing for order of appearance for final statements. 4. 10 minute recess. 5. Each finalist will get 5 minutes for summary. 6. Each Board member casts a signed ballot for his or her choice of appointment. 7 . Voting tallied and announced by District Clerk. 8. Clerk keeps ballots for later public inspection. 9. If no candidate receives four votes, there will be additional votes on the full list of finalists until a candidate receives four votes. 10. Board adopts resolution naming appointment to fill the office. Absence of Candidates from Interviews - The Board will consider the written application and supplementary information provided by candidates who cannot attend this interview session. Members of the public are invited to submit comments regarding the candidates, or questions they recommend the Board pose to all candidates during the interviewing process. Written comments and/or questions should be forwarded to the District Clerk at the Open Space . . . for room to breathe - 20th Anniversary - 1972-1992 330 Distel Circle - Los Altos, California 94022-1404 - Phone: 415-691-1200 - FAX: 415-691-0485 t General Manager:Herbert Giend) Board of Oireoors:Katherine Duffy,Robert McKibbin,Teena Henshaw,Gin ny Babbitt,Nonette Hanko,Betsy Crowder,Richard Bishop R-92-119 Page 2 address shown below by 3 : 00 P.M. Wednesday, November 18, 1992 so that they can be compiled and duplicated for the members of the Board prior to the start of the meeting. Prepared by: Jean H. Fiddes, District Clerk Contact person: Same as above POLICIES 1 .0 The District will endeavor to provide a variety of satisfying trail use opportunities on open space preserves throughout the District. More specifically, the District will endeavor to: 1 .1 Provide multiple use on individual trails where such use is consistent with the balance of these policies. 1 .2 Protect the opportunity for tranquil nature study and observation, especially in those areas identified as providing a unique wilderness experience. 2.0 The District will designate appropriate use(s) for each trail. Uses will be allowed that are consistent with District's objectives for sound resource management and safe and compatible use. More specifically, the District will: 2.1 Allow trail use appropriate to the nature of the land and consistent with the protection of the natural, scenic and aesthetic values of open space. 2.2 Within budgetary and staffing constraints, make reasonable efforts to provide safe conditions for trail users. 2.3. Evaluate trail user needs, concerns, quality of experience, impacts, and the compatibility of various uses. Those uses creating the least conflict among trail users and the least environmental impact will be given greatest preference in trail use planning. 2.4 Ensure that all District trails will be accessible to hiking. When consistent with this policy, if a non-hiking use adversely impacts user safety, the use may be restricted or redirected. The intention is not to restrict access by any individual, but rather to limit incompatible uses and means of travel. 3.0 The Board of Directors will adopt qualitative and quantitative trail use guidelines to aid the Board and staff in determining trail use designations in the implementation of these policies. 4.0 Specific trail use designations will be established and reviewed periodically through the Use and Management Planning Process, and will be subject to adopted Public Notification Procedures. Trail use designations may change if use patterns develop thatye in conflict with these policies. 4.1 In extreme cases where there is not sufficient time to comply with the Use and Management Planning Process, the Board of Directors or General Manager may make an interim decision to limit use while providing an evaluation process and timeline for final determination of the designated use. 5.0 The District will endeavor to provide trail access for a variety of physical capabilities and user needs (including persons with physical limitations) in a manner consistent with resource protection goals, budgetary constraints, and state and federal regulations. 6.0 The District will carry out management programs necessary for the implementation of these trail use policies. The designation of appropriate trail use as a method of mirkimizing trail use conflicts and environmental impacts will require a significant increase in to use measures RESOLUTION NO. RESOLUTION OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT APPOINTING WARD 1 DIRECTOR WHEREAS, a vacancy was created in the position of Director of Ward 1 on November 7 , 1992 , and WHEREAS, the Board of Directors had previously determined on September 23 , 1992 to fill the vacancy by appointment until a Ward 1 Director is elected in the District's next general election and takes office; and WHEREAS, an application and interview process for the Ward 1 vacancy has been completed. NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors of the Midpeninsula Regional Open Space District does appoint as Director of Ward 1 until a Director for this Ward is elected in the District' s next general election, and takes office. Open Space R-92-121 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Meeting 92-30 November 18, 1992 AGENDA ITEM Issuance of 1992 Promissory Notes ' CONTROLLER'S RECOMMENDATION 1. Approve the following attached resolutions required to complete the issuance and sale of $8 million of 1992 Promissory Notes A. Resolution of the Board of Directors of the Midpeninsula Regional Open Space District Authorizing the Issuance of $8, 000, 000 Principal Amount of Midpeninsula Regional Open Space District 1992 Promissory Notes and Providing for the Form, Execution, and Repayment of Said Notes B. Resolution of the Board of Directors of the Midpeninsula Regional Open Space District Authorizing the Execution and Delivery of a Purchase Contract Relating to $8, 000, 000 Principal Amount of Midpeninsula Regional Open Space District 1992 Promissory Notes and Approving the Preliminary Official Statement and the Official Statement and Other Documents Relating to Said Notes 2 . Authorize the general manager to execute agreement dated Novebmer 10, 1992 with Orrick, Herrington and Sutcliffe for public financial legal services for Midpeninsula Regional Open Space District 1992 Promissory Note Financing (Completed copies of the resolutions and all of the documentation are available for public review at the District office. ) Discussion: At your meeting of November 4 , 1992 you authorized staff to take all actions necessary to arrange the issuance of $8 million of twenty year notes (see report R-92-113) . All of the documentation has been completed and is ready for your approval. Representatives from the underwriter and bond counsel will be at the meeting to answer any questions you may have. 1. Amount: $8, 000, 000 2 . Term: Twenty years 3 . Primary Purpose: Provide funds to complete purchase of the Vidovich property 4 . Principal Repayment: Annually beginning July 1, 1997 (4-1/2 years interest-only) 5. Interest Rate: To be priced on December 2 , 1992 . Estimated coupon rates range from 3 .90% for July 1997 to 6. 55% for July 2012 (average rate 6. 13%) 6. Interest Payments: Twice a year, in January and July Open Space . . . for room to breathe 20th Anniversary 1972-1992 330 Distel Circle - Los Altos, California 94022-1404 . Phone: 415-691-1200 FAX:415-691-0485 General Manager:Herbert Grench Board of Oirectors:Katherine Duffy,Robert McKibbin,Teena Henshaw,Ginny Babbitt,Nonette Hanko,Betsy Crowder,R(ehard Bishop R-92-121 Page 2 7. Prepayment: Not allowed prior to 2002 ; redeemable at a premium 2003 - 2006; redeemable without premium 2006 - 2012 8. Reserve Fund: 8% of issue ($640, 000) ; District receives interest from fund 9. Cost of Issuance: Estimated at $200, 000 including underwriter's discount of $128, 000 (1.6%) , bond counsel fees of $25, 000 and rating fees from Moody's and Standard & Poors Parties to the Transaction 1. Issuer: Midpeninsula Regional Open Space District 2 . Underwriter: Prudential Securities Incorporated 3 . Bond Counsel: Orrick, Herrington and Sutcliffe 4. Paying Agent: Seattle First Bank The underwriter, bond counsel, and paying agent have each worked on several successful District financings and have each quoted fees which I consider to be reasonable and competitive. The Documents 1. Official Statement: Describes the Notes to potential buyers. The latest version of The Preliminary Official Statement, Draft No. 3 , contains a few errors and blanks, which will be corrected and completed, but is very close to being in final form. 2 . Purchase Contract: Defines terms under which the underwriter will buy the Notes from the District. The terms are virtually identical to the term of previous purchase contracts. 3 . The Resolutions: Documents Board of Directors ' approval of all key elements of the note issue. The Schedule November 13 : Presentations to Rating Agencies November 18: Board approves all documents December 2 : Note pricing December 14: Pre-closing December 15: Close sale and receive net proceeds Prepared by: Michael Foster, Controller Contact person: Same as above MIDPENINSULA REGIONAL OPEN SPACE DISTRICT RESOLUTION NO. 92-56 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT AUTHORIZING THE ISSUANCE OF $8, 000, 000 PRINCIPAL AMOUNT OF MIDPENINSULA REGIONAL OPEN SPACE DISTRICT 1992 PROMISSORY NOTES AND PROVIDING FOR THE FORM, EXECUTION AND REPAYMENT OF SAID NOTES Adopted November 18, 1992 S17-7270.3 TABLE OF CONTENTS Page SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . 1 SECTION 2 . Authority for the Issuance of the Notes . . . . . 5 SECTION 3 . Terms of the Notes . . . . . . . . . . . . . . . 5 SECTION 4 . Form of the Notes . . . . . . . . . . . . . . . . 8 SECTION 5. Execution of the Notes . . . . . . . . . . . . . 15 SECTION 6. Appointment of Paying Agent; Registration and Transfer of the Notes . . . . . . . . . . 15 SECTION 7 . Delivery of the Notes and Use of Depository . . . 18 SECTION 8 . Payment of the Notes . . . . . . . . . . . . . . 20 SECTION 9 . Reserve Fund . . . . . . . . . . . . . . . . . . 22 SECTION 10. Acquisition Fund . . . . . . . . . . . . . . . . 23 SECTION 11. Tax Covenants . . . . . . . . . . . . . . . . . 23 SECTION 12 . General Covenants . . . . . . . . . . . . . . . 24 SECTION 13 . Discharge of Notes . . . . . . . . . . . . . . . 25 SECTION 14 . Effective Date . . . . . . . . . . . . . . . . . 28 Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . SF2-7270.3 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT RESOLUTION NO. 92-56 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT AUTHORIZING THE ISSUANCE OF $8, 000, 000 PRINCIPAL AMOUNT OF MIDPENINSULA REGIONAL OPEN SPACE DISTRICT 1992 PROMISSORY NOTES AND PROVIDING FOR THE FORM, EXECUTION AND REPAYMENT OF SAID NOTES WHEREAS, the Board of Directors of the Midpeninsula Regional Open Space District (the "District") has found and determined that funds in the amount of $8, 000, 000 are needed by the District for the purpose of acquiring necessary and proper lands and facilities for open space purposes of the District; and WHEREAS, the District is authorized by law to borrow money for such purposes, which such borrowing may be evidenced by the issuance of promissory notes; and WHEREAS, all acts, conditions and things required by law to exist, to happen and to be performed precedent to the issuance of promissory notes as provided herein do exist, have happened and have been performed in the time, form and manner as required by law, and the District is now duly authorized to issue promissory notes as provided herein; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Midpeninsula Regional Open Space District, as follows: SECTION 1. Definitions. Unless the context otherwise requires, the terms defined in this section shall for all purposes hereof and of the Notes have the meanings specified herein: Acquisition Fund "Acquisition Fund" means the 1992 Promissory Note Acquisition Fund established in Section 7 . Board "Board" means the Board of Directors of the District. SEZ-7270.3 Business Day "Business Day" means a day of the year that is not a Saturday or Sunday or a day on which banking institutions located in Seattle, Washington, or San Francisco, California, are required or authorized to remain closed. Code "Code" means the Internal Revenue Code of 1986, as amended, and the regulations of the United States Department of the Treasury issued thereunder, and in this regard reference to any particular section of the Code shall include reference to all successor sections of the Code. Controller "Controller" means the Controller of the District. District "District" means the Midpeninsula Regional Open Space District, a regional open space district duly organized and existing under and pursuant to the Law and having the office of its Board of Directors in Santa Clara County, California. Federal Securities "Federal Securities" means United States of America Treasury bills, notes, bonds or certificates of indebtedness, or obligations for which the full faith and credit of the United States of America are pledged for the payment of interest and principal, or securities evidencing ownership interests in such obligations or in specified portions of the interest on or principal of such obligations. General Fund "General Fund" means the General Fund of the District now existing in the treasury of the District under the Law. Interest and Principal Fund "Interest and Principal Fund" means the 1992 Promissory Note Interest and Principal Fund established in Section 7 . Law "Law" means Article 3 of Chapter 3 of Division 5 of the Public Resources Code of the State of California, as amended to date, and all laws amendatory thereof and supplemental thereto. SM-7270.3 2 Limited Taxes "Limited Taxes" means the limited ad valorem property taxes levied upon all taxable property in the District by the Board of Supervisors of Santa Clara County and by the Board of Supervisors of San Mateo County and allocated to the District under applicable law that are legally available to pay the interest on and principal of and redemption premiums, if any, on the Notes together with the payment on a parity of the interest on and principal of the District's outstanding 1987 Promissory Notes, 1988 Promissory Notes and 1990 Promissory Notes and certain land acquisition contracts, but excluding the proceeds of any Tax Overrides. Notes "Notes" means the $8, 000, 000 principal amount of I'Midpeninsula Regional Open Space District 1992 Promissory Notes" designated as such in Section 3 and authorized to be issued by the District under and by the authority of the Law and under and pursuant hereto. Outstanding "Outstanding" means, with respect to the Notes and as of any date of calculation, all Notes authorized, issued, authenticated and delivered under the Resolution, except: (a) Notes cancelled or surrendered to the Paying Agent for cancellation pursuant to Section 6; (b) Notes deemed to have been paid as provided in Section 13 ; and (c) Notes in lieu of or in substitution for which other Notes shall have been authenticated and delivered pursuant to Section 6. Paying Agent "Paying Agent" means Seattle-First National Bank at its principal corporate trust office in Seattle, Washington, appointed by the District in section 6, with the duties and powers herein provided, and its successors or assigns. Payment Fund "Payment Fund" means the 1992 Promissory Note Payment Fund established in Section 7 . President "President" means the President of the Board. Sr2-7270.3 3 Project "Project" means those necessary and proper lands and facilities for open space purposes of the District which have been authorized by the Board to be acquired by the District and which have been determined by the Board to constitute the Project. Rebate Fund "Rebate Fund" means the 1992 Promissory Note Rebate Fund established in Section 11. Rebate Instructions "Rebate Instructions" means those calculations and directions required to be performed and delivered by the District under and pursuant to the Tax Certificate. Rebate Requirement "Rebate Requirement" has the meaning assigned to it in the Tax Certificate. Reserve Fund "Reserve Fund" means the 1992 Promissory Note Reserve Fund established in Section 7. Reserve Fund Requirement "Reserve Fund Requirement" means $640, 000. Resolution "Resolution" means this Resolution No. 92-56 adopted by the Board under and by authority of the Law on November 18, 1992 . Secretary "Secretary" means the Secretary of the Board. Tax Certificate "Tax Certificate" means that certificate executed by the District at the time of the original issuance and delivery of the Notes relating to the requirements of Section 148 of the Code, as originally executed and as it may from time to time be amended or supplemented. Tax Overrides "Tax Overrides" means any tax levied for the purpose of the payment of general obligation bonded indebtedness authorized by voters of the District. SF2-72703 4 Treasurer "Treasurer" means the Treasurer of the District. Written Order "Written Order" means a written order of the District, signed by the President, Vice-President, Treasurer, General Manager or any other person authorized by resolution of the Board to perform an act or to sign a document on behalf of the District for purposes of the Resolution. SECTION 2 . Authority for the Issuance of the Notes. The Board has reviewed all proceedings heretofore taken relative to the issuance of the Notes and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist, to happen and to be performed precedent to the issuance of the Notes do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the District is now duly authorized to issue the Notes and incur an indebtedness under and pursuant to the conditions and terms provided in the Resolution. SECTION 3 . Terms of the Notes. Promissory notes of the District in the aggregate principal amount of $8, 000, 000 are hereby authorized to be issued by the District under and pursuant to the Law for the purpose of paying the costs of the acquisition of the Project and the related incidental expenses and for the purpose of paying the Prior Notes and the interest thereon as and when they respectively become due, which authorized issue of promissory notes is hereby designated the I'Midpeninsula Regional Open Space District 1992 Promissory Notes. " The Notes shall be issued in fully registered form in the denomination of five thousand dollars ($5, 000) or any integral multiple thereof (but not to exceed the principal amount of Notes maturing on any one date) , shall be dated December 1, 1992 , and shall mature (subject to any right of prior redemption reserved herein) on the dates and in the principal amounts as set forth in the following schedule: M-72703 5 Maturity Date Principal (July 1) Amount 1998 $ 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 The Notes shall bear interest at the interest rate or rates per annum designated in the purchase contract pursuant to which the Notes are sold to the original purchaser thereof. The Notes shall bear interest from the interest payment date next preceding the date of registration thereof, unless the Notes are registered on a day during the period from the sixteenth (16th) day of the month next preceding an interest payment date to such interest payment date, both inclusive, in which event they shall bear interest from such interest payment date, or unless the Notes are registered on a day on or before the fifteenth (15th) day of the month next preceding the first interest payment date, in which event they shall bear interest from December 1, 1992 . Such interest shall be payable on July 1, 1993 and semiannually thereafter on January 1 and July 1 until the Notes shall have been fully paid, and the interest due before the maturity or the prior redemption of the Notes shall be paid by check mailed on each such interest payment date to the persons whose names appear as the registered owners thereof at the close of business as of the fifteenth (15th) day of the month next preceding each such interest payment date on the registration books required to be kept by the Paying Agent pursuant to Section 6 (except that in the case of a registered owner of one million dollars ($1, 000, 000) or more in principal amount of Notes outstanding, payment shall be made at such owner's option by wire transfer of immediately available funds according to written instructions provided by such owner to the Paying Agent at least fifteen (15) days before such interest payment date) , and the interest due on the maturity or the prior redemption of the Notes and the principal of and the redemption premiums, if any, on the Notes shall be payable at maturity or upon redemption prior to maturity only on surrender of the Notes by such registered owners to the Paying Agent at the principal corporate trust office of the Paying Agent in Seattle, Washington. Both the interest on and principal of and redemption premiums, if any, on the Notes shall be payable in lawful money of the United States of America. Sr2-7270.3 6 The Depository Trust Company, New York, New York is hereby appointed depository for the Notes; and the Notes shall be initially registered in the name of "Cede & Co. , " as nominee of The Depository Trust Company, and shall be evidenced by one Note maturing on each maturity date set forth herein, to be corresponding to the total principal amount of the Notes to become due and payable on such maturity date and shall be numbered in consecutive order from R-1 upwards. Registered ownership of the Notes, or any portion thereof, may not thereafter be transferred except as provided in Section 6 or Section 7 . The Notes maturing by their terms on or after July 1, 2003 , are subject to optional redemption by the District on any interest payment date on or after July 1, 2002, and prior to their respective maturity dates, as a whole, or in part in integral multiples of five thousand dollars ($5, 000) in inverse order of maturity (and by lot within any one maturity if less than all the Notes of any one maturity are redeemed) , from any legally available funds of the District, upon mailed notice as hereinafter provided, at a redemption price equal to the following amount expressed as a percentage of the principal amount of the Notes or the portions thereof called for redemption, together with accrued interest thereon to the date of redemption, namely: Redemption Date Redemption Price July 1, 2002, or January 1, 2003 102% July 1, 2003 , or January 1, 2004 101. 5 July 1, 2004, or January 1, 2005 101 July 1, 2005, or January 1, 2006 100. 5 On or after July 1, 2006, and prior to maturity 100 If less than all the Outstanding Notes of any one maturity date are to be redeemed at any one time, the Paying Agent shall select the Outstanding Notes or the portions thereof to be redeemed at such time from the Outstanding Notes maturing on such date by lot in any manner that it deems fair. Notice of redemption of any Note or any portion thereof shall be given by the Paying Agent by mailing a copy of such notice by first class mail to the registered owner thereof and to all securities depositories and securities information services selected by the District to comply with custom or the rules of any securities exchange or commission or brokerage board or otherwise as may be determined by the District in its sole discretion not less than thirty (30) days nor more than sixty (60) days before the redemption date; provided, that receipt of such notice shall not be a condition precedent to the effect of such notice and neither failure to receive any such notice nor any immaterial defect contained therein shall affect the validity of the proceedings for the redemption of such Note or such portion thereof. Such notice shall state the redemption date, SF2-72703 7 the redemption price, the place of redemption, and shall designate the principal amount, the numbers and CUSIP numbers of the Notes to be redeemed in whole or in part, and shall require that such Notes be then surrendered at the office of the Paying Agent for redemption in whole or in part at such redemption price, giving notice also that further interest on the Notes or the portions thereof called for redemption will not accrue from and after such redemption date. If any Note so chosen for redemption is to be redeemed in part only, such notice shall also state that such Note is to be redeemed in part only and that upon the presentation of such Note for redemption there will be issued in lieu of the unredeemed portion of the principal amount thereof a new Note or Notes of the same interest rate and maturity date of an aggregate principal amount equal to the unredeemed portion thereof. If notice of redemption has been duly given as aforesaid and money for the payment of the redemption price of the Notes or the portions thereof so called for redemption is held by the Paying Agent, then on the redemption date designated in such notice such Notes or such portions thereof shall become due and payable, and from and after the date so designated interest on such Notes or the portions thereof so called for redemption shall cease to accrue and the registered owners of such Notes or such portions thereof shall have no rights in respect thereof except to receive payment of the redemption price thereof. SECTION 4 . Form of the Notes. The Notes, including the Paying Agent's Certificate of Authentication and Registration and the Assignment to appear thereon, shall be in substantially the following forms, the blanks being suitably filled in to comply with the provisions of the Resolution, namely: SF2-72703 8 [Form of Note] UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTIES OF SANTA CLARA AND SAN MATEO MIDPENINSULA REGIONAL OPEN SPACE DISTRICT 1992 PROMISSORY NOTE No. $ Interest Maturity Date Rate Date of Note CUSIP July 1, December 1, 1992 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS MIDPENINSULA REGIONAL OPEN SPACE DISTRICT, a regional open space district duly organized and existing under and pursuant to the laws of the State of California, and having the office of its Board of Directors in Santa Clara County, California (the "District") , hereby acknowledges itself indebted to and, for value received, promises to pay (but only out of the funds hereinafter referred to, and subject to any right of prior redemption reserved herein) to the registered owner set forth above on the maturity date set forth above or upon the prior redemption hereof the principal sum set forth above, together with interest thereon at the interest rate per annum set forth above from the interest payment date next preceding the date of registration of this Note (unless this Note is registered on a day during the period from the sixteenth (16th) day of the month next preceding an interest payment date to such interest payment date, both inclusive, in which event it shall bear interest from such interest payment date, or unless this Note is registered on a day on or before the fifteenth (15th) day of the month next preceding the first interest payment date, in which event it shall bear interest from December 1, 1992) until the principal hereof shall have been fully paid, payable on July 1, 1993 and semiannually thereafter on January 1 and July 1 of each year, until the Notes shall have been fully paid. Interest due before the maturity or the prior redemption of this Note shall be payable only by check mailed on each such interest payment date to the registered owner hereof at the close of business as of the fifteenth (15th) day of the month next preceding each such interest payment date (except that in the case of a registered owner of one million dollars ($1, 000, 000) or more in principal SM-72703 9 amount of Notes outstanding, payment shall be made at such owner's option by wire transfer of immediately available funds according to written instructions provided by such owner to the Paying Agent at least fifteen (15) days before such interest payment date) , and the interest due on the maturity or the prior redemption of this Note and the principal hereof and the redemption premium, if any, hereon shall be payable at the maturity or upon the prior redemption of this Note only upon surrender hereof by the registered owner hereof at the principal corporate trust office of the paying agent of the District, initially, Seattle-First National Bank in Seattle, Washington (together with any successor paying agent, the "Paying Agent") . Both the interest on and principal of and redemption premium, if any, on this Note are payable in lawful money of the United States of America. This Note is one of a duly authorized issue of promissory notes of the District designated as its 1992 Promissory Notes (the "Notes") aggregating Eight Million Dollars $8, 000, 000 in principal amount, all of like date and tenor (except for such variations as may be required to designate varying numbers, interest rates, denominations, maturities or redemption provisions) , and is issued under and by authority of Article 3 of Chapter 3 of Division 5 of the Public Resources Code of the State of California, as amended to date, and all laws amendatory thereof and supplemental thereto (the "Law") , and under and pursuant to the provisions of Resolution No. 92-56 adopted by the Board of Directors of the District on November 18, 1992 (the "Resolution") , to provide funds for the purpose of acquiring necessary and proper lands and facilities for open space purposes of the District all as more particularly provided in the Resolution, and reference is hereby made to the Resolution for a description of the terms on which the Notes are issued, for the provisions with regard to the security for the repayment of the Notes and for the rights of the registered owners of the Notes. All the terms of the Resolution are hereby incorporated herein and constituted a contract between the District and the registered owner of this Note, to all the provisions of which the registered owner of this Note, by his acceptance hereof, consents and agrees, and the registered owner of this Note shall have recourse to all the provisions of the Resolution and shall be bound by all the terms and conditions thereof. The Notes maturing by their terms on or after July 1, 2003 , are subject to optional redemption by the District on any interest payment date on or after July 1, 2002 , and prior to their respective maturity dates, as a whole, or in part in integral multiples of five thousand dollars ($5, 000) in inverse order of maturity (and by lot within any one maturity if less than all the Notes of any one maturity are redeemed) , from any legally available funds of the District, upon mailed notice as hereinafter described, at a redemption price equal to the following amount expressed as a percentage of the principal amount of the Notes or the portions thereof called for SF2-7270,3 10 redemption, together with accrued interest thereon to the date of redemption, namely: Redemption Date Redemption Price July 1, 2002, or January 1, 2003 102% July 1, 2003, or January 1, 2004 101. 5 July 1, 2004, or January 1, 2005 101 July 1, 2005, or January 1, 2006 100.5 On or after July 1, 2006, and prior to maturity 100 If less than all the outstanding Notes of any one maturity date are to be redeemed at any one time, the Paying Agent shall select the outstanding Notes or the portions thereof to be redeemed at such time from the outstanding Notes maturing on such date by lot in any manner that it deems fair. f As provided in the Resolution, notice of redemption of this Note or any portion hereof shall be given by the Paying Agent by mailing a copy of such notice by first class mail to the registered owner hereof and to all securities depositories and securities information services selected by the District to comply with custom or the rules of any securities exchange or commission or brokerage board or otherwise as may be determined by the District in its sole discretion not less than thirty (30) days nor more than sixty (60) days before the redemption date; provided, that receipt of such notice shall not be a condition precedent to the effect of such notice and neither failure to receive any such notice nor any immaterial defect contained therein shall affect the validity of the proceedings for the redemption of this Note or such portion hereof. If notice of redemption has been duly given as aforesaid, then on the redemption date designated in such notice this Note or such portion hereof shall become due and payable at the above-described redemption price, and if money for the payment of the above-described redemption price of this Note or such portion hereof is held by the Paying Agent, then from and after the date so designated interest on this Note or such portion hereof shall cease to accrue and the registered owner of this Note shall, as to this Note or such portion hereof, have no rights in respect hereof except to receive payment of the redemption price hereof on the redemption date hereof; provided, that if this Note is to be redeemed in part only, upon presentation of this Note for redemption there will be issued in lieu of the unredeemed portion of the principal amount hereof a new Note or Notes of the same interest rate and maturity date of an aggregate principal amount equal to the unredeemed portion hereof. It is hereby recited, certified and declared that this Note is issued in strict conformity with the Constitution and laws of the State of California and with proceedings of the District authorizing the same, and that all acts, conditions and things required by law to exist, to happen and to be performed SF2-7270.3 11 precedent to the issuance of this Note do exist, have happened and have been performed in the time, form and manner as required by law, and that this Note, together with all other indebtedness and obligations of the District, does not exceed any limit prescribed by the Constitution or laws of the State of California. It is hereby further recited, certified and declared that the Notes are limited obligations of the District and that the interest on and principal of and redemption premiums, if any, on the Notes shall, as authorized by and subject to the Law, be paid only from limited ad valorem property taxes levied upon all taxable property within the District by the Board of Supervisors of Santa Clara County and by the Board of Supervisors of San Mateo County, and allocated to the District under applicable law, that are legally available to pay the Notes together with the payment on a parity of the interest on and principal of the District's outstanding 1987 Promissory Notes, 1988 Promissory Notes and 1990 Promissory Notes and certain land acquisition contracts, or from other funds legally available therefor. The full faith and credit or taxing power of the District is not pledged for the payment of the interest on or principal of or redemption premiums, if any, on the Notes, and the Notes are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any property of the District or any of its income or revenue. This Note is transferable by the registered owner hereof, in person or by his duly authorized attorney, at the above-mentioned office of the Paying Agent, upon surrender of this Note for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Paying Agent, and thereupon a new Note or Notes of authorized denominations for a like aggregate principal amount and of the same maturity date will be issued to the transferee in exchange therefor, in the manner, subject to the conditions and upon payment of the charges provided in the Resolution. The District and the Paying Agent may deem and treat the registered owner of this Note as the absolute owner hereof for all purposes, and neither the District nor the Paying Agent shall be affected by any notice or knowledge to the contrary; and payment of the interest on and principal of and redemption premium, if any, on this Note shall be made only to such registered owner as above provided, which payment shall be valid and effectual to satisfy and discharge the liability on this Note to the extent of the sum or sums so paid. The Notes are authorized to be issued in the form of fully registered notes in the denomination of five thousand dollars ($5, 000) or any integral multiple thereof (not exceeding the principal amount of Notes maturing in any one year) , and, subject to the conditions and upon payment of the charges provided in the Resolution, the Notes may be exchanged at the above-mentioned office of the Paying Agent for the same aggregate SF2-7270.3 12 principal amount of Notes of the same maturity date of other authorized denominations. This Note shall not be entitled to any benefits under the Resolution or become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been signed by the Paying Agent. IN WITNESS WHEREOF, the District has caused this Note on its behalf to be signed by the manual or facsimile signature of the President of its Board of Directors and attested by the manual or facsimile signature of the Secretary of its Board of Directors and has caused the seal of the District to be impressed or printed hereon, all as of December 1, 1992 . MIDPENINSULA REGIONAL OPEN SPACE DISTRICT B President of the Board of Directors (SEAL) Attest: Secretary of the Board of Directors Sfz2-7270.3 13 [Form of Paying Agent's Certificate of Authentication and Registration] This is one of the Notes described in the within-mentioned Resolution which has been authenticated and registered as of SEATTLE-FIRST NATIONAL BANK, as Paying Agent By Authorized Officer [Form of Assignment] For value received the undersigned do(es) hereby sell, assign and transfer unto the within Note and do(es) hereby irrevocably constitute and appoint attorney to transfer the same on the register of the Paying Agent, with full power of substitution in the premises. Dated: SIGNATURE GUARANTEED BY: NOTE: The signature(s) to this Assignment must correspond with the name(s) as written on the face of the within Note in every particular, without alteration or enlargement or any change whatsoever, and the signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. Social Security Number, Taxpayer Identification Number or other identifying number of Assignee: M-72703 14 SECTION 5. Execution of the Notes. The President and the Secretary who may be in office at the date of the Notes, or at any time thereafter prior to the delivery of the Notes, and each of such officers, are hereby authorized and directed respectively as such officers to sign and attest each of the Notes on behalf of the District by use of their manual or facsimile signatures, and the Secretary is hereby additionally authorized and directed to impress or print the seal of the District thereon, which such signing and sealing shall be a sufficient and binding execution of the Notes by the District. In case any officer whose signature appears on the Notes shall cease to be such officer before the delivery of the Notes to the purchaser, such signature shall nevertheless be valid and sufficient for all purposes the same as though such officer had remained in office until the delivery of the Notes. Only such of the Notes as shall bear thereon a certificate of authentication and registration in the form hereinabove set forth, executed and dated by the Paying Agent, shall be entitled to any benefits hereunder or be valid or obligatory for any purpose, and such certificate shall be conclusive evidence that the Notes so authenticated have been duly authorized, executed, issued and delivered hereunder and are entitled to the benefits hereof. SECTION 6. Ammintment of Paving Agent; Registration and Transfer of the Notes. Seattle-First National Bank at its principal corporate trust office in Seattle, Washington, is hereby appointed Paying Agent of the District for the purpose of paying the interest on and principal of and redemption premiums, if any, on the Notes. The District may at any time in its sole discretion remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto by an instrument in writing; provided, the District agrees that it will at all times maintain a Paying Agent for the Notes having a principal corporate trust office in either San Francisco, California, or Seattle, Washington. The Paying Agent may at any time resign and be discharged from its duties hereunder by giving forty-five (45) days' written notice of such resignation to the District. If, after ninety (90) days following the Paying Agent's giving of such notice of resignation no successor Paying Agent has been approved, in accordance with the terms of the Resolution, the Paying Agent shall be entitled to be discharged as Paying Agent of any and all duties arising hereunder or any related documents, including, but not limited to, inspection, perfection and transfer of security, payment of money and notification of any party. If no successor Paying Agent shall have been appointed and shall have accepted such appointment within ninety (90) days following the giving of notice of removal or notice of resignation as aforesaid, the resigning Paying Agent or any registered owner of the Notes (on behalf of himself and all other owners) may petition any court of competent jurisdiction to appoint a successor Paying Agent, which court may, upon such notice, if any, as such court may deem proper and prescribe, appoint a successor Paying Agent or grant such other legal or equitable release as such court may deem slz2-7270.3 15 appropriate. The Paying Agent is hereby authorized and directed to pay interest on the Notes due before the maturity or the prior redemption thereof to the registered owners thereof as their names appear at the close of business as of the fifteenth (15th) day of the month preceding each such interest payment date on the registration books required to be kept by it pursuant to this section as the registered owners thereof, such interest to be paid by check mailed on each such interest payment date to such registered owners at their addresses appearing on such books or at such other addresses as they may have filed with the Paying Agent for that purpose (except that in the case of a registered owner of one million dollars ($1, 000, 000) or more in principal amount of Notes outstanding, payment shall be made at such owner's option by wire transfer of immediately available funds according to written instructions provided by such owner to the Paying Agent at least fifteen (15) days before such interest payment date) , and to pay to such registered owners the interest on the Notes due on the maturity or the prior redemption of the Notes and the principal of the Notes and any redemption premium thereon upon presentation and surrender of the Notes to the Paying Agent at maturity or upon the prior redemption thereof. The District shall from time to time, subject to any agreement between the District and the Paying Agent then in force, pay the Paying Agent compensation for its services, reimburse the Paying Agent for all its advances and expenditures, including but not limited to advances to and fees and expenses of independent accountants, counsel and consultants or other experts employed by it in the exercise and performance of its rights and obligations hereunder, and indemnify and save the Paying Agent harmless against liabilities not arising from its own negligence or willful misconduct which it may incur in the exercise and performance of its rights and obligations hereunder. The recitals of facts, agreements and covenants contained herein and in the Notes shall be taken as statements, agreements and covenants of the District, and the Paying Agent does not assume any responsibility for the correctness of the same and does not make any representation as to the sufficiency or validity hereof or of the Notes, and shall not incur any responsibility in respect thereof other than in connection with the rights and obligations expressly assigned to or imposed upon it herein or in the Notes, and shall not be liable in connection with the performance of its duties hereunder except for its own negligence or willful misconduct. The Paying Agent shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, and the Paying Agent's rights to immunities and protection from liability hereunder and its payment of its fees and expenses shall survive its resignation or removal and the final payment or the defeasance of the Notes. The cost of printing of any Notes and any services rendered or any expenses incurred by the Paying Agent in connection with any exchange or transfer shall be paid by the District. SF2-72703 16 The Paying Agent will keep at its principal corporate trust office sufficient books for the registration, transfer and exchange of the Notes, which books shall at all times be open to inspection by the District during normal business hours, and upon presentation for such purpose the Paying Agent shall, under such reasonable regulations as it may prescribe, register or transfer or exchange the Notes on such books as hereinafter provided. Any Note may be transferred on such books by the registered owner thereof, in person or by his duly authorized attorney, upon payment by the person requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer and upon surrender of such Note for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Paying Agent. Whenever any Note or Notes shall be surrendered for transfer, the District shall execute and the Paying Agent shall authenticate and deliver a new Note or Notes of authorized denominations for a like aggregate principal amount and of the same maturity date. The District and the Paying Agent may deem and treat the registered owner of any Note as the absolute owner of such Note for the purpose of receiving payment thereof and for all other purposes, whether such Note shall be overdue or not, and neither the District nor the Paying Agent shall be affected by any notice or knowledge to the contrary received by the District or the Paying Agent; and payment of the interest on and principal of and redemption premium, if any, on such Note shall be made only to such registered owner as above provided, which payment shall be valid and effectual to satisfy and discharge liability on such Note to the extent of the sum or sums so paid. The Notes may be exchanged on such books by the registered owners thereof for a like aggregate principal amount of Notes of the same maturity date of other authorized denominations upon payment by the person requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. If any Note is mutilated, lost, stolen or destroyed, the District shall execute and the Paying Agent shall authenticate a new Note of the same date, maturity and denomination as that mutilated, lost, stolen or destroyed; provided, that in the case of any mutilated Note, such mutilated Note shall first be surrendered to the Paying Agent, and in the case of any lost, stolen or destroyed Note, there shall be first furnished to the District and the Paying Agent evidence of such loss, theft or destruction which shall be satisfactory to the District and the Paying Agent, together with an indemnity satisfactory to them. In the event any such Note shall have matured or been called for redemption, instead of issuing a duplicate Note, the Paying Agent may pay the same. The District and the Paying Agent may charge the owner of such Note with their reasonable fees and expenses in connection with replacing any Note mutilated, lost, stolen or destroyed. S F2-7270.3 17 The Paying Agent may consult with counsel (who may be counsel to the District) with regard to legal questions arising hereunder, and the opinion of such counsel shall be full and complete authorization and protection to the Paying Agent in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The Paying Agent shall have no responsibility or liability with respect to any information, statement or recital in any offering -memorandum or other disclosure material prepared or distributed with respect to the issuance of the Notes. SECTION 7 . Delivery of the Notes and Use of Depository. (a) The Secretary is directed to cause to be prepared a sufficient number of blank Notes of suitable quality and to cause the blank spaces thereof to be filled in to comply with the provisions hereof, and to procure their execution by the proper officers of the District, and to deliver them to the Treasurer, who shall safely keep the same and deliver them to the Paying Agent for registration in such manner as directed by the purchaser thereof, and who shall thereafter deliver them to such purchaser upon receiving therefor the purchase price thereof and accrued interest thereon to the date of delivery. The President and the Secretary are further authorized and directed to make, execute and deliver to the purchaser of the Notes a signature certificate in the form customarily required by purchasers of notes of public districts certifying to the genuineness and due execution of the Notes, and the Treasurer is hereby authorized and directed to make, execute and deliver to the purchaser of the Notes a receipt in the form customarily required by purchasers of notes of public districts evidencing the payment of the purchase price and the delivery of the Notes, which receipt shall be conclusive evidence that the Notes have been duly paid for and delivered. The purchaser of the Notes and any subsequent registered owner of the Notes are hereby authorized to rely upon and shall be justified in relying upon any such signature certificate and any such receipt with respect to the Notes issued and delivered pursuant to the authority of the Resolution. (b) Notwithstanding any provision of the Resolution to the contrary, the Notes shall be initially registered as provided in section 3 , and registered ownership of the Notes, or any portion thereof, may not thereafter be transferred except: (i) To any successor of The Depository Trust Company or its nominee, or to any substitute depository designated pursuant to clause (ii) of this subsection (a "substitute depository") ; provided, that any successor of The Depository Trust Company or any substitute depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) To any substitute depository designated by the District, upon (1) the resignation of The Depository Trust Company or its successor (or any substitute depository SF2-7270,3 18 or its successor) from its functions as depository, or (2) a determination by the District that The Depository Trust Company or its successor (or any substitute depository or its successor) is no longer able to carry out its functions as depository; provided, that any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (iii) To any person as provided below upon (1) the resignation of the Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository; provided, that no substitute depository can be obtained, or (2) a determination by the District that it is in the best interests of the District to remove The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository. In the case of any transfer pursuant to clause (i) or clause (ii) of this subsection, upon receipt of all outstanding Notes by the District, together with a Written Order of the District to the Paying Agent, a new Note shall be executed, authenticated and delivered for each maturity of the Notes than Outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such Written Order of the District. In the case of any transfer pursuant to clause (iii) of this subsection, upon receipt of all Outstanding Notes by the District, together with Written Order of the District to the Paying Agent, new Notes shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such Written Order of the District, subject to the limitations of Section 3; provided, that the Paying Agent shall not be required to deliver such new Notes within a period less than sixty (60) days from the date of receipt of such Written Order of the District, and subsequent to any transfer pursuant to clause (iii) of this subsection the Notes shall be transferred as provided in Section 6 . In the case of partial redemption or an advance refunding of the Notes, The Depository Trust Company shall make an appropriate notation on the Notes indicating the date and amounts of such reduction in principal, in form acceptable to the District. The District and the Paying Agent shall have no responsibility for transmitting payments to, communication with, notifying, or otherwise dealing with any beneficial owners of the Notes and neither the District nor the Paying Agent will have any responsibility or obligations, legal or otherwise, to the beneficial owners or to any other party including The Depository Trust Company or its successor (or any substitute depository or its successor) , except as the registered owner of a Note. SI-2-72703 19 So long as the Outstanding Notes are registered in the name of Cede & Co. or its registered assigns, the District and the Paying Agent shall cooperate with Cede & Co. , as sole registered Owner, and its registered assigns in effecting payment of the principal and redemption premiums, if any, and interest evidenced and represented by the Notes by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due. (c) Upon the receipt of payment for the Notes when the same shall have been duly sold and delivered, the Treasurer shall set aside and deposit the proceeds received from such sale in the following respective funds and in the following order of priority: (i) The Treasurer shall deposit in the 111992 Promissory Note Interest and Principal Fund, " which fund the District hereby agrees and covenants to establish and maintain until payment in full or provision therefor of all interest on and principal of and redemption premiums, if any, on the Notes, a sum of money equal to the accrued interest from the date of the Notes to the date of the payment of the purchase price thereof. (ii) The Treasurer shall deposit in the 111992 Promissory Note Reserve Fund, " which fund the District hereby agrees and covenants to establish and maintain with the Paying Agent until payment in full or provision therefor of all interest on and principal of and redemption premiums, if any, on the Notes, a sum of money equal to the Reserve Fund Requirement. (iii) The Treasurer shall deposit the remainder of the proceeds received from the sale of the Notes in the 111992 Promissory Note Acquisition Fund, " which fund the District hereby covenants and agrees to establish and maintain until payment of all costs of the issuance of the Notes and the payment of the costs of acquisition of the Project. SECTION 8. Payment of the Notes. The Notes are limited obligations of the District and the interest on and principal of and premium, if any, on the Notes shall, as authorized by and subject to the Law, be paid only from the Limited Taxes, or from other funds legally available therefor. The full faith and credit or taxing power of the District is not pledged for the payment of the interest on or principal of or redemption premiums, if any, on the Notes, and the Notes are not and shall not be secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any property of the District or any of its income or revenue. In order to provide for the timely payment of the interest on and principal of and redemption premiums, if any, on SF2-7270.3 20 the Notes as the same becomes due, the District agrees and covenants, consistent with the foregoing and as authorized by and subject to the Law, that until the interest on and the principal of and redemption premiums, if any, on the Notes are paid in full or until there is a sum in the treasury of the District set apart for that purpose sufficient to meet all payments of the interest on and principal of and redemption premiums, if any, on the Notes as they become due, it will annually set aside a portion of the Limited Taxes (or other legally available funds of the District) sufficient to pay such interest and principal and redemption premiums, if any, that will become due before the proceeds of the Limited Taxes levied at the next general tax levy will be available for such purpose. In order to implement this provision, the District further agrees and covenants that it will set aside, as soon as possible after the receipt of the Limited Taxes that become delinquent after April 10 of each year (commencing with such Limited Taxes that become delinquent after April 10, 1993) , an amount of such Limited Taxes (or other legally available funds of the District) equal to the interest that becomes due and payable on the Notes on the next succeeding July 1 plus the redemption premiums, if any, on the Notes that become due on the Notes on or prior to such date plus the principal of the Notes that becomes due and payable on the next succeeding July 1, and that it will set aside, as soon as possible after the receipt of such Limited Taxes that become delinquent after December 10 of each year (commencing with such Limited Taxes that become delinquent after December 10, 1993) , an amount of such Limited Taxes (or other legally available funds of the District) equal to the interest that becomes due and payable on the Notes on the next succeeding January 1 plus the redemption premiums, if any, on the Notes that become due on or prior to such date. All such amounts of Limited Taxes (or other legally available funds of the District) shall be deposited by the Controller in the Interest and Principal Fund. All money in the Interest and Principal Fund shall be used solely for the payment of the interest on and principal of and redemption premiums, if any, on the Notes, and for this purpose the Controller shall, at least one (1) Business Day before each interest payment date on the Notes and each principal maturity date or redemption date of any of the Notes, disburse from the Interest and Principal Fund to the Paying Agent an amount, in immediately available funds, sufficient to make such interest, principal and premium payments; provided, that any money held by the Paying Agent in trust for the payment and discharge of any Notes which remains unclaimed for two (2) years after the date when such Notes have become due and payable, either at their stated maturity date or by call for redemption prior to maturity, if such money was held by the Paying Agent on such date, or for two (2) years after the date of deposit of such money if deposited with the Paying Agent after the date when such Notes become due and payable, shall be repaid by the Paying Agent to the District and deposited by the District in the General Fund, and the Paying Agent shall thereupon be released and discharged with respect thereto and the registered owners of the SF2-7270.3 21 Notes shall look only to the District for the payment of such Notes (subject to the applicable statute of limitations) . All money in the Interest and Principal Fund shall, pending its disbursement as above provided, be deposited or invested as determined by the Controller as permitted by law so as to obtain the highest yield that the Controller deems practicable, having due regard for the safety of such deposits and investments and subject to the provisions of Section 11 hereof; provided, that all such deposits and investments shall be withdrawable or shall mature, as the case may be, to coincide as nearly as practicable with the time when such money is required to be withdrawn for use hereunder. All proceeds of such deposits or investments shall (except as otherwise provided by Section 11) be deposited as and when received in the Interest and Principal Fund. When all the interest on and principal of and redemption premiums, if any, on the Notes have been paid, any balance of money then remaining in the Interest and Principal Fund shall be deposited in the General Fund. The covenants and agreements set forth herein are for the equal and proportionate benefit, security and protection of all owners of the Notes and the District's outstanding 1987 Promissory Notes, 1988 Promissory Notes and 1990 Promissory Notes and any additional notes which may hereafter be issued on a parity with the Notes, without preference or distinction as to security or otherwise of any such obligations over any of the other by reason of the number or date thereof or the time of sale, execution or delivery hereof. SECTION 9. Reserve Fund. The money in the Reserve Fund shall be used solely for the payment of the interest on and principal of and redemption premium, if any, on the Notes in the event and to the extent that the District has no other money available therefor, except that (1) any money in the Reserve Fund in excess of the Reserve Fund Requirement may be withdrawn from the Reserve Fund and transferred to the Controller for deposit in the General Fund upon receipt by the Paying Agent of written instructions from the District, and (2) the money in the Reserve Fund may be used (together with any other money available for that purpose) for the retirement or defeasance of all the Outstanding Notes. Whenever any withdrawals from the Reserve Fund reduce the balance therein below the Reserve Fund Requirement, the Reserve Fund shall be replenished to the Reserve Fund Requirement from the first available Limited Taxes (or other legally available funds of the District) , except that the District shall not be obligated to make any payments into the Reserve Fund at any time when the money contained therein and in the Interest and Principal Fund is at least equal to the principal amount of the Outstanding Notes plus the interest then due and thereafter to become due thereon. SF2-7270.3 22 All money in the Reserve Fund shall, pending its use, be deposited or invested as directed by the Controller as permitted by law so as to obtain the highest yield that the Controller deems practicable, having due regard for the safety of such deposits and investments and subject to the provisions of Section 11 hereof; provided, that all such deposits and investments shall be withdrawable or shall mature, as the case may be, to coincide as nearly as practicable with the time when such money is expected to be withdrawn for use hereunder, and in any event not later than July 1, 2012. All proceeds of such deposits or investments shall (except as otherwise provided by Section 11) be transferred to the Controller and be deposited as and when received in the Interest and Principal Fund. The Paying Agent shall not be liable or responsible for any loss suffered in connection with any such deposit or investment made by it under the terms of and in accordance with this section. When all the interest on and the principal of the Notes has been paid, any balance of money then remaining in the Reserve Fund shall be deposited in the General Fund. SECTION 10. Acquisition Fund. All money in the Acquisition Fund shall be withdrawn therefrom only upon the order of the Board or pursuant to its directions, and shall be used and withdrawn solely for paying costs of the issuance of the Notes (including, but not limited to, all printing and document preparation expenses in connection with the Notes and the preliminary official statement and official statement pertaining to the Notes, rating agency fees, CUSIP Service Bureau charges, the initial fees and expenses of the Paying Agent, and other fees and expenses incurred in connection with the issuance of the Notes and the acquisition of the Project (including reimbursing the District for any such costs theretofore paid by it) , except that any balance of money in the Acquisition Fund not needed or used for such purpose, after the closure of such fund, shall be transferred to the Interest and Principal Fund. All money in the Acquisition Fund shall, pending expenditure, be deposited or invested as determined by the Controller as permitted by law so as to obtain the highest yield that the Controller deems practicable, having due regard for the safety of such deposits and investments; provided, that all such deposits and investments shall be withdrawable or shall mature, as the case may be, to coincide as nearly as practicable with the time when such money is expected to be withdrawn for use hereunder. All proceeds of such deposits or investments shall (except as otherwise provided by Section 11) be deposited as and when received in the Acquisition Fund. SECTION 11. Tax Covenants. (a) The District will not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of the interest on the Notes pursuant to Section 103 of the Code. The District will not directly or S1,2-7270.3 23 indirectly use or make any use of the proceeds of the Notes or any other funds of the District or take or omit to take any action that would cause the Notes to be "arbitrage bonds" subject to federal income taxation by reason of Section 148 of the Code or "private activity bonds" subject to federal income taxation by reason of Section 141 (a) of the Code or obligations subject to federal income taxation because they are "federally guaranteed" as provided in Section 149 (b) of the Code. The District, with respect to the proceeds of the Notes and such other funds, will comply with all requirements of such sections of the Code, and all regulations of the United States Department of the Treasury issued thereunder to the extent that such regulations are, at the time, applicable and in effect; provided, that if the District shall obtain an opinion of nationally recognized bond counsel to the effect that any action required under this section is no longer required to maintain the exclusion from gross income of the interest on the Notes pursuant to Section 103 of the Code, the District may rely conclusively on such opinion in complying with the provisions hereof; and provided further, that in the event that at any time the Board is of the opinion that for purposes of this section it is necessary to restrict or limit the yield on the investment of any moneys held by the District hereunder or otherwise, the Board shall so instruct the Controller in writing, and the Controller shall take such action as may be necessary in accordance with such instructions. (b) Without limiting the generality of the foregoing, the District will pay from time to time all amounts required to be rebated to the United States of America pursuant to Section 148 (f) of the Code and all regulations of the United States Department of Treasury issued thereunder to the extent that such regulations are, at the time, applicable and in effect, which obligation shall survive payment in full or defeasance of the Notes. To that end, there is hereby established in the treasury of the District a fund to be known as the "Midpeninsula Regional Open Space District 1992 Promissory Notes Rebate Fund" to be held and administered by the Controller. The District will comply with the provisions of the Tax Certificate with respect to making deposits in the Rebate Fund, and moneys held in the Rebate Fund are pledged to provide payments to the United States of America as provided herein and in the Tax Certificate and no other person shall have claim to such moneys except as provided in the Tax Certificate. SECTION 12 . General Covenants. The District agrees and covenants that, until payment in full of all the interest on and principal of and redemption premiums, if any, on the Notes (or provision satisfactory for such payment shall have been made) , it will: A. Duly and punctually pay or cause to be paid the interest on and principal of and redemption premiums, if any, on the Notes in accordance with the conditions and terms thereof and with the conditions and terms hereof. SF-*2-7270,3 24 B. Incur no additional indebtedness or capital lease obligations payable from the Limited Taxes received by the District having any priority in payment to the payment of the interest on or principal of or redemption premiums, if any, on the Notes. C. Incur no additional indebtedness or capital lease obligations payable from the Limited Taxes received by the District on a parity in payment of the interest on or principal of or redemption premiums, if any, on the Notes unless it shall - have first filed with the Paying Agent a certificate (which the Paying Agent shall maintain in its files, but shall have no responsibility for the review or verification thereof) executed by the Controller showing: 1. The total Limited Taxes received by the District in its most recent audited fiscal year, as shown by the most recent audited financial statement of the District, plus the total subventions in lieu of taxes received by the District from the State of California in such fiscal year; 2 . The debt service payable by the District during its next succeeding fiscal year on all indebtedness or capital lease obligations of the District that would be payable from the Limited Taxes on a parity with the Notes and the debt service that is payable on the outstanding Notes in the next succeeding fiscal year; 3 . That the total defined in subparagraph 1 above is at least one hundred twenty-five per cent (125%) of the total defined in subparagraph 2 above. D. Prepare and adopt a budget for each fiscal year, which budget shall provide for the payment of the interest and premium, if any, on and the principal of the Notes becoming due and payable in such fiscal year and for appropriations of the Limited Taxes fully sufficient to make such payments. A copy of each budget shall be filed with the Paying Agent within twenty (20) days of its adoption (which budget the Paying Agent shall maintain in its files, but shall not be responsible for the review thereof) . The budgets of the District on file with the Paying Agent shall be open to inspection during regular business hours by any registered owner of the Notes. E. Not amend or modify the Resolution in any manner which affects the rights or obligations of the Paying Agent without its prior written approval to any such amendment or modification. SECTION 13 . Discharge of Notes. (a) If the District shall pay or cause to be paid or there shall otherwise be paid to the registered owners of all outstanding Notes the interest thereon and the principal thereof SF2-7270.3 25 and the redemption premiums, if any, thereon at the times and in the manner stipulated therein and herein, then all agreements, covenants and other obligations of the District to the registered owners of such Notes hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Paying Agent shall execute and deliver to the District all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Paying Agent shall pay over or deliver to the District all money or securities held by it pursuant hereto which are not required for the payment of the interest on or principal of and redemption premiums, if any, on such Notes or any outstanding fees or expenses of the Paying Agent. (b) Any Outstanding Notes shall on the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if there shall be on deposit with the Paying Agent money which is sufficient to pay the interest due on such Notes on such date and the principal and redemption premiums, if any, due on such Notes on such date. (c) Any Outstanding Notes shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in subsection (a) of this section if (1) in case any such Notes are to be redeemed on any date prior to their maturity date, the District shall have agreed to mail a notice of redemption to the respective registered owners of all outstanding Notes and to those securities depositories or securities information services selected by it pursuant to Section 3 , (2) there shall have been deposited with an escrow agent or the Paying Agent either money in an amount which shall be sufficient or Federal Securities which are not subject to redemption except by the holder thereof prior to maturity (including any Federal Securities issued or held in book-entry form on the books of the Department of the Treasury of the United States of America) or municipal obligations which have been defeased with Federal Securities and which are rated in the highest rating category either by Moody's Investors Service or Standard & Poor's Corporation the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with such escrow agent or the Paying Agent at the same time, shall be sufficient to pay when due the interest to become due on such Notes on and prior to the maturity dates or redemption dates thereof, as the case may be, and the principal of and redemption premiums, if any, on such Notes on and prior to the maturity dates or the redemption dates thereof, as the case may be, as evidenced by a report of an independent certified public accountant on file with the District and the Paying Agent, and (3) in the event such Notes are not by their terms subject to redemption within the next succeeding sixty (60) days, the District shall have agreed to mail a notice to the registered owners of such Notes and to those securities depositories or securities information services selected by it pursuant to Section 3 that the deposit required by clause (2) St-2-7270.3 26 above has been made with such escrow agent or the Paying Agent and that such Notes are deemed to have been paid in accordance with this section and stating the maturity dates or redemption dates, as the case may be, upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such Notes. (d) Anything contained herein to the contrary notwithstanding, any money held by the Paying Agent in trust for the payment and discharge of any of the Notes or any interest thereon which remains unclaimed for two (2) years after the date when such Notes or interest thereon have become due and payable, either at their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Paying Agent on such date, or for two (2) years after the date of deposit of such money if deposited with the Paying Agent after the date when such Notes or interest thereon became due and payable, shall be repaid by the Paying Agent to the District as its absolute property free from trust and for use in accordance with the Law, and the Paying Agent shall thereupon be released and discharged with respect thereto and the registered owners of such Notes shall look only to the District for the payment of such Notes and interest thereon; provided, that before the Paying Agent shall be required to make any such repayment the District shall mail pursuant to Section 3 a notice to the registered owners of all Outstanding Notes that such money remains unclaimed and that after a date named in such notice, which date shall not be less than thirty (30) days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the District. SM-7270.3 27 SECTION 14 . Effective Date. The Resolution shall take effect from and after its passage and approval. PASSED AND ADOPTED on November 18, 1992 , by the following vote: AYES: Directors NOES: ABSENT: Approved: President of the Board of Directors of the Midpeninsula Regional Open Space District (SEAL) Attest: Clerk of the Midpeninsula Regional Open Space District SF2-7270.3 28 CERTIFICATE OF THE CLERK OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT I, Jean H. Fiddes, Clerk of the Midpeninsula Regional Open Space District, State of California, hereby certify that the foregoing is a true, correct and complete copy of Resolution No. 92-56 duly adopted by the Board of Directors of the Midpeninsula Regional open Space District at a regular meeting thereof duly and regularly held on November 18, 1992 , of which meeting all of the members of said Board of Directors 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 true, correct and complete copy of the original resolution duly adopted by said Board of Directors at said meeting and entered in said minutes; and that said resolution has not been amended, modified or rescinded since its adoption and is in full force and effect as of the date hereof. I further certify that in accordance with California Government Code Section 54954 . 2 , the agenda for said meeting contained a brief description of said resolution to be considered at said meeting, and a copy thereof was posted at least seventy-two (72) hours before said meeting in a location freely accessible to members of the public. IN WITNESS WHEREOF, I have executed this certificate and affixed the seal of the Midpeninsula Regional open Space District on the date hereinbelow set forth. Dated: November —, 1992 Clerk of the Midpeninsula Regional Open Space District (SEAL] ST'2-7270.3 RESOLUTION OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT RESOLUTION NO. 92-55 APPOINTING BOND COUNSEL AND UNDERWRITER IN CONNECTION WITH THE ISSUANCE OF $8, 000, 000 PRINCIPAL AMOUNT OF MIDPENINSULA REGIONAL OPEN SPACE DISTRICT 1992 PROMISSORY NOTES WHEREAS, the Board of Directors (the "Board") of the Midpeninsula Regional Open Space District (the "District") , has determined to issue $8, 000,000 principal amount of Midpeninsula Regional Open Space District 1992 Promissory Notes (the "Notes") ; and WHEREAS, the Board will require certain consultants to conduct the proceedings to issue Notes; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Midpeninsula Regional Open Space District as follows: Section 1. The firm of Orrick, Herrington & Sutcliffe be, and such firm is, hereby appointed Bond Counsel in said proceedings, in accordance with that certain Letter Agreement on file with the District, and the General Manager of the District is hereby authorized and directed to execute said Letter Agreement for and on behalf of the District. Section 2 . The firm of Prudential Securities, Inc. is hereby appointed Underwriter in saidk,proceedings, in accordance with that certain agreement on file with the District. PASSED AND ADOPTED this 18th day of November, 1992 , by the following vote: AYES: NOES: ABSENT: President of the Board of Directors of the Midpeninsula Regional Open Space District [SEAL] Attest: Clerk of the Midpeninsula Regional Open Space District SF2-8846.1 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT RESOLUTION NO. 92-57 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY OF A PURCHASE CONTRACT RELATING TO $8, 000, 000 PRINCIPAL AMOUNT OF MIDPENINSULA REGIONAL OPEN SPACE DISTRICT 1992 PROMISSORY NOTES AND APPROVING THE PRELIMINARY OFFICIAL STATEMENT AND THE OFFICIAL STATEMENT AND OTHER DOCUMENTS RELATING TO SAID NOTES Adopted November 18, 1992 SH-7272.3 1 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT RESOLUTION NO. 92-57 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT AUTHORIZING THE EXECUTION AND DELIVERY OF A PURCHASE CONTRACT RELATING TO $8, 000, 000 PRINCIPAL AMOUNT OF MIDPENINSULA REGIONAL OPEN SPACE DISTRICT 1992 PROMISSORY NOTES AND APPROVING THE PRELIMINARY OFFICIAL STATEMENT AND THE OFFICIAL STATEMENT AND OTHER DOCUMENTS RELATING TO SAID NOTES WHEREAS, the Board of Directors of the Midpeninsula p ninsula Regional Open Space District (the "District") has duly authorized the issuance of $8 , 000, 000 principal amount of Midpeninsula Regional Open Space District 1992 Promissory Notes (the "Notes") to provide funds for the purpose of acquiring necessary and proper lands and facilities for open space purposes of the District; and WHEREAS, there has been submitted to this Board of Directors by Prudential Securities Incorporated (the "Underwriter") a form of Purchase Contract relating to the Notes (the "Purchase Contract") and there has been submitted to this Board of Directors by the Underwriter a Preliminary Official Statement relating to the Notes (the "Preliminary Official Statement") ; and WHEREAS, this Board of Directors has carefully considered the terms and conditions of the Purchase Contract and of the Preliminary Official Statement and is fully advised in the premises; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Midpeninsula Regional Open Space District, as follows: Section 1. The Purchase Contract, in the form now on file with the Secretary of the Board of Directors of the District, is hereby approved for execution by the District; and pursuant thereto the Notes shall be sold at a purchase price equal to the principal amount thereof plus accrued interest thereon, less a discount of $128, 000 (which discount equals .the Underwriter's spread, and which discount the Board of Directors of the District hereby determines reflects an underwriter's SF2-7272.3 spread which is both reasonable and necessary under the prevailing market conditions) , and pursuant thereto the General Manager of the District, with the advice and consent of the Controller of the District, shall determine the interest rate or rates of the Notes, which such interest rate or rates shall not exceed twelve per cent (12%) per annum and which such interest rate or rates shall be inserted therein with the approval of the officers executing the Purchase Contract, and pursuant thereto the President of the Board of Directors of the District is hereby authorized to execute and the Secretary of the Board of Directors of the District is hereby authorized to attest such execution and affix the seal of the District thereto and deliver the Purchase Contract on behalf of the District, with such changes therein as the officers executing the same may require or approve, such execution and delivery to be conclusive evidence of the approval of the Purchase Contract and the interest rates on the Notes stated therein. Section 2 . The Preliminary Official Statement in the form now on file with the Secretary of the Board of Directors of the District is hereby approved, and the General Manager of the District is hereby authorized to approve the distribution of the Preliminary Official Statement in substantially said form and to certify to the Underwriter on behalf of the District that the Preliminary Official Statement is, as of its date, "deemed final" by the District within the meaning of Rule 15c2-212 promulgated under the Securities and Exchange Act of 1934 (except for the omission of certain final pricing, rating and related information as permitted by such rule) . The General Manager of the District is hereby authorized and directed, for and in the name and on behalf of the District, to execute and deliver to the Underwriter the Official Statement, which shall be in substantially the form of the Preliminary official Statement with such additions thereto or changes therein as such officer shall require or approve, such approval to be conclusively evidenced by the execution and delivery thereof, and the Underwriter is hereby authorized to distribute copies of the official Statement to persons who may be interested in the purchase of the Notes and the Underwriter is directed to deliver such copies to all actual purchasers of the Notes. Section 3 . The officers of the Board of Directors of the District and the officers of the District are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents and contracts which they may deem necessary or advisable in order to consummate the sale, execution and delivery of the Notes and otherwise to carry out, give effect to and comply with the terms and intent of this resolution, the Notes, the Purchase Contract the Preliminary Official Statement and the Official Statement; and any such actions heretofore taken by such officers in connection therewith are hereby ratified, confirmed and approved. SF:2-7272.3 2 Section 4 . This resolution shall take effect from and after its passage and approval. PASSED AND ADOPTED on November 18, 1992 , by the following vote: AYES: Directors NOES: ABSENT: Approved: President of the Board of Directors of the Midpeninsula Regional Open Space District (SEAL) Attest: Clerk of the Midpeninsula Regional Open Space District SF2-7272.3 3 CERTIFICATE OF THE CLERK OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT I, Jean H. Fiddes, Clerk of the Midpeninsula Regional Open Space District, State of California, hereby certify that the foregoing is a true, correct and complete copy of Resolution No. 92-57 duly adopted by the Board of Directors of the Midpeninsula Regional Open Space District at a regular meeting thereof duly and regularly held on November 18, 1992 , of which meeting all of the members of said Board of Directors 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 true, correct and complete copy of the original resolution duly adopted by said Board of Directors at said meeting and entered in said minutes; and that said resolution has not been amended, modified or rescinded since its adoption and is in full force and effect as of the date hereof. I further certify that in accordance with California Government Code Section 54954 . 2, the agenda for said meeting contained a brief description of said resolution to be considered at said meeting, and a copy thereof was posted at least seventy-two (72) hours before said meeting in a location freely accessible to members of the public. IN WITNESS WHEREOF, I have executed this certificate and affixed the seal of the Midpeninsula Regional Open Space District on the date hereinbelow set forth. Dated: November —, 1992 Clerk of the Midpeninsula Regional Open Space District (SEAL] SF2-7272.3 ter,_ t aman, Guthner, G!- Knox & Elliott November 6, 1992 a Draft No. 3 ;r C � o o— U C PRELIMINARY OFFICIAL STATEMENT DATED 1992 E NEW ISSUE - FULL BOOR-ENTRY Moody's N `o Standard & Poor's: C 0 (See 'Ratings' herein.) C E In the opinion of Orrick, Herrington & Sutcliffe, Note Counsel, based Qti on existing laws, regulations, rulings and court decisions and assuming, 0o among other matters, compliance with certain covenants, interest on the 1992 L 3: Notes is excluded from gross income for federal income tax purposes and is 0 exempt from State of California personal income taxes. In the opinion of 0 � Note Counsel, interest on the 1992 Notes is not a specific preference item �2 for purposes of the federal individual or corporate alternative minimum 0-6 taxes, although Note Counsel observes that is included in adjusted current D=o earnings in calculating federal corporate alternative minimum taxable 20 income. Note Counsel expresses no opinion regarding other federal or state 0o income tax consequences relating to the accrual or receipt of interest on v the 1992 Notes. See "TAX MATTERS" herein. c D � q E �r $8,000,000* C 1992 PROMISSORY NOTES — o E MIDPENINSULA REGIONAL OPEN SPACE DISTRICT `-' (Santa Clara and San Mateo Counties, California) o� c o Em Dated: December 1, 1992 Due: July 1, as shown below 0� o m .- o The 1992 Notes are being issued for the purposes of acquiring land and facilities within the District to preserve and use as open space, to fund a reserve fund and to pay costs of issuance of the 1992 Notes. m0 t o The 1992 Notes will be initially delivered only in book-entry form, registered to Cede & Co. as nominee of The Depository Trust Company ("DTC") . Principal of the 1992 Notes will be payable at the principal �$ corporate trust office of the Paying Agent, Seattle-First National Bank, in o` a Seattle, Washington, to DTC, which will in turn remit such principal or m� redemption price and interest to the DTC participants, which will in turn of° remit such principal or redemption price and interest to the Beneficial spa Owners of the 1992 Notes, as described herein. DTC will act as securities n, q C s = depository for the 1992 Notes. Individual purchases will be made in 4� book-entry only form in the principal amount of $5,000 or integral multiples thereof. Purchasers of the 1992 Notes will not receive instruments 4pq representing their interests in the 1992 Notes purchased. See "THE 1992 Co NOTES - Description of the 1992 Notes" and - "Book-Entry Only System. " � aq p O 3 U C o O q q O c v u DTF600 a L L C. O `u b L v C The Notes will bear interest payable semiannually on January 1 and July 1 of each year commencing July 1, 1993, by check mailed on each interest payment date to the registered owners thereof (except that in the case of a registered owner of $1,000,000 or more in principal amount of Notes outstanding, payment shall be made at such owner' s option by wire transfer of immediately available funds) . The 1992 Notes are limited obligations of the District payable from limited ad valorem property taxes levied upon all taxable property within the District by the Board of Supervisors of Santa Clara County and by the Board of Supervisors of San Mateo County, allocated to the District under applicable law, and from any other funds legally available therefor. The 1992 Notes are payable on a parity with the District' s outstanding 1987 Notes, 1988 Notes and 1990 Notes and certain land purchase contracts, as more fully described herein. The full faith and credit or taxing power of the District is not pledged for the payment of the 1992 Notes, and the 1992 Notes are not secured by a legal or equitable pledge of, or charge, lien or encumbrance on, any property of the District or any of its income or revenue. The 1992 Notes are not a debt of the State of California or any of its political subdivisions, other than the District, and neither the State nor any of its political subdivisions, other than the District, is liable therefor, nor in any event shall the 1992 Notes be payable out of any funds or properties other than those of the District as set forth in the Resolution of Issuance for the 1992 Notes. The 1992 Notes maturing on or after July 1, 2003, are subject to optional redemption prior to maturity on any date on or after July 1, 2002, in whole or in part in inverse order of maturity and by lot within any one maturity. See "The 1992 NOTES - Optional Redemption" herein. MATURITY SCHEDULE AND INTEREST RATES Due Interest Due Interest July 1 Amount Rate Price July Amount Rate Price $ z z $ z z (Plus Accrued Interest From December 1, 1992) The 1992 Notes are offered when, as, and if issued, subject to the approval of legality by Orrick, Herrington & Sutcliffe, San Francisco, California. Certain legal matters will be passed upon for the District by its General Counsel, Stanley R. Norton, Esq. , Palo Alto, California, and for the Underwriter by Nossaman, Guthner, Knox & Elliott, San Francisco, California. It is expected that the 1992 Notes in definitive form will be available for delivery in New York, New York on or about December , 1992. PRUDENTIAL SECURITIES INCORPORATED Dated: 1992 * Preliminary, subject to change. DTF600 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Santa Clara and San Mateo Counties, California Board of Directors Robert J. McKibbin, Cupertino - President Elizabeth S. Crowder, Portola Valley - Vice President Virginia Babbitt, Mountain View - Treasurer Ernestine V. Henshaw, Sunnyvale - Secretary Richard S. Bishop, San Carlos - Director , - Director Nonette G. Hanko, Palo Alto - Director District Staff Herbert Grench - General Manager L. Craig Britton - Assistant General Manager/Land Acquisition Manager Michael L. Foster - Controller SPECIAL SERVICES General Counsel Stanley R. Norton, Palo Alto, California Note Counsel Orrick, Herrington & Sutcliffe, San Francisco, California Paying Agent, Registrar and Transfer Agent Seattle-First National Bank, Seattle, Washington DTFb00 No dealer, broker, salesperson or other person has been authorized by the District or the Underwriter to give or to make any representations other than those contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by the District or the Underwriter. 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 1992 Notes by any 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 1992 Notes. Statements contained in this Official Statement which involve estimates, forecasts, projections or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts. The information set forth herein has been obtained from the District and from other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Underwriter. The information and expressions of opinion herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District or the Counties since the date hereof. This Preliminary Official Statement has been deemed final as of its date, except for the omission of such information as is described in Rule 15c2-12(b) (1) under the Securities Exchange Act of 1934, as amended and subject to revision, amendment and completion in a Final Official Statement pursuant to Rule 15c2-12(b) (3) . All of the summaries contained herein of the authorizing resolution and other documents referred to herein are made subject to the provisions of such documents respectively, and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the District for further information in connection therewith. All capitalized terms used herein and not normally capitalized have the meanings assigned to them in the Resolution (as defined herein) , unless otherwise stated in this Official Statement. IN CONNECTION WITH THIS OFFICIAL STATEMENT, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE AND MAINTAIN THE MARKET PRICE OF THE 1992 NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. OTF600 TABLE OF CONTENTS Page INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 THE 1992 NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Authorityfor Issuance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Description of the Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Optional Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Noticeof Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 NoteTransfer and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Book-Entry Only System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 APPLICATION OF 1992 NOTE PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECURITY AND SOURCE OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Property Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ReserveFund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Parity Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 THE RESOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Flow of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 NoteFund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Reserve Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Acquisition Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Investment of Moneys in the Funds andAccounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Covenants and Additional Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 THE PROJECT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 THE DISTRICT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Locationand Size. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Objectives and Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ESTIMATED TAX REVENUES AND NOTE RETIREMENT. . . . . . . . . . . . . . . . . . . 16 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Property Tax Limitation and Allocation. . . . . . . . . . . . . . . . . . 16 Property Tax Collection Procedures. . . . . . . . . . . . . . . . . . . . . . 17 AssessedValuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Secured and Unsecured Tax Levies. . . . . . . . . . . . . . . . . . . . . . . . 18 ProjectedRevenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Note Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 DISTRICT FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Methodof Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 District Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Debt Capacity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Sourcesof Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Other Outstanding Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Salariesand Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 CONSTITUTIONAL AND STATUTORY TAX LIMITATIONS. . . . . . . . . . . . . . . . . 28 Constitutional Limitations - Article XIIIA. . . . . . . . . . . . . . 28 Court Challenges to Article XIIIA. . . . . . . . . . . . . . . . . . . . . . . 28 Gann Initiative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Statutory Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 FutureInitiatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 DTF600 Page LEGAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 TAXMATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 LEGALITY FOR INVESTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 RATINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 UNDERWRITING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 AVAILABILITY OF DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 APPENDIX A - DISTRICT' S AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 1992. . . . . . . . . . . . . . . A-1 APPENDIX B - GENERAL AND ECONOMIC INFORMATION SANTA CLARA COUNTY AND SAN MATEO COUNTY. . . . . . . . . . . . . . . . . . . . . B-1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1 Population. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1 Economic Characteristics. . . . . . . . . . . . . . . . . . . . . . B-6 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-7 Agriculture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-7 Transportation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-9 Education. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-9 APPENDIX C - FORM OF NOTE COUNSEL OPINION. . . . . . . . . . . . . . . . . . . . C-1 DTF600 $8,000,000* 1992 PROMISSORY NOTES MIDPENINSULA REGIONAL OPEN SPACE DISTRICT (Santa Clara and San Mateo Counties, California) INTRODUCTION This Official Statement, including the cover page and the appendices hereto (the "Official Statement") is provided to furnish information in connection with sale of the $8,000,000* aggregate principal amount of Midpeninsula Regional Open Space District 1992 Promissory Notes (the "1992 Notes") being issued pursuant to Resolution No. 92-_ adopted by the Board of Directors of the Midpeninsula Regional Open Space District (the "District") on November 18, 1992, and as it may hereafter be amended from time to time (the "Resolution") . The 1992 Notes are being issued in book-entry only form in accordance with the provisions of Article 3 of Chapter 3 of Division 5 of the Public Resources Code of the State of California, as amended and supplemented (the "Law") , for the purposes of acquiring land and facilities to preserve and use as open space, funding a reserve fund and paying costs of issuance of the 1992 Notes. The District, which was established by the voters in 1972, includes approximately 330 square miles of land within Santa Clara County and San Mateo County (collectively, the "Counties") on the peninsula south of San Francisco, California, plus approximately 1.2 square miles of land in Santa Cruz County. The 1992 population of the District is approximately 600,900. District policies are the responsibility of a seven member Board of Directors elected from seven wards within the District. The 1992 Notes are limited obligations of the District payable from limited ad valorem property taxes levied upon all taxable property within the District by the Board of Supervisors of Santa Clara County and by the Board of Supervisors of San Mateo County and allocated to the District under applicable law (sometimes herein referred to as "Limited Taxes") , and from any other funds legally available therefor. The full faith and credit or taxing power of the District is not pledged for the payment of the 1992 Notes, and the 1992 Notes are not secured by a legal or equitable pledge of, or charge, lien or encumbrance on, any property of the District or any of its income or revenue. The 1992 Notes will be secured on a parity with the District' s $15,000,000 outstanding principal amount of 1990 Promissory Notes (the "1990 Notes") , $12,500,000 outstanding principal amount of 1988 Promissory Notes (the "1988 Notes") and the $8,908,146 outstanding principal amount of 1987 Promissory Notes (the "1987 Notes") (such 1990 Notes, 1988 Notes, 1987 Notes * Preliminary, subject to change. 1 DTF:600 and the 1992 Notes being herein referred to as the "Notes") . The 1992 Notes will also be secured on a parity with certain land purchase contracts of the District in the outstanding principal amount of $120,302 (the "Parity Land Contracts" and together with the Notes, the "Parity Debt") . In addition, the District has outstanding other obligations payable from its legally available funds and the District intends to issue additional obligations on a parity with the Notes upon the satisfaction of certain conditions precedent set forth in the Resolution. See "SECURITY AND SOURCE OF PAYMENT" , "THE RESOLUTION" and "DISTRICT FINANCIAL INFORMATION" herein. The District has projected that, during the fiscal year 1992/93, total revenues available to pay debt service on the Notes and other obligations will be approximately 2.25 times 1993/94 debt service on the District' s outstanding Notes, Parity Land Contracts and other obligations following the issuance of the 1992 Notes. See "ESTIMATED TAX REVENUES AND NOTE RETIREMENT" herein for further information regarding the District' s outstanding indebtedness and the assumptions underlying the District' s revenue projections. See also "DISTRICT FINANCIAL INFORMATION - Other Outstanding Debt. " The amount of property tax revenues allocated to the District is primarily a function of the assessed value of properties in the tax code areas comprising the District, the rates at which such properties are taxed by the Counties and the allocation formula applied to property tax revenues. The reduction of assessed values of taxable property in the District caused by economic factors beyond the District' s control, or the complete or partial destruction of such property, or a change in the property tax rates or in the property tax allocation formula established by California law could cause a reduction in the tax revenues of the District. Such reduction of tax revenues could have an adverse effect on the District' s ability to make timely payments of principal of, redemption premium, if any, and interest on the 1992 Notes. Likewise, delinquencies in the payment of property taxes could have an adverse effect on the District' s ability to make timely debt service payments. With the exception of the audited financial statements of the District for the year ended March 31, 1992 contained in Appendix A, the financial and statistical information contained herein has been obtained from the records of the District and from certain other sources and such financial information has not been audited or reviewed by the independent auditors for the District. There is no assurance that the numbers contained in the financial projections contained herein will be met, or that the assumptions on which such projections were made will conform to actual experience. If actual experience should deviate significantly from the assumptions upon which such projections were made, the moneys available to the District for the payment of the principal of, redemption premium, if any, and interest on the 1992 Notes may be insufficient to make such payments. THE 1992 NOTES Authority for Issuance The issuance of the 1992 Notes by the District is authorized pursuant to the Law and the Resolution. 2 DTF:600 Section 5544.2 of the Law provides, in part, that the District may incur indebtedness, whether by borrowing money or by purchasing on contract, to acquire necessary and proper land and facilities. The amount of such indebtedness incurred may not exceed an amount equal to the anticipated tax income of the District over the next five-year period. Following the issuance of the 1992 Notes, the outstanding bonded indebtedness of the District will represent approximately 89Z of the Limited Taxes anticipated to be received by the District from April 1, 1993 through March 31, 1998. Description of the Notes The 1992 Notes will bear interest payable semiannually on January 1 and July 1 of each year commencing July 1, 1993 at the rates per annum and mature on the dates and in the principal amounts shown on the cover page of this Official Statement. The 1992 Notes will be issued in book-entry only form, in the denomination of $5,000 or any integral multiple thereof. The 1992 Notes shall be initially registered in the name of Cede & Co. , as nominee of The Depository Trust Company, and shall be evidenced by one 1992 Note maturing on each maturity date set forth on the cover of this Official Statement. Principal of the 1992 Notes will be payable only at the principal corporate trust office of Seattle-First National Bank (the "Paying Agent") in Seattle, Washington. Payment of interest on the 1992 Notes will be made by check mailed on each interest payment date to the registered owner as its name and address appear at the close of business on the fifteenth day of the month next preceding each interest payment date in the register kept by the Paying Agent as registrar for the District (except that in the case of a registered owner of $1,000,000 or more in principal amount of Notes outstanding, payment shall be made at such owner' s option by wire transfer of immediately available funds according to written instructions provided by such owner to the Paying Agent at least 15 days before such interest payment date) . See "Book-Entry Only System" below. Optional Redemption 1992 Notes maturing on or before July 1, 2002, are not subject to optional redemption prior to their stated maturities. 1992 Notes maturing by their terms on or after July 1, 2003 are subject, at the option of the District, to optional redemption prior to their stated maturities on any interest payment date on or after July 1, 2002, in whole or in part in inverse order of maturity and by lot within any one maturity if less than all the 1992 Notes of any one maturity are redeemed, upon payment from any source of funds legally available, at redemption prices equal to the following amounts expressed as a percentage of the principal amount redeemed (plus accrued interest to the date fixed for redemption) : 3 DTF:600 Dates Price July 1, 2002 or January 1, 2003 X July 1, 2003 or January 1, 2004 July 1, 2004 or January 1, 2005 July 1, 2005 or January 1, 2006 On or after July 1 2006, and prior to maturity If less than all the Outstanding 1992 Notes of any one maturity date are to be redeemed at any one time, the Paying Agent shall select the Outstanding 1992 Notes or the portions thereof to be redeemed at such time from the Outstanding 1992 Notes maturing on such date by lot in any manner that it deems fair. Notice of Redemption So long as the Book-Entry system is used for the 1992 Notes, the Paying Agent will give any notice of redemption or any other notices required to be given to Owners only to DTC. Any failure of DTC to advise any DTC Participant (as defined herein) , or of any DTC Participant to notify the Beneficial Owner (as defined herein) , of any such notice and its content or effect will not affect the validity of the redemption of the 1992 Notes called for redemption or any other action premised on such notice. Beneficial Owners may desire to make arrangements with a DTC Participant so that all notices of redemption or other communications to DTC which affect such Beneficial Owners, including notification of all interest payments, will be forwarded in writing by such DTC Participant. See "THE 1992 NOTES -- Book-Entry Only System" herein. In the event that the Book-Entry system shall no longer be used, the Resolution requires the Paying Agent to give mailed notice of redemption of any 1992 Notes to the registered owners of the Notes called in whole or in part and to various securities depositories and securities information services at least thirty, but not more than sixty, days prior to the redemption date; provided, that failure to receive any such notice shall not affect the redemption of such 1992 Notes. Note Transfer and Exchange The 1992 Notes are transferable by the registered owner thereof, in person or by duly authorized attorney, at the principal corporate trust office of the Paying Agent, upon surrender thereof for cancellation accompanied by a duly executed written instrument of transfer on a form approved by the Paying Agent, and thereupon a new 1992 Note or 1992 Notes will be issued to the transferee in exchange therefor, in the manner, subject to the conditions and upon payment of any tax or governmental charge required to be paid with respect to such transfer as set forth in the Resolution. The 1992 Notes may be exchanged at the principal corporate trust office of the Paying Agent for the same principal amount of 1992 Notes of the same maturity date of other authorized denominations, in the manner, subject to 4 DTF:600 the conditions and upon payment of any tax or other governmental charge required to be paid with respect to such exchange as set forth in the Resolution. Book-Entry Only System DTC will act as securities depository for the 1992 Notes. The 1992 Notes will be executed and delivered as fully-registered notes registered in the name of Cede & Co. (DTC' s partnership nominee) . One fully-registered note will be executed and delivered for each maturity of the 1992 Notes, each in the aggregate principal amount due on such maturity date, and , will be deposited with DTC. The following information has been provided by DTC and the District makes no representation as to its accuracy or completeness. For further information, DTC may be contacted in New York, New York. DTC is a limited purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants ( "DTC Participants") deposit with DTC. DTC also facilitates the settlement among DTC Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in . DTC Participants ' accounts, thereby eliminating the need for physical movement of securities certificates. "Direct Participants" include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc. , the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants") . The Rules applicable to DTC and its participants are on file with the Securities and Exchange Commission. Purchases of 1992 Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the 1992 Notes on DTC' s records. The ownership interest of each actual purchaser of each 1992 Note ( "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, but Beneficial Owners are 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 1992 Notes are to be accomplished by entries made on the books of DTC Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive 1992 Notes representing their ownership interests, except in the event that use of the book-entry system for the 1992 Notes is discontinued. 5 DTF:600 To facilitate subsequent transfers, all 1992 Notes deposited by DTC Participants with DTC are registered in the name of DTC' s partnership nominee, Cede & Co. The deposit of 1992 Notes with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 1992 Notes; DTC' s records reflect only the identity of the Direct Participants to whose accounts such 1992 Notes are credited, which may or may not be the Beneficial Owners. The DTC Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to 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. Neither DTC nor Cede & Co. will consent or vote with respect to the 1992 Notes. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer of the securities 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 1992 Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy) . Principal and interest payments and premium, if any, with respect to the 1992 Notes will be made to DTC. DTC' s practice is to credit Direct Participants ' accounts on the payable date in accordance with their respective holdings shown on DTC' s records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by DTC Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name, " and will be the responsibility of such DTC Participant and not of DTC, the Paying Agent or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the District or the Paying Agent, fiscal agent or other designated agent; disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the 1992 Notes at any time by giving reasonable notice to the Paying Agent and the District. Under such circumstances, in the event that a successor securities depository is not obtained, physical bonds are required to be printed and delivered as described in the Resolution. In the event the District and the Paying Agent determine not to continue the DTC book-entry only system or DTC determines to discontinue its services with respect to the 1992 Notes and the District does not select another qualified securities depository, the District shall deliver one or more 1992 Notes in such principal amount or amounts, in authorized denominations, and registered in whatever name or names, as DTC shall designate. In such event, transfers and exchanges of 1992 Notes will be governed by the provisions of the Resolution. 6 DTF:600 AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE 1992 NOTES, THE PAYING AGENT WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO HOLDERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE 1992 NOTES CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. THE DISTRICT, THE PAYING AGENT AND THE UNDERWRITER HAVE NO RESPONSIBILITY OR LIABILITY FOR ANY ASPECTS OF THE RECORDS RELATING TO OR PAYMENTS MADE ON ACCOUNT OF BENEFICIAL OWNERSHIP, OR FOR MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO BENEFICIAL OWNERSHIP OF INTERESTS IN THE 1992 NOTES. THE DISTRICT, THE PAYING AGENT AND THE UNDERWRITER CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC WILL DISTRIBUTE PAYMENTS TO DTC PARTICIPANTS OR THAT DTC PARTICIPANTS OR OTHERS WILL DISTRIBUTE PAYMENTS WITH RESPECT TO THE 1992 NOTES RECEIVED BY DTC OR ITS NOMINEES AS THE HOLDER OR ANY REDEMPTION NOTICES OR OTHER NOTICES TO THE BENEFICIAL HOLDERS, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC WILL SERVICE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. The foregoing description of the procedures and record keeping with respect to beneficial ownership interests in the 1992 Notes, payment of principal, redemption premium, if any, and interest with respect to the 1992 Notes to DTC, DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the 1992 Notes and other related transactions by and between DTC, DTC Participants and the Beneficial Owners is based solely on the District' s and the Paying Agent' s understanding of such procedures and record keeping from information provided by DTC. Accordingly, no representations can be made concerning these matters and neither DTC, DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or DTC Participants, as the case may be. The District and the Paying Agent understand that the current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and that the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. 7 DTF:600 APPLICATION OF 1992 NOTE PROCEEDS The proceeds of the sale of the 1992 Notes (excluding accrued interest which will be deposited in the Note Fund) and certain other moneys are expected to be applied as follows: Underwriter' s Discount and Estimated Costs of Issuance $ Reserve Fund (1) Acquisition Fund Total Uses $ (1) Equal to 8X* of principal amount of the 1992 Notes. SECURITY AND SOURCE OF PAYMENT Property Taxes The 1992 Notes are payable from limited ad valorem property taxes levied upon all taxable property within the District by the Board of Supervisors of Santa Clara County and by the Board of Supervisors of San Mateo County, and allocated to the District under applicable law, and from any other legally available funds of the District including, but not limited to, subventions received from the State in lieu of property taxes, if any, certain federal and State grants, if any, and interest earned on invested funds. The full faith and credit or taxing power of the District is not pledged for the payment of the 1992 Notes, and the 1992 Notes are not secured by a legal or equitable pledge of, or charge, lien or encumbrance on, any property of the District or any of its income or revenue. The Resolution constitutes a contract between the District and the holders of the 1992 Notes. The covenants and agreements set forth in the Resolution shall be for the equal and proportionate benefit, security and protection of all holders of the 1992 Notes and any additional parity notes which may hereafter be issued without preference, priority or distinction as to security or otherwise of any of such obligations over any of the other by reason of the number or date thereof or the time of sale, execution and delivery thereof. For the purpose of paying the principal of and interest on the 1992 Notes, until the principal of and interest on the 1992 Notes are paid or until there is a sum in the treasury of the District set apart for that purpose sufficient to meet all payments of principal of and interest on the 1992 Notes as they become due, the District agrees under the Resolution annually to set aside a portion of the limited ad valorem taxes levied upon all taxable property within the District by the Boards of Supervisors of the * Preliminary, subject to change. 8 DTF:600 Counties, and allocated to the District under applicable law, or other legally available funds of the District, sufficient to pay such principal of and interest on the 1992 Notes that will become due before the proceeds of a tax levied at the next general tax levy will be available for such purpose. See "THE RESOLUTION - Note Fund" herein. Reserve Fund A Reserve Fund will be established for the security of the noteholders in an amount equal to 8* percent of the original principal amount of the 1992 Notes from the proceeds of their sale. An amount equal to the Reserve Requirement (as defined below) will be retained in the Reserve Fund and used only for the payment of principal of, redemption premium, if any, and interest on the 1992 Notes to the extent amounts in the Note Fund (as defined below) are insufficient therefor or for the retirement of all outstanding 1992 Notes. Parity Obligations The 1992 Notes are co-equal to and are on a parity with the outstanding 1987 Notes, 1988 Notes and 1990 Notes as well as the Parity Land Contracts described below. In March 1987, pursuant to Resolution 87-09 adopted by the Board of Directors of the District on March 11, 1987 (the "1987 Resolution") , the District sold the 1987 Notes in the aggregate principal amount of $21,200,000 to defease certain outstanding promissory notes of the District, to prepay land contract debt, and to finance acquisition of open space lands. The initial maturity for the 1987 Notes was March 1, 1991 and maturities occur annually to March 1, 1997, bearing interest at rates ranging from 4.7z to 5.85X per annum. As of December 1, 1992, the outstanding principal balance of the 1987 Notes is $8,908,146. In February 1988, pursuant to Resolution 88-03 adopted by the Board of Directors of the District on January 27, 1988, (the "1988 Resolution") the District sold the 1988 Notes in the aggregate principal amount of $12,500,000 to finance acquisition of open space lands. The outstanding 1988 Notes mature annually from March 1, 1994 through February 1, 2008 and bear interest at a floating rate which is based upon prevailing market conditions and is redetermined every seven days. For the 12 months preceding October 21, 1992 the average interest rate for the 1988 Notes was 3.21Z. None of the $12,500,000 aggregate principal amount of 1988 Notes outstanding has been repaid as of December 1, 1992. In September 1990, pursuant to Resolution 90-38 adopted by the Board of Directors of the District on August 22, 1990, (the "1990 Resolution") the District sold the 1990 Notes in the aggregate principal amount of $15,000,000 to refund a portion of the 1987 Notes, prepay certain land contract debt and finance acquisition of open space lands. The outstanding 1990 Notes mature annually from September 1, 1995 through September 1, 2010 * Preliminary subject to change. 9 DTF:600 and bear interest at rates ranging from 6.5X to 7.5X. As of December 1, 1992 all of the $15,000,000 original principal amount of the 1990 Notes remains outstanding. As of December 31, 1992, the District will have $1,914,425 aggregate principal amount of notes representing obligations of the District under contracts for the purchase of land by the District for open space (the "Land Contract Notes") . As of March 31, 1992, land with a cost of approximately $4,446,000 was pledged as collateral for the Land Contract Notes payable. The 1992 Notes being offered herein are payable from property taxes allocated to the District and legally available to pay the Notes and obligations of the District on a parity with the Notes (the "Limited Tax Revenues") and other revenues as herein described, and are not secured by a pledge of any land or other property of the District. Of the $1,914,425 total amount of Land Contract Notes, $120,302 is payable from Limited Tax Revenues on a parity with the Notes. The District intends to issue additional notes on a parity with the Notes in the future. THE RESOLUTION The following is a brief outline of certain provisions of the Resolution and is not to be considered a full statement pertaining thereto. Reference is made to the Resolution for the complete text thereof. Copies of the Resolution are available from the District. Flow of Funds Upon the sale and delivery of the 1992 Notes, the Treasurer of the District (the "Treasurer") shall set aside and deposit the proceeds received from such sale in the following respective funds and in the following order of priority: first, the 1992 Promissory Note Interest and Principal Fund (the "Note Fund") ; second, the 1992 Promissory Note Reserve Fund (the "Reserve Fund") ; and third, the 1992 Promissory Note Acquisition Fund (the "Acquisition Fund") . From the proceeds of the sale of the 1992 Notes, the Treasurer will deposit in the Note Fund moneys in an amount equal to the accrued interest, if any, on the 1992 Notes from their dated date to their delivery date and will deposit the Reserve Requirement (as described in the section "Reserve Fund" below) into the Reserve Fund. The remainder of the proceeds received from the sale of the 1992 Notes will be deposited in the Acquisition Fund to be applied to payment of the cost of issuance of the 1992 Notes and the financing of the Project. Note Fund Under the Resolution, the District agrees and covenants that, as authorized by and subject to the Law, until the principal of, redemption premiums, if any, and interest on the 1992 Notes are paid in full or until * Preliminary, subject to change. 10 DTF:600 there is a sum in the treasury of the District set apart for that purpose sufficient to meet all payments of principal of, redemption premiums, if any, and interest on the 1992 Notes as they become due, it will annually set aside a portion of the limited ad valorem taxes levied upon all taxable property in the District by the Boards of Supervisors of the Counties and allocated to the District under applicable law, or other legally available funds of the District, sufficient to pay such principal of, redemption premiums, if any, and interest on the 1992 Notes that will become due before the proceeds of such tax levied at the next general tax levy will be available for such purpose. In order to implement this covenant, the District further agrees to set aside as soon as possible after the receipt of such taxes that become delinquent after April 10 of each year, commencing April, 1993, an amount of such taxes or other available funds of the District equal to the interest that becomes due and payable on the 1992 Notes on the next succeeding July 1, plus the redemption premiums, if any, on the 1992 Notes that become due on the 1992 Notes on or prior to such date, and that it will set aside, as soon as possible after the receipt of such taxes that become delinquent after December 10 each year, commencing December 1993, an amount of such taxes or other legally available funds of the District equal to the interest that becomes due and payable on the 1992 Notes on the next succeeding January 1, plus the redemption premiums, if any, on the 1992 Notes that become due on or prior to such date plus the principal of the 1992 Notes that becomes due and payable on the next succeeding January 1. Under the Resolution, all such taxes or other legally available funds of the District shall be deposited by the District Controller in the Note Fund. Moneys in the Note Fund are required to be used solely for the payment of the principal, redemption premium, if any, and interest on the 1992 Notes. Pending disbursement, moneys in the Note Fund will be deposited or invested as permitted by law and the Resolution. All proceeds of such deposits or investments will be deposited as and when received in the Note Fund. The covenants and agreements set forth in the Resolution are for the equal and proportionate benefit, security and protection of all owners of the 1992 Notes, the 1987 Notes, 1988 Notes and 1990 Notes and any additional notes which may be issued on a parity with the Notes, without preference or distinction as to security or otherwise of any such obligations over any of the other by reason of the number or date thereof or the time of sale, execution and delivery of the 1992 Notes. Reserve Fund The Resolution requires that the Reserve Fund, initially funded with proceeds of the sale of the 1992 Notes in the amount of $640,000* (the "Reserve Requirement") be maintained at the Reserve Requirement so long as the 1992 Notes are outstanding. In the event withdrawals from the Reserve Fund decrease the balance in the Reserve Fund to an amount less than the Reserve Requirement, the District is required to replenish such Fund from the first available taxes and revenues of the District, provided, however, that the District is not obligated to replenish the Reserve Fund at any time when the sum of the amounts in the Reserve Fund and the Note Fund is at 11 DTF:600 least equal to the aggregate principal amount of the 1992 Notes then outstanding and interest then due and thereafter to become due on such 1992 Notes. The Resolution permits the District to withdraw any amounts in the Reserve Fund in excess of the Reserve Requirement. Except as previously described, all moneys in the Reserve Fund are required to be used solely for the payment of the principal of, redemption premium, if any, and interest on, the 1992 Notes in the event and to the extent that the District has no other moneys available therefor. Acquisition Fund Moneys in the Acquisition Fund may be used and withdrawn solely for paying costs of issuance of the 1992 Notes and the financing of the Project. After the closure of the Acquisition Fund, any moneys remaining therein will be transferred to the Note Fund. Investment of Moneys in the Funds and Accounts Subject to the provisions of the Internal Revenue Code of 1986, as amended, and State law, including the Law, all moneys in the funds and accounts established under the Resolution are to be deposited or invested as determined by the Controller so as to obtain the highest yield that the Controller deems practicable, having due regard for the safety of such deposits and investments; provided, that all such deposits and investments must be withdrawable or must mature at such times so as to coincide as nearly as practicable with the time when such moneys are expected to be withdrawn for use under the Resolution. Proceeds of the investment of amounts in the funds and accounts established by the Resolution are deposited as and when received in the fund or account in which such investments are held. Covenants and Additional Debt The District agrees and covenants that until payment in full of all the principal of, redemption premium, if any, and interest on the 1992 Notes (or provision satisfactory for such payment) shall have been made, it will: 1. Duly and punctually pay or cause to be paid the principal of, redemption premium, if any, and interest on the 1992 Notes in accordance with the conditions and terms thereof and of the Resolution; 2. Incur no additional indebtedness or capital lease obligations payable from Limited Taxes received by the District having any priority in payment to payment of the principal of, redemption premium, if any, and interest on the 1992 Notes; 3. Incur no additional indebtedness or capital lease obligations payable from Limited Taxes received by the District on a parity in payment with the principal of, interest on, or redemptions * Preliminary, subject to change. 12 OTF:600 premiums, if any, on the 1992 Notes unless it shall have first filed with the Paying Agent a certificate executed by the District Controller showing: (i) the total Limited Taxes plus the total subventions received by the District from the State of California in its most recent audited fiscal year, as shown by the most recent audited financial statement of the District; (ii) the debt service payable by the District during its next succeeding fiscal year on all indebtedness or capital lease obligations of the District that would be payable from the Limited Taxes on a parity with the 1992 Notes and the debt service that is payable on the outstanding 1992 Notes in the next succeeding fiscal year; and (iii) that the total defined in subparagraph (i) above is at least 125Z of the total defined in subparagraph (ii) above. "Limited Taxes" means the limited ad valorem property taxes levied on all taxable property in the District by the Boards of Supervisors of the Counties and allocated to the District under applicable law that are legally available to pay the 1992 Notes and any other notes and parity debt. 4. Prepare and adopt a budget for each fiscal year, which budget shall provide for the payment of the principal of, redemption premium, if any, and interest on the 1992 Notes becoming due and payable in such fiscal year and for appropriations of the Limited Taxes fully sufficient to make such payments. The budgets of the District on file with the Paying Agent will be open to inspection during regular business hours by any registered owner of the 1992 Notes. THE PROJECT In addition to funding the Reserve Fund and paying costs of issuance of the 1992 Notes, proceeds of the 1992 Notes will be used by the District to acquire necessary and proper lands and facilities for preservation and use as open space (the "Project") in accordance with the Law. See "THE DISTRICT Objectives and Operations" below. THE DISTRICT Location and Size On November 7, 1972, the citizens of northwestern Santa Clara County voted to establish the Midpeninsula Regional Park District under provisions of the Law. On July 7, 1976, after another public vote the District expanded its boundaries by annexing the southeastern portion of San Mateo County. The District was subsequently renamed the "Midpeninsula Regional Open Space District. " 13 DTF:600 The approximately 331 square miles of the District include about 200 square miles within Santa Clara County and 130 square miles within San Mateo County, constituting approximately 61Z and 39Z respectively of the total District area. In 1992, approximately 1.2 square miles of land in Santa Cruz County was also annexed to the District, although the District receives no portion of the property taxes attributable to this land. The southwestern border of the District falls approximately along the ridgeline of the coast range which bisects the San Francisco Peninsula into the coastside and bayside regions. The coastside is predominately rural in character, with limited areas of flat land on the ocean terraces and vast areas of steep, forested ridges and canyons located inland. The District is located on the bayside which has more gentle topography characterized by substantially level areas and rolling plains which have been more favorable for development. The District' s northeast border is the San Francisco Bay. The District is composed of the incorporated communities of Palo Alto, Mountain View, Los Altos, Los Altos Hills, Sunnyvale, Cupertino, Saratoga, Monte Sereno, and Los Gatos and adjacent unincorporated areas located in Santa Clara County, the incorporated communities of Woodside, San Carlos, Menlo Park, East Palo Alto, Atherton, Portola Valley and Redwood City and adjacent unincorporated areas located in San Mateo County. The small portion of the District in Santa Cruz County is in an unincorporated area. The District encompasses a population of approximately 600,900 persons. Management The seven-member elected District Board of Directors originates, guides, and enforces District policies. Members of the Board of Directors are elected for staggered four-year terms from seven wards within the District. The following are the current Board members: Robert J. McKibbin, President Richard S. Bishop, Director Elizabeth S. Crowder, Vice President Nonette G. Hanko, Director Virginia Babbitt, Treasurer , Director Ernestine V. Henshaw, Secretary The administration of the District from its inception has been the responsibility of its General Manager, Herbert Grench. Prior to his involvement with the District, Dr. Grench was a staff scientist at the Lockheed Nuclear Sciences Research Laboratory in Palo Alto. He received a B.A. in Physics from Kalamazoo College in Michigan, and an M.S. and Ph.D. in Nuclear Physics from the University of Iowa. Michael L. Foster has been Controller of the District since 1978. In addition to his responsibility with the District, Mr. Foster is also the Vice President - Financial Planning and Treasurer of California Microwave, Inc. , a communications equipment manufacturer. Mr. Foster received both an undergraduate degree in economics and a Master of Business Administration from Stanford University. 14 DTF:600 The District currently has 46 full-time employees, four part-time employees, and five seasonal employees. Objectives and Operations Preservation of open space is the principal objective of the District. "Open space" is generally defined by the District as any land or water area which remains in a natural state, is used for agriculture, or is otherwise essentially undeveloped. The Master Plan of the District (the "Master Plan") , which was adopted initially by the District Board of Directors on December 14, 1977 and January 11, 1978, defines acquisition policies and the role the District will play in the preservation of open space. According to the Master Plan, the District seeks to preserve open space for the following purposes: for the protection of natural vegetation, for the protection of wildlife, for outdoor recreation, for guiding urban form, for scenic preservation, for the preservation of unique sites, for the protection of agriculture, for the production of minerals and for the protection of public health and safety. Under certain circumstances the District may acquire undeveloped land within an urbanized area. The Master Plan of the District defines acquisition policies and the role the District will play in the preservation of open space and reflects the roles the District believes other public agencies and private organizations should play in the preservation of open space. The Master Plan map was based on an open space lands evaluation. The District' s most effective method for the preservation of open space is the purchase of land with District revenues and from the proceeds of its debt obligations. Other sources of revenues for acquiring land for open space purposes include obtaining State and federal grants for the land purchases. From time to time the District also receives gifts of open space land and participates in joint projects with other governmental agencies and private non-profit organizations to acquire and maintain open space lands. The District has the power of eminent domain. However, the District does not have regulatory power over lands other than those it owns. Consequently, it cannot adopt zoning ordinances or regulations affecting lands not owned by the District. The power to protect open space by regulating land use is held primarily by the cities located within the District and by the Counties. It is the policy of the current Board of Directors that during the next several years as much as possible of the District' s financial resources will be devoted to acquiring open space lands before the land is developed and land costs become prohibitive. In keeping with this land acquisition policy, administrative costs are projected to be kept to a minimum, but land management expenditures are anticipated to be an increasing percentage of annual tax revenue. Approximately 35,200 acres of open space land had been acquired by the District as of November 1, 1992. The use of proceeds of the 1992 Notes will add additional land to the District' s current open space holdings. 15 DTF:600 ESTIMATED TAX REVENUES AND NOTE RETIREMENT General The 1992 Notes are limited obligations of the District payable from limited ad valorem property taxes levied upon all taxable property within the District by the Boards of Supervisors of the Counties, and allocated to the District under applicable law, and from any other funds legally available therefor. The full faith and credit or taxing power of the District is not pledged for the payment of the 1992 Notes, and the 1992 Notes are not secured by a legal or equitable pledge of, or charge, lien or encumbrance on, any property of the District or any of its income or revenue. See "DISTRICT FINANCIAL INFORMATION" for a description of certain other moneys which may be available to pay debt service on the 1992 Notes. The District' s property tax revenues are derived from two basic sources: (1) the District' s allocation of the 1X tax rate levied in the Counties; and (2) subventions received from the State in lieu of certain property taxes. Property Tax Limitation and Allocation Article XIIIA of the California Constitution provides for a maximum ad valorem property tax equal to one percent of the full cash value of property. Article XIIIA defines full cash value to mean "the county assessor' s valuation of real property as shown on the 1975/76 tax bill under ' full cash value' , or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. " At other times, this full cash value may be increased at a rate not to exceed two percent per year to account for inflation. Future assessed valuation growth allowed under Article XIIIA (new construction, certain changes of ownership, two percent inflation) will be allocated on the basis of "situs" among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and schools will share the growth of "base" revenues from the tax rate area. Each year' s growth allocation becomes part of each agency' s allocation in the following year. The availability of revenues from growth in tax bases to such entities may be affected by the establishment of redevelopment agencies which, under certain circumstances, may be entitled to revenues resulting from the increase in certain property values. See "CONSTITUTIONAL AND STATUTORY TAX LIMITATIONS. " Although Proposition 46, approved by the voters of the State in June 1986, permits local governments, including the District, to issue bonded indebtedness payable from ad valorem taxing in excess of one percent of full cash value with the approval of two-thirds of the votes cast by voters voting on the proposition, the voters of the District have not been presented with a tax override proposal with respect to the 1992 Notes. Owners of the 1992 Notes have no right to compel the District to levy or cause to be levied any tax for the payment of the principal of, redemption premium, if any, or interest on the 1992 Notes and must look solely to the allocation described above and to certain other legally available revenues of the District for such payment. 16 DTF:600 Property Tax Collection Procedures In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured. " The secured classification includes property on which any property tax levied by the county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed, unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens on the secured property, regardless of the time of the creation of other liens. A 1OX penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, property on the secured roll on which taxes are delinquent becomes tax defaulted property by the last business day of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and delinquency penalties, plus a redemption penalty of 1.5X per month. The valuation of property is determined as of either (1) the 1975-76 tax year, (2) the later date of a change of ownership or new construction, or (3) March 1 of the tax year if the value has declined below the previous year' s value. For property on the secured roll, taxes become delinquent on December 10 and April 10. Taxes on unsecured property are due March 1 and become delinquent August 31. When a change of ownership or completion of new construction occurs a supplemental assessment is made. Depending upon when the change of ownership occurred or when the construction was completed there can be one or two supplemental assessments. Assessed Valuation Table 1 shows a detailed summary of the District' s assessed valuation since 1985/86. Property in the District is assessed by the Santa Clara and San Mateo County Assessors in their respective counties except for public utility property which is assessed by the State Board of Equalization. TABLE 1 District Assessed Valuation ($000,000's) Santa Clara San Mateo Total District Less: Total Net Fiscal County County Gross Redevelopment District Year Portion Portion Valuation Increment Valuation 1985/86 23,264.7 8,900.1 32,164.8 516.4 31,648.4 1986/87 25,560.3 9,832.2 35,392.4 748.4 34,644.1 1987/88 27,708.4 10,844.5 38,552.9 966.0 37,586.9 1988/89 29,285.4 11,583.5 40,869.0 1,047.1 39,821 .9 1989/90 32,999.0 13,040.2 46,039.2 1,358.7 44,680.5. 1990/91 36,598.5 14,849.0 51,447.5 1,586.8 49,860.7 1991/92 38,191 .6 15,866.6 54,058.2 1,783.7 52,274.5 1992/93 40,129.0 16,809.8 56,938.8 N/A N/A Source: California Municipal Statistics. 17 Secured and Unsecured Tax Levies Table 2 shows the total combined secured and unsecured tax receipts allocated by the Counties to the District and received by the District during the last five State fiscal years. The Pre-Article XIIIA tax override for the District, as well as certain late payments of taxes with respect to fiscal years prior to the fiscal years during which such payments are made are not reflected in Table 2. See "CONSTITUTIONAL AND STATUTORY TAX LIMITATIONS - Constitutional Limitations - Article XIIIA" below. TABLE 2 District Current Secured and Unsecured Tax Receipts (Excludes Pre-Article XIIIA Tax Override Levy) (1) Current Secured Tax Receipts State Fiscal Santa Clara San Mateo District Total Year County County Secured 1985/86 $3,139,700 $1,334,200 $4,473,900 1986/87 3,445,208 1,463,045 4,908,253 1987/88 3,712,180 1,674,445 5,386,625 1988/89 4,007,120 1,792,226 5,799,346 1989/90 4,476,832 2,031,886 6,508,718 1990/91 4,925,651 2,248,516 7,174,167 1991/92 5,153,247 2,360,795 7,514,042 Current Unsecured Tax Receipts State Fiscal Santa Clara San Mateo District Total Total Secured Year County County Unsecured and Unsecured 1985/86 $451,500 $196,800 $648,300 $5,122,200 1986/87 512,189 209,185 721,374 5,629,627 1987/88 507,689 221,739 729,428 6,116,053 1988/89 574,021 236,983 811,004 6,610,350 1989/90 625,167 242,246 867,413 7,376,131 1990/91 739,049 280,485 1,019,534 8,193,701 1991/92 742,931 312,098 1,055,029 8,569,071 (1) The District also receives a share of delinquent taxes, redemption fees, supplemental taxes and State subvention payments received by each County. This revenue totaled $754,325 in 1991/92 and the District expects to receive $850,000 in 1992/93. Source: District Controller. According to California Municipal Statistics, Inc. , the secured tax delinquency rate has been at or below 3.9X in both Counties during each of the last five fiscal years, as shown below: 18 DTF:600 TABLE 3 Secured Tax Delinquency Rates (at June 30) Fiscal Year Santa Clara County San Mateo County 1987/88 2.88Z 2.22Z 1988/89 2.63 2.03 1989/90 2.57 2.82 1990/91 3.37 3.66 1991/92 3.44 3.83 Source: California Municipal Statistics, Inc. The District' s allocation of tax revenues is the aggregate of the District' s apportionment of the taxes produced by the one percent tax rate in nearly one thousand tax code areas in Santa Clara and San Mateo Counties. In accordance with Chapter 6 of the State Revenue and Taxation Code, the tax increment derived by the increase in assessed valuation in each tax code area is apportioned to the taxing entities within the code area in the same proportion as in the prior year, subject to certain modifications for change in jurisdiction or new incorporations and for certain incremental tax revenues allocated directly to redevelopment agencies within the District. Thus, the increase in the District' s allocation of taxes varies directly with the increase in the assessed valuation within the District. Unlike special districts in California that are wholly within one county, as a multi-county special district, the District receives 100Z of its allocation of collected taxes pursuant to Section 98.6 of the California Revenue and Taxation Code, and is not subject to a discretionary reduction in such allocation by action of either County' s Board of Supervisors. Projected Revenues The District has projected revenues and expenditures for the first ten years in which the 1992 Notes will be outstanding and these projections are set forth in Table 4. The District' s projection of revenues is based on the following parameters: (1) Annual increases of seven percent (excluding subventions) in the Districts ' s allocation of funds derived from the basic 1Z tax rate. The assessed valuation of taxable property within the District has increased at an average rate of 7.86Z annually over the last five years. (2) District cash balances will be invested to earn five percent per annum. (3) Revenue from State and federal grants is included based on approved project grants. 19 DTF:600 Although the District believes such assumptions to be reasonable, there is no assurance that such assumptions and the projections based thereon will in fact be realized. A State budget for State fiscal year 1992-93 was adopted September 2, 1992. To balance the budget, the State reduced aid to school districts, which impacted local governments by reducing aid to local governments by $1.3 billion. As an offset to the reduction, counties will receive some relief from state-mandated general assistance and indigent health care requirements. The District, as a multi-county district is exempt from these reductions in aid to local governments, and the District' s share of local property taxes is therefor unaffected for State fiscal year 1992-93. No assurance can be given that such an exemption will be available in future years. Table 4 below shows the estimated projected revenues for the District for fiscal years 1992/1993 through 2001/02. TABLE 4 Estimated Revenues, 1992/93 - 2001/02 ($000's) Fiscal Tax Interest Other Total Year Revenues(1) Earnings (2) Revenue (3) Revenues 1992/93 $ 9, 765 $450 $ 782 $10,997 1993/94 10,449 400 2,315 13,164 1994/95 11,180 400 2,361 13,941 1995/96 11,963 400 2,410 14,773 1996/97 12,800 400 1,260 14,460 1997/98 13,696 400 1,315 15,411 1998/99 14,655 400 1,422 16,477 1999/00 15, 680 450 1,583 17,713 2000/01 16,778 450 1,662 18,890 2001/02 17,953 450 1, 745 20,148 (1) Estimated tax revenues include the District' s share of funds derived from the 1X tax rate and subventions received from the State of California in lieu of property taxes. The projection assumes a 7X per year increase in overall tax revenue. (2) Interest earnings on the reserve fund and other funds of the District estimated at 5X. Such assumption is based on historical increases; there is no assurance that such increases will occur. (3) "Other Revenue" is primarily grant receipts, rental income, and, in 1992/93 through 1995/96, proceeds from the sale of surplus property. Source: District Controller. 20 DTF:600 Note Retirem ent Table 5 estimates debt service coverage on the 1992 Notes and other debt of the District on a parity with the 1992 Notes. The minimum debt service coverage ratio is estimated to be approximately 2.72 in 1993/94. The District intends to issue additional notes on a parity with the 1992 Notes in the future. Although the Resolution requires the District to meet certain financial tests before it may issue any such additional notes, the issuance of additional parity notes by the District would decrease the debt service coverage ratios reflected on Table 5. See "THE RESOLUTION - Covenants and Additional Debt. " See "DISTRICT FINANCIAL INFORMATION - Other Outstanding Debt" for a description of the District' s other outstanding obligations payable from Limited Tax Revenues and other legally available funds of the District. TABLE 5 Estimated Debt Service Schedule Parity Debt ($O0O's) Fiscal Estimated 1992 Notes(2) Other Parity Total Parity Coverage Year Revenues(1) Principal Interest Total Debt Service Debt Service Coverage W/0 Other 1992/93 $10,997 3,607 3,607 3.05 2.83 1993/94 13,164 529 529 4,303 4,832 2.72 2.25 1994/95 13,941 488 488 4,289 4,777 2.92 2.42 1995/96 14,773 488 488 4,814 5,302 2.79 2.33 1996/97 14,460 488 488 4,027 4,515 3.20 2.92 1997/98 15,411 320 480 800 2,894 3,694 4.17 3.82 1998/99 16,477 330 464 794 2,751 3,545 4.65 4.25 1999/00 17,713 350 447 797 2,809 3,606 4.91 4.47 2000101 18,890 370 423 793 2,769 3,562 5.30 4.84 2001102 20,148 390 402 792 2,821 3,613 5.58 5.09 (1) From Table 4. (2) Assumes an average interest of 6.2%. Source: District Controller. 21 DTF:600 The following sets forth the overlapping and direct bonded indebtedness of the District. DIRECT AND OVERLAPPING BONDED DEBT: % AppLicable Debt 12/1/92 Santa Clara County Authorities 39.922% $123,085,514 San Mateo County Authorities 32.510 26,245,323 Santa Clara County Flood Control and Water Conservation District Zones W-1 & NC-1 34.447 & 58.627 9,375,637 Foothill Community College District Certificates of Participation 92.365 27,307,712 Mountain View-Los Altos Union High School District Certificates of Participation 100. 6,129,000 Cupertino Union School District Certificates of Participation 73.079 - 73.149 15,310,051 Redwood City School District Certificates of Participation 99.975 3,254,186 Whisman School District 100. 3,375,000 Other School Districts Various 15,831,397 City of Mountain View and Lease Obligations 100. 35,664,197 City of Sunnyvale Lease Obligations 99.994 25,068,496 City of Palo Alto Lease Obligations 100. 13,758,700 City of Cupertino and Lease Obligations 99.756 & 90.329 49,940,073 City of Redwood City Lease Obligations 100. 25,985,000 Other Cities Various 5,906,121 Other City Lease Obligations Various 12,843,444 Redwood City General Improvement Districts 100. 19,990,000 El Camino Hospital District and Facilities Authority 96.372 3,907,885 Santa Clara Valley Water District Certificates of Participation 39.922 15,112,473 Parking Districts 100. 8,465,000 1915 Act Bonds (Estimate) Various 39,237,909 Other Special Districts Various 6,608,016 Midpeninsula Regional Open Space District 100. 36,408,000(1) Midpeninsula Regional Open Space District Certificates of Participation 100. 9,960,000 TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBT $538,769,134(2) Less: Santa Clara County FC & WCD, Zone NC-1 (100% self-supporting) 1,676,732 Cities of Mountain View and San Jose self-supporting bonds 827,185 El Camino Hospital Facilities Authority (100% self-supporting) 3,907,885 TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT $532,357,332(2) (1) Excludes Promissory Notes to be sold. (2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Ratios to 1991-92 Assessed Valuation: Direct Debt ($46,368,000) 0.09% Total Gross Debt 1.03% Total Net Debt 1.02% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/90: $3,875,988 Source: California Municipal Statistics, Inc. 22 DTF:600 DISTRICT FINANCIAL INFORMATION Method of Accounting The official books of record kept by the District utilize the principles of fund accounting as prescribed for special districts by the State Controller. All District funds reflect the modified accrual basis of accounting under which revenues are generally recognized in the period they become available and measurable and expenditures are recognized generally when the obligation is incurred, except for interest on long term debt which is recognized as an expenditure when due. The District' s fiscal year is April 1 through March 31. Prior to fiscal year 1988/89, the District' s fiscal year was July 1 to June 30. The District' s certified public accountants are currently Deloitte & Touche, San Jose, California. District Financial Statements The District' s audited statement of General Fund Revenues, Expenditures and Changes in Fund Balance for the four years ended March 31, 1992 is shown in Table 6. General property taxes are the District' s largest source of revenues. Over the last four fiscal years, property taxes have generated between 42Z and 78Z of the District' s total revenues. See "CONSTITUTIONAL AND STATUTORY TAX LIMITATIONS" for a description of the tax assessment process in California. Due to voter approval of State Proposition 70 in June, 1988, State grants were a major source of District revenue during the period from 1988-1990, representing approximately 24Z of the District' s total revenues over the last four years. The District' s allocation from overall Proposition 70 funds was $11 million, most of which was received in the three fiscal years ending March 31, 1991. It is not known what the level of State grants will be in the future. See "Sources of Funds" below. Land acquisition, including debt service on notes issued to buy land in prior years, is the major component of the District' s expenditures, representing between 68Z and 83Z of total expenditures in each year since fiscal year 1987/88. Table 7 shows the combined Balance Sheet for the District' s General Fund, General Fixed Assets Fund, and General Long-Term Debt Fund for the years ended March 31, 1991 and March 31, 1992. The General Fixed Assets Fund includes all land, equipment, structures and improvements. The General Long-Term Debt Fund accounts for the annual payment of long-term debt. See Appendix A, "District' s Audited Financial Statements for the Year Ended March 31, 1992 - Notes to Financial Statements" for the breakdown of changes in the General Long-Term Debt Account and the amount of future debt service payments. 23 DTF:600 TABLE 6 Midpeni.nsula Regional Open Space District General Fund Revenues, Expenditures And Changes In Fund Balance(1) ($0O01s) 198 Z89 1989/90 1990/91(1) 1991/92 REVENUES: General Property Tax(1) $ 6,440 $ 7,690 $ 8,645 $ 9,434 State Grants 6,562 3,123 1,343 713 Other Taxes 462 525 171 ill Interest 738 772 961 840 Other (2) 366 353 1,155 1,042 Total Revenues 14,568 12,463 12,275 12,140 EXPENDITURES: Salaries and Benefits 1,147 1,648 2,141 2,270 Services and Other 844 2,105 3,630 1,979 Subtotal 1,991 3,753 5,771 4,249 DEBT SERVICE: Principal Retirement 690 7,677 5,446 1,666 Interest 2,146 2,698 2,797 3,070 Subtotal Debt Service 2,836 10,375 8,243 4,736 SubtotaL Expenditures 4,827 14,128 14,014 8,985 Operating Cash Flow 9,741 (1,665) (1,739) 3,155 Property Acquisition 6,688 4,667 9,924 4,467 Excess of Revenues Over Expenditures 3,053 (6,332) (11,663) (1,312) Proceeds From Notes Payable 2,914 0 17,622 135 Net Excess 5,967 (6,332) 5,959 (1,177) Starting Fund Balance 10,171 16,138 9,806 15,765 Ending Fund Balance 16,138 9,806 15,765 14,588 (1) Fiscal Years ending March 31 beginning with 1988/89. Figures for 1988/89 are for only nine months. Source: Compiled from the Audited Financial Statements of the District and the Approved Budget for 1992/93. 24 DTF:600 TABLE 7 Midpeninsula Regional Open Space District Balance Sheet ($000's) March 31, 1991 March 31, 1992 General General General General General Fixed Long-Term General Fund Long-Term Fund Assets Debt Fund Assets Debt ASSETS AND OTHER DEBT BALANCES: Cash and Cash Investments $ 8,598 $ 4,999 Restricted Cash 4,818 4,926 Taxes Receivable 2,447 2,724 Other Receivables 287 654 Prepaid Expenses/Other Assets 454 2,292 Land (at cost) $115,879 $120,346 Equipment 859 970 Structures and Improvements 3,912 4,505 Amount to be Provided for Retirement of General Long-Term Debt $50,514 $48,983 Total Assets 166 604 120,650 50,514 15,595 125,821 48,983 LIABILITIES AND FUND EQUITY: Liabilities: Accounts Payable 302 194 Accrued Liabilities/Deposits 196 267 Deferred Revenue 340 545 Notes Payable 50,514 48,983 Total Liabilities $ 838 $ 0 $50,514 $1,006 $ 0 $48,983 Fund Equity: Investment in General Fixed Assets $120,650 $ 0 $125,821 Fund Balance 15,766 $ 14,589 Total Fund Equity 15,766 120,650 50,514 $14,589 $125,821 $ 0 Total Liabilities and Equity $16,604 $120,650 $50,514 $15,595 $125,821 $48,983 Debt Capacity Pursuant to the Law, the District may acquire lands or facilities by means of a plan to borrow money or by purchase on contract. The amount of such indebtedness to be incurred may not exceed an amount equal to the District' s anticipated tax income for the next five-year period. All such indebtedness must be repaid during a period not to exceed 20 years from the date on which it is incurred and may bear interest at rates not exceeding 25 DTF:600 12Z per annum. Each such indebtedness shall be authorized by a resolution adopted by the affirmative votes of at least two-thirds of the members of the Board of Directors of the District. In addition, the Resolution imposes additional limitations upon the issuance of debt payable on a parity with the Notes. See "THE RESOLUTION - Covenants and Additional Debt. " Sources of Funds Tax Revenues. The general ad valorem property tax is the District' s major source of revenue, as well as the primary source of funds for the payment of debt service on the Notes. The general ad valorem property tax consists of secured and unsecured property taxes. See "ESTIMATED TAX REVENUES AND NOTE RETIREMENT" above for a more complete description of the District' s tax revenues. State Grants. Over the last four years, the District has received an average of approximately $2.9 million a year in State grants. Because grants are often tied to specific land purchases or site development and because the District must often compete with similar agencies for a fixed amount of State or federal funds, the level of grant revenues has varied from six percent to 42Z of the District's total revenues over the last four years. The source of most of the grant revenues received by the District during this period was State Proposition 70, approved by the voters in June 1988. The District' s 1992/93 Budget estimates revenues from grants at $289,000, which amount represents grants for which the District has received approval, pending the completion of site development for certain projects. In general, the District only budgets grant revenues when the source and amount of the grant have been reasonably assured. Major Uses of Funds. Most of the District' s funds are used for the acquisition of open space lands and to service the debt issued for those purposes. In keeping with the policy of the District' s Board of Directors, administrative costs are projected to be kept to a minimum, but land management expenditures are anticipated to be an increasing percentage of annual tax revenue. In 1991/92, land acquisition, including debt service on notes issued to buy land in prior years, totalled $9.2 million, accounting for 68Z of total District expenditures. Other Outstanding Debt Following the issuance of the 1992 Notes the District will have outstanding $8,908,146 of 1987 Notes, $12,500,000 of 1988 Notes and $15,000,000 of 1990 Notes. In addition, the District will have outstanding $10 million aggregate principal amount of lease obligations represented by certificates of participation executed and delivered in 1990, and approximately $1,914,425 principal amount of Land Contract Notes as described below. The District has never defaulted on any of its debt. 26 DTF:600 Table 8 below lists the District' s total indebtedness outstanding as of December 31, 1992, after giving effect to the issuance of the 1992 Notes. The outstanding balance of the Land Contract Notes as shown below is, in some cases, an aggregate of the outstanding balances on more than one Land Contract Note. In some cases, several parcels constituting one open space area have been purchased at different times through contracts secured by Land Contract Notes with differing maturities and interest rates. In each case, the land has been purchased pursuant to the California Public Resources Code which currently requires payment of debt over not more than 20 years. Approximately 21X ($11.8 million) of the debt outstanding, including the $10 million certificates of participation issued in 1990, and approximately $1.8 million of the Land Contract Notes will be subordinate to the obligation of the District to make payments on the 1992 Notes from Limited Tax Revenues. The Resolution requires that any future debt issued by the District and payable from Limited Taxes be on a parity with or subordinate to the 1992 Notes. TABLE 8 Midpeninsula Regional Open Space District Debt Outstanding(1) ($000's) Original Debt 1993/94 Amount Out (1) Debt Final Of Notes 12/31/92 Service Payment EL Corte de Madera(2,3) 500 500 40 March 1998 Fremont OLder(3) 89 71 9 June 2009 FoothiLLs(3) 192 171 18 December 1998 La Honda Creek(4) 941 662 90 October 1996 Sierra AzuL (5) 625 300 44 August 2008 Skyline (3) 600 210 74 May 1996 1987 Notes (6) 21,200 8,908 1,901 March 1997 1988 Notes (7) 12,500 12,500 1,200 February 2008 1990 Certificates of Participation 10,000 10,000 785 September 2020 1990 Notes 15,000 15,000 1,088 September 2010 1992 Notes 8,000 8,000 529 JuLy 2012 TOTAL $69,647 $56,322 $5,778 (1) Including the 1992 Notes expected to be issued in December 1992. (2) Aggregation of Notes payable for parcels within one open space preserve. (3) Subordinated to the 1990 Notes. (4) Aggregation of Notes payable. Including a subordinated note in the outstanding amount of $620,000 with 1993/94 debt service of $73,400. (5) Aggregation of Notes payable. Including subordinated notes in the outstanding amount of $217,400 with 1993/94 debt service of $16,800. (b) Amounts shown as outstanding and for 1992/94 debt service exclude the portion refunded from the proceeds of the 1990 Notes. (7) Projected 4-5% average interest rate. 27 DTF:600 Salaries and Benefits Salaries and benefits for the District' s 46 full-time, four part-time, and five seasonal employees represent the third major component of total District expenditures. In 1991/92, $2,270,000 was expended for salaries and benefits. District employees are covered under the Public Employees Retirement System administered by the State of California. Other uses of funds include patrol and site development, site maintenance, professional services, utilities and communications. CONSTITUTIONAL AND STATUTORY TAX LIMITATIONS Constitutional Limitations - Article XIIIA Article XIIIA of the California Constitution limits the maximum ad valorem tax on real property to one percent of "full cash value, " to be collected by counties and apportioned according to law, but provides that the one percent limitation does not apply to ad valorem taxes to pay interest or redemption charges on (1) indebtedness approved by the voters prior to July 1, 1978, or (2) any bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition. "Full cash value" is defined to mean "the county assessor' s valuation of real property as shown on the 1975/76 tax bill under full cash value or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. " The full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent per year, or reduction in the consumer price index or comparable data for the area under taxing jurisdiction or reduced in the event of declining property value caused by substantial damage, destruction or other factors. Legislation enacted by the California Legislature provides that each county will levy the maximum tax permitted by Article XIIIA of $1.00 per $100 of assessed valuation (based on full cash value) . Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by damage, destruction or other factors and to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in various other minor or technical ways. Court Challenges to Article XIII A On December 3, 1990, the Court of Appeal for the Second District in the case of Nordlinger v. Lynch, upheld Article XIIIA' s assessment rules. On February 28, 1991, the State Supreme Court denied the property owner' s request to review that decision, however on October 7, 1991 the United States Supreme Court accepted review of Nordlinger v. Lynch. On June 18, 1992 the Court upheld the constitutionality of Article XIIIA. Further legislation is possible. 28 DTF:600 Gann Initiative At the Statewide special election on November 6, 1979, the voters approved an initiative entitled "Limitation on Government Appropriations" (the "Gann Initiative") which added Article XIIIB to the California Constitution. Under Article XIIIB, as amended in 1990, State and local government entities have an annual "appropriations limit" which limits the ability to spend certain moneys which are called "appropriations subject to limitation" in an amount higher than the "appropriations limits. " Article XIIIB does not affect the appropriation of moneys which are excluded from the definition of "appropriations limit" including appropriations of any special district which existed on January 1, 1978, and which did not as of the 1977-78 fiscal year levy an ad valorem tax on property in excess of 12.5 cents per $100 of assessed value. Since the District did not levy a tax in excess of 12.5 cents, in the opinion of the District' s General Counsel the District' s appropriations are not subject to the limitations of Article XIIIB. Statutory Limitations On November 4, 1986, California voters approved Proposition 62, an initiative statute limiting the imposition of new or higher taxes by local agencies. The statute (a) requires new or higher general taxes to be approved by two-thirds of the local agency' s governing body and a majority of its voters, (b) requires the inclusion of specific information in all local ordinances or resolutions proposing new or higher general or special taxes, (c) penalizes local agencies that fail to comply with the foregoing, and (d) requires local agencies to stop collecting any new or higher general tax adopted after July 31, 1985, unless a majority of the voters approved the tax by November 3, 1988. Two State Court of Appeals decisions, both of which are final decisions, have declared the majority voter provisions referred to in (a) above in one case and in (a) and (d) above in the second case to be unconstitutional. The District has not collected new or higher taxes to date, and it has no plans to collect new or higher taxes. Future Initiatives Article XIIIA, the Gann Initiative and Proposition 62 were each adopted as measures that qualified for the ballot pursuant to California' s initiative process. From time to time other initiative measures could be adopted, further affecting District revenues or the District' s ability to expend revenues. LEGAL All legal proceedings in connection with the issuance of the 1992 Notes are subject to the approval of Orrick, Herrington & Sutcliffe, San Francisco, California, Note Counsel. The form of opinion of Orrick, Herrington & Sutcliffe, attesting to the validity of the 1992 Notes, is shown in Appendix C to this Official Statement. Certain legal matters will be passed upon for the District by Stanley R. Norton, Esq. , General Counsel to the District and for the Underwriter by Nossaman, Guthner, Knox & Elliott, San Francisco, California, Underwriter's Counsel. 29 DTF:600 TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe, Note Counsel, based on existing laws, regulations, rulings and court decisions, interest on the 1992 Notes is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes. Note Counsel is also of the opinion that interest on the 1992 Notes is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes although, Note Counsel observes that such interest is included in adjusted current earnings in calculating federal corporate alternative minimum taxable income. The form of the opinion of Note Counsel is set forth in Appendix C hereto. The Internal Revenue Code of 1986 (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 1992 Notes. The District has covenanted to comply with certain restrictions designed to assure that interest on the 1992 Notes will not be included in federal gross income. Failure to comply with these covenants may result in interest on the 1992 Notes being included in federal gross income, possibly from the date of issuance of the 1992 Notes. The opinion of Note Counsel assumes compliance with these covenants. Note Counsel has not undertaken to determine (or to inform any person) whether any actions taken ..,(or not taken) or events occurring (or not occurring) after the date of issuance of the 1992 Notes may affect the tax status of interest on the 1992 Notes. Certain requirements and procedures contained or referred to in the Resolution of Issuance and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the 1992 Notes) may be taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of nationally recognized bond counsel. Note Counsel expresses no opinion as to any 1992 Notes or the interest thereon if any such change occurs or action is taken upon the advice or approval of bond counsel other than Orrick, Herrington & Sutcliffe. Although Note Counsel has rendered an opinion that interest on the 1992 Notes is excluded from gross income for federal income tax purposes and is exempt from California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on the 1992 Notes may otherwise affect a holder' s federal or state tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the holder and the holder' s other items of income or deduction. Note Counsel expresses no opinion regarding any such other tax consequences. LEGALITY FOR INVESTMENT The 1992 Notes are legal investments in California for commercial and savings banks and as such are legal investments for all trust funds, and for funds of insurance companies and trust companies. The 1992 Notes are eligible as security for deposits of public moneys in California. 30 DTF:600 RATINGS As noted on the cover page of this Official Statement, Standard & Poor' s Corporation has given the 1992 Notes the rating of and Moody' s Investors Service has given the Notes a rating of (together the "Rating Agencies") . Any explanation of the significance of such ratings may be obtained only from the Rating Agencies furnishing the same. Tire District has furnished to the Rating Agencies certain information and materials. Generally, rating agencies base their ratings on such information and materials and, in addition, on investigations, studies and assumptions made by the rating agencies themselves. There is no assurance that the ratings mentioned above will remain for any given period of time or that the ratings may not be lowered or withdrawn entirely by such Rating Agencies if in their judgment circumstances so warrant. Any such downward change or withdrawal of a rating may have an adverse effect on the market price of the 1992 Notes. LITIGATION There is no litigation pending concerning the validity of the 1992 Notes and the application of the proceeds thereof, the corporate existence of the District, or the title of the officers thereof to their respective offices or contesting or affecting the District' s ability to receive the Limited Taxes or other moneys that could be used for payment of the 1992 Notes. There are a number of lawsuits and claims pending against the District. The aggregate amount of the uninsured liabilities of the District and the timing of any anticipated payments of judgments which may result from suits and claims will not, in the opinion of the General Counsel of the District, materially affect the District' s finances or impair its ability to repay the 1992 Notes. UNDERVRITING The 1992 Notes will be purchased from the District by Prudential Securities Incorporated as underwriter (the "Underwriter") under a Purchase Contract pursuant to which the Underwriter agrees to purchase all of the 1992 Notes for an aggregate purchase price of $ plus accrued interest, if any, from December 1, 1992 to the delivery date thereof. The initial public offering prices stated on the cover of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the 1992 Notes to certain dealers (including dealers depositing 1992 Notes into investment trusts) , dealer banks, banks acting as agents and others at prices lower than said public offering prices. AVAILABILITY OF DOCUMENTS During the initial offering period for the 1992 Notes, copies of the forms of the Resolution and other documents referred to herein may be obtained, upon written request, from Midpeninsula Regional Open Space District, 330 Distel Circle, Los Altos, California 94022, Attention: General 31 OTF:600 Manager. After delivery of the 1992 Notes, copies of such agreements may be obtained from the Paying Agent, Seattle-First National Bank, 1001 Fourth Avenue, llth Floor, Seattle, Washington 98154, Attention: Bond Trustee Services. MISCELLANEOUS Insofar as any statements made in this Official Statement involve matters of opinion or of estimates, whether or not expressly stated, they are set forth as such and not as representations of fact. No representation is made that any of such statements made will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the owners of the 1992 Notes. Neither the members of the Board of Directors nor the officers or employees of the District are liable personally on the 1992 Notes by reason of their issuance. The execution and delivery of this Official Statement have been duly authorized by the District. MIDPENINSULA REGIONAL OPEN SPACE DISTRICT By: Herbert Grench General Manager i 32 DTF:600 APPENDIX B GENERAL AND ECONOMIC INFORMATION SANTA CLARA COUNTY AND SAN MATEO COUNTY Introduction Santa Clara County is located below the southern point of San Francisco Bay and covers a total land area of over 1,300 square miles or about 847,000 acres. Two distinct valleys are created by the hill formation of the Santa Cruz Mountains and the Diablo Range. These two areas are known locally as "North County" and "South County. " South County has retained the agricultural base which once characterized the entire area. North County is densely populated, extensively urbanized and heavily industrialized. Most of North County is now referred to as "Silicon Valley" because of the concentration of electronics companies throughout the area. San Mateo County is located on the San Francisco Peninsula. The coastal mountains run north and south through the County dividing the lightly populated coastal area from the more heavily developed eastern corridor between San Francisco and San Jose. San Mateo County attracted businesses at a fast pace during the 1960s with its suburban atmosphere and convenient access to nearby population centers. The County is characterized by manufacturing, engineering and technical-product firms located along the Bay, with commercial and residential areas stretching westward into the foothills. Transportation facilities in the Counties include San Francisco International Airport, a small deepwater port in Redwood City and freeway and bridge connections to nearby ports and airports in San Francisco, San Jose and Oakland. In addition to their own extensive range of manufacturing, professional, service, and academic employers, the Counties provide an important residential base for the financial, trade, commercial, and industrial companies located in San Francisco. The District extends from 20 to 40 miles south of San Francisco. Population According to the California State Department of Finance, as of January 1, 1992, Santa Clara County is ranked the fourth most populous County in the State and is the most populous of the nine San Francisco Bay Area counties. The County' s population has been growing at a fast pace since 1960, and between 1960 and 1984, Santa Clara County' s population more than doubled. San Mateo County has experienced moderate but consistent population growth since 1970. The U.S. Census reports that between 1970 and 1980 the County grew by approximately 30,000 residents, or 5.4X. The 1990 Census reported that the County population was 649,623, which represents a 10.6X increase over 1980. B-1 DTF:600 APPENDIX A District's Audited Financial Statements for the Year Ended March 31, 1992 A-1 DTF:600 The table below shows population estimates for the last five years for both Santa Clara and San Mateo Counties. The population within the Midpeninsula Regional Open Space District was estimated by the District in 1992 to be approximately 600,900. POPULATION STATISTICS SAN MATEO AND SANTA CLARA COUNTIES For Years 1988 through 1992 1988 1989 1990 1991 1992 Midpeninsula Regional Open Space District(1) 587,621 593,269 598,916 600,900 600,900 San Mateo County(2) 624,800 633,000 649,623 657,000 670,100 Santa Clara County(2) 1,422,900 1,443,800 1,497,577 1,513,100 1,531,800 Source: (1) Midpeninsula Regional Open Space District. (2) California State Department of Finance, Population Research. The 1990 figures come from the United States Census Bureau. Economic Characteristics Santa Clara County, with approximately 822,600 wage and salary jobs in 1991, has the largest employment base of any county in Northern California. Three major industry sectors comprise 78Z of the County' s employment: manufacturing (31.4X) , services (26.7X) and retail trade (20X) . Their percentage share of County payrolls has remained virtually constant over the past five years. Various types of manufacturing firms are located in Santa Clara County, with durable goods manufacturing accounting for almost 90Z of manufacturing employment. Within this sector, the electrical equipment and supplies industry accounts for approximately 60Z of all County manufacturing jobs. Other major components of durable goods manufacturing are electronic components and accessories; office computing and accounting machinery; instruments, guided missiles and space vehicles and communications equipment. In the nondurable goods manufacturing sector, the printing, publishing, software, and goods processing industries are the leading employers. The services sector has been the fastest growing industry, particularly in the areas of business and medical services which support electronics manufacturing and health care. San Mateo County' s diversified economy includes construction, manufacturing, transportation, communications, retail and wholesale trade, financial services and government employment. Forty-eight of the nation' s top 100 industrial firms are either headquartered or have branch offices in San Mateo County. The two major growth industries affecting San Mateo County over the past decade have been the high technology and office sectors. The San Francisco Bay Area' s principal airport, San Francisco International Airport, is located within San Mateo County. B-2 DTF:600 Major commercial centers located in the Counties include the Stanford Shopping Center in Palo Alto, Eastridge Mall and Valley Fair in San Jose, Vallco Fashion Park in Cupertino, San Antonio Shopping Center in Mountain View, Fashion Island Shopping Center in Foster City and Hillsdale Mall in San Mateo. Taxable sales and the number of sales permits issued in each County since 1987 are shown below. Both the number of permits issued and the total valuation of taxable transactions have increased each year. TAXABLE SALES AND NUMBER OF SALES PERMITS SAN MATEO AND SANTA CLARA COUNTIES For Years 1987 through 1991 ($000's) Santa Clara County _ San Mateo County Year No. of Taxable Percent No. of Taxable Percent (As of July 1) Permits Sales Increase Permits Sales Increase 1987 45,765 14,932,279 7.3X 22,106 6,676,152 4.7X 1988 46,807 16,020,882 7.3 21,725 7,193,625 7.8 1989 48,206 17,343,878 8.3 22,008 7,541,003 4.8 1990 47,832 17,914,405 3.9 22,764 7,843,359 4.0 1991 48,559 17,425,346 -2.7 22,258 7,863, 738 0.3 Source: California State Board of Equalization. Major employers in each County, ranked by employment size, are shown in the following table. Santa Clara County' s major employers, led by Lockheed Missiles & Space Company, Hewlett-Packard and IBM, are active in the high technology, aerospace and electronic industries. Many of these companies are the resident hardware and software producers of "Silicon Valley. " San Mateo County' s employment base includes the San Francisco International Airport, which employs over 20,000 persons, and several electronics manufacturers, medical facilities and research organizations. B-3 DTF:600 MAJOR EMPLOYERS SANTA CLARA AND SAN MATEO COUNTIES (Firms Ranked by Employment Size) Employers Location Employees SANTA CLARA COUNTY: Lockheed Missiles & Space Co. Sunnyvale 25,000 Hewlett-Packard Company Palo Alto 17,000 IBM Corporation San Jose 14,178 County of Santa Clara San Jose 13,000 Stanford University Palo Alto 9,190 Sun Microsystems Mountain View 7,300 Moffett Naval Air Station San Jose 7,000 Amdahl Corporation Sunnyvale 6,000 National Semiconductor Santa Clara 6,000 Apple Computers Cupertino 5,785 City of San Jose San Jose 5,338 Tandem Computers Cupertino 4,593 FMC Corporation San Jose 4,230 Stanford Hospital Palo Alto 4,000 Varian Associates Palo Alto 4,000 Pacific Bell San Jose 3,557 Intel Corporation Santo Clara 3,500 San Jose State University San Jose 3,500 Syntex Corporation Palo Alto 3,500 Advanced Micro-Devices, Inc. Sunnyvale 3,200 Santa Clara Valley Medical Center San Jose 3,009 SAN MATEO COUNTY: United Airlines San Francisco Intl Airport 11,000 Raychem Corporation Menlo Park 3,500 SRI International Menlo Park 3,500 Veterans Admin. Medical Center Menlo Park 3,300 Stanford Linear Accelerator Menlo Park 3,000 Oracle Corporation Foster City 2,000 Franklin Resources San Mateo 2,000 Pacific Bell San Mateo 2,000 Genetech, Inc. South San Francisco 1,850 Sequoia Hospital Redwood City 1,600 Seton Medical Center Daly City 1,500 American Airlines, Inc. San Francisco Int'1 Airport 1,450 Mills Peninsula Hospital Burlingame 1,411 Ampex Corporation Redwood City 1,450 United States Geological Survey Menlo Park 1,400 Kaiser Foundation Hospital Redwood City 1,400 Network Equipment Redwood City 1,200 Source: San Jose Chamber of Commerce; individual companies, November 1991, and San Mateo County Economic Development Association, Inc. , March 1992. B-4 DTF:600 The unemployment rates for both Counties for 1987 through 1991 are shown below. CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT SAN MATEO AND SANTA CLARA COUNTIES Annual Averages (1987-1991) Santa Clara County 1987 1988 1989 1990 1991 Civilian Labor Force(1) 807,000 836,400 846,800 817,600 814,900 Employment 770,600 803,400 814,500 785,200 770,100 Unemployment 36,400 33,000 32,300 32,400 44,800 Unemployment Rate(2) 4.5X 4.OX 3.8X 4.OX 5.5X Santa Mateo County 1987 1988 1989 1990 1991 Civilian Labor Force(1) 344,700 353,100 359,100 353,800 351,200 Employment 333,700 343,200 349,600 343,300 336,500 Unemployment 11,000 9,900 9,500 10,500 14,700 Unemployment Rate(2) 3.2X 2.8X 2.6X 3.OX 4.2X (1) Labor force by place of residence. Employment includes persons involved in labor-management trade disputes. (2) The unemployment rate is computed from non-rounded data; therefore it may differ from rates calculated by using rounded figures in this table. Source: State of California, Employment Development Department. The following table shows the ten largest taxpayers of secured taxes for the Counties. TEN LARGEST TAXPAYERS AS OF 1991 SANTA CLARA AND SAN MATEO COUNTIES Santa Clara County San Mateo County IBM Corporation United Airlines Hewlett-Packard American Airlines Pacific Bell Pacific Gas & Electric Lockheed Missiles & Space Co. Pacific Telephone Pacific Gas & Electric Genetech Sobrato Development Corp. Raychem Corporation Richard T. Perry, et al. USAir, Inc. Tandem Computers Delta Airlines Prometheus Development City & County of San Francisco Metropolitan Life Insurance Co. Bohannon Development Co. Source: Offices of the Santa Clara County Treasurer-Tax Collector and the San Mateo County Treasurer-Tax Collector. B-5 DTF:600 Construction The following table shows building permit activity in Santa Clara County for 1987-1991 and in San Mateo County for 1987-1989. BUILDING PERMIT ACTIVITY SANTA CLARA AND SAN MATEO COUNTIES For Years 1987 through 1991 SANTA CLARA COUNTY: Type 1987 1988 1989 1990 1991 Residential: New Single dwellings $ 404,637 $ 486,702 $ 402,858 New multi-dwellings 197,066 128,860 124,996 Additions/alterations 117,219 136,930 161,691 Total Residential $ 718,922 $ 752,492 $ 689,545 $672,800 $596,500 Non-Residential: New commercial $ 239,651 $ 151,205 $ 163,500 $194,000 $151,300 New industrial 134,569 94,940 126,446 138,000 57,100 Other 71,759 62,365 49,618 Additions/alterations 325,788 399,407 421,586 430,500 375,200 Total Non-Residential $ 771,768 $ 707,917 $ 761,150 $762,500 $583,600 TOTAL VALUATION $1,490,690 $1,460,409 $1,450,695 $1,435,300 $1,180,000 Number of New Dwelling Units Single dwellings 3,078 3,691 2,571 1,762 1,638 Multi-dwellings 4,558 2,794 2,312 3,223 2,134 Total Units 7,636 6,485 4,883 4,985 3,772 SAN MATEO COUNTY: Type 1987 1988 1989 Residential: New Single dwellings $ 193,975 $ 248,984 $ 216,675 New multi-dwellings 89,646 85,825 109,034 Additions/alterations 98,884 115,569 155,624 Total Residential $ 382,505 $ 450,378 $ 481,333 Non-Residential: New commercial $ 142,374 $ 75,804 $ 91,508 New industrial 44,548 7,416 12,256 Other 13,782 13,681 19,593 Additions/alterations 112,763 144,051 114,615 Total Non-Residential $ 313,467 $ 240,953 $ 237,972 TOTAL VALUATION $ 695,972 $ 691,330 $ 719,305 Number of New Dwelling Units Single dwellings 1,310 1,429 1,085 Multi-dwellings 1,708 981 1,335 Total Units 3,018 2,410 2,420 Source: Security Pacific Corporation, The Economic Group: "California Building Permit Activity" for years 1987-89. Economic Sciences Corporation for Santa Clara County, 1990 and 1991. B-6 DTF:600 Agriculture Santa Clara County was once a leading producer of apricot, cherry and prune crops. However, recent industrial development and urbanization have displaced most of the agricultural land. Most of the remaining agricultural acreage is found around the communities of Gilroy and Morgan Hill. Major crops include cut flowers, wine grapes, mushrooms and nursery stock. Dairy products and seasonal crops including tomatoes, bell peppers, strawberries, prunes, walnuts and garlic provide the balance of agricultural production in Santa Clara County. San Mateo County is a national leader in the production of ornamental flowers and nursery products. This industry, which accounts for about 80Z of total County revenue from agriculture, developed in the County due to the favorable climate and proximity to the San Francisco International Airport. The industry is located in the western part of the County, particularly around the communities of Half Moon Bay and Pescadero. Transportation Transportation has played a vital role in the Bay Area' s growth as an economic center. Seven general purpose ports located in the area and numerous special purpose facilities serve manufacturing industries and facilitate distribution to world markets. The San Francisco Bay Area is the western terminus for three transcontinental railroads. An extensive network of freeways serves the area. B-7 DTF:b00 The Bay Area' s network of freeways and expressways provides the peninsula industries access to regional, national and international markets. U.S. 101, a parallel route along the Bay, and a major north-south highway between San Francisco and Los Angeles, provides access to the deep sea ports at San Francisco and Redwood City, and to air passenger and cargo facilities of San Francisco International and San Jose Municipal Airports. Interstate Highway 280 traverses the ridge of the peninsula and joins U.S. 101 in San Francisco. Additional north-south transportation is provided by Interstate 5, the major national highway reaching north to Canada and south through San Diego, and State Highway 82. Principal routes connecting the peninsula with the East Bay' s air and sea ports are State Highway 17, Interstate Highway 680 and the San Mateo, Dumbarton, and San Francisco-Oakland Bay Bridges. The main coast line of the Southern Pacific Railroad traverses Santa Clara County, providing connections to San Francisco, Oakland, and Los Angeles, commuter passenger service is operated on the Southern Pacific between San Jose and San Francisco. In addition to local bus service, cities in the District are served by Santa Clara County Transit System, San Mateo County Transit District and Greyhound Bus Lines. The Bay Area Rapid Transit System ("BART") provides passenger rail service within Contra Costa, Alameda, San Francisco and northern San Mateo Counties. San Francisco International Airport, located in San Mateo County, is served by all major scheduled aircarriers. Metropolitan Oakland International Airport is served by eight scheduled airlines and two large supplemental carriers. The San Jose Municipal Airport is served by twelve airlines. General aviation airports include Reid-Hillview in San Jose, South County Airport, Palo Alto Airport, San Carlos Airport, and Half Moon Bay Airport. Water transportation is provided by the international water transportation complex of the San Francisco Bay; major ports include the Port of Oakland, Port of San Francisco, and Port of Redwood City. Education In 1991 approximately 231,237 students attended public K-12 schools in Santa Clara County' s 283 elementary and 53 high schools. In San Mateo County about 77,147 students attended schools administered by 130 elementary, 23 high school and three unified school districts. Institutions of higher education include Stanford University, the University of Santa Clara, San Jose State University, and nine public community colleges. i B-8 DTF:600 APPENDIX C Form of Note Counsel Opinion C-1 DTF:600 Nossaman, Guthner, Knox & Elliott Draft No. 1 October 28, 1992 MIDPENINSULA REGIONAL OPEN SPACE DISTRICT 1992 PROMISSORY NOTES PURCHASE CONTRACT 1992 Board of Directors Midpeninsula Regional Open Space District 330 Distel Circle Los Altos, California 94022 Ladies and Gentlemen: The undersigned, Prudential Securities Incorporated (the "Underwriter" ) , hereby offers to enter into this Purchase Contract (the "Purchase Contract" ) with you, the Midpeninsula Regional Open Space District (the "District" ) , for the purchase by the Underwriter of the $ Midpeninsula Regional Open Space District 1992 Promissory Notes (the "Notes " ) being issued pursuant to Resolution No. 92-- (the "Resolution" ) adopted by the Board of Directors of the District on 1992 . This offer is made subject to acceptance by you prior to 11:59 o 'clock P.M. , California time, on the date hereof . If this offer is not so accepted, this offer will be subject to withdrawal by the Underwriter upon notice delivered to you at any time prior to acceptance. Upon acceptance, this Purchase Contract shall be in full force and effect in accordance with its terms and shall be binding upon the District and the Underwriter. 1 . Purchase, Sale and Delivery of the Certificates . (a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter hereby agrees to purchase and the District agrees to issue and deliver to the Underwriter all (but not less than all) of the Notes for a purchase price of $ , plus accrued interest to the Closing Date (as defined below) . The Notes shall be dated , 1992 , shall mature on July 1 in the years and the amounts indicated on the cover of the Official Statement dated the date hereof relating to the Notes (the "Official Statement" ) and shall otherwise be as described in, and shall be issued and secured pursuant to the provisions of the Resolution, which was adopted in accordance with and pursuant to the provisions of Article 3, Chapter 3, Division 5 of the Public Resources Code of the State of California (the "Act" ) . Principal of the Notes will be payable upon maturity or prior redemption at the office of the Paying Agent, Seattle-First National Bank in Seattle, Washington (the "Paying Agent" ) . The Notes will be in denominations of $5, 000 or integral multiples thereof . (b) At 8 : 00 A.M. , California time, on If 1992, or at such other time or on such other date as we mutually agree upon (the "Closing Date" ) , the District will deliver to the Underwriter, at the office of Orrick, Herrington & Sutcliffe, Note Counsel, in San Francisco, California or at such place as we may mutually agree, the documents mentioned herein, and the District will deliver or cause to be delivered to the Underwriter, at a location or locations to be designated by the Underwriter in New York, New York, the Notes in book-entry form through the facilities of The Depository Trust Company, duly executed. The Underwriter will accept such delivery and pay the purchase price of the Notes as set forth in subparagraph (a) above in immediately available funds (such delivery and payment being herein referred to as the "Closing" ) payable to the order of the District in an amount equal to the purchase price. The Notes will be made available to the Underwriter for inspection and packaging, at an office which we may mutually agree upon, not less than two business days prior to the Closing. (c) The Underwriter agrees to make a bona fide public offering of the Notes at the initial offering prices set forth in the Official Statement, which prices may be changed from time to time by the Underwriter after such offering. 2 . Representations , Warranties and Agreements of the District. The District hereby represents, warrants and agrees with the Underwriter as follows: (a) Both at the date hereof and at the date of Closing, the statements and information contained in the Official Statement pertaining to the District contain no 2 DTF:601 misstatement of a material fact and the Official Statement does not and will not omit any statement or information pertaining to the District which is necessary to make the statements and information therein, in the light of the circumstances under which they were made, not misleading in any material respect; (b) The District is and will be on the Closing Date a regional open space district of the State of California organized and operating pursuant to the Constitution and laws of the State of California with the full power and authority to execute and deliver the Official Statement, to enter into this Purchase Contract, to adopt the Resolution and issue the Notes; (c) By official action of the District prior to or concurrently with the acceptance hereof, the District has duly approved, ratified and confirmed the distribution of the Preliminary Official Statement dated , 1992 (the "Preliminary Official Statement" ) relating to the Notes and the execution, delivery and distribution of the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the District of the obligations on its part contained in, this Purchase Contract and the consummation by it of all other transactions contemplated by the Official Statement and this Purchase Contract and has duly authorized the issuance of the Notes; (d) The execution and delivery of this Purchase Contract and the Official Statement, the adoption of the Resolution and issuance of the Notes and compliance with the provisions on the District ' s part contained herein and therein, will not in any material respect 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 the District is a party or is otherwise subject, 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 of the District 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 Official Statement; (e) The District is not in any material respect in breach of or default under any applicable law or administrative regulation of the State of California or the 3 DTF:601 United States of America or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the District is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute a default or an event of default under any such instrument; ( f) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, pending or threatened against the District in any material respect affecting the existence of the District or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the issuance of the Notes or the collection of tax revenues or other money from which the Notes are payable or in any way contesting or affecting the validity or enforceability of the Notes, the Resolution or this Purchase Contract or contesting the powers of the District or its authority to enter into, adopt or perform its obligations under any of the foregoing, or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or any amendment or supplement thereto, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Notes, the Resolution or this Purchase Contract; (g) The District will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order (i) to qualify the Notes 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 Underwriter may designate and (ii) to determine the eligibility of the Notes for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualification in effect so long as required for distribution of the Notes; provided, however, that in no event shall the District be required to take any action which would subject it to general or unlimited service of process in any jurisdiction in which it is not now so subject; (h) If between the date hereof and the date of the Closing an event occurs, of which the District has knowledge, which might or would cause the information contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated 4 DTF:601 therein or necessary to make such information therein, in light of the circumstances under which it was presented, not misleading, the District will notify the Underwriter, and, if in the opinion of the Underwriter, or its respective counsel, such even requires the preparation and publication of a supplement or amendment to the Official Statement, the District will cooperate in the preparation of an amendment or supplement to the Official Statement in a form and manner approved by the Underwriter, and shall pay all expenses thereby incurred; and (i) If the information contained in the Official Statement is amended or supplemented pursuant to paragraph (h) hereof, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and including the Closing Date, the portions of the Official Statement so supplemented or amended (including any financial and statistical data contained therein) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading. The District hereby ratifies, confirms and approves of the use and distribution by the Underwriter prior to the date hereof of the Preliminary Official Statement. The District has delivered or caused to be delivered to the Underwriter on the date hereof a form of the official statement relating to the Notes dated the date hereof which the District deems final for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 ( "Rule 15c2-1211 ) , except for information permitted to be omitted therefrom by Rule 15c2-12 . The District hereby agrees to deliver or cause to be delivered to the Underwriter, within seven ( 7 ) business days of the date hereof, copies of the final official statement, dated the date hereof, relating to the Notes (including all information previously permitted to have been omitted by Rule 15c2-12 and any amendments or supplements as have been approved by the District and the Underwriter) (the "Official Statement" ) in such quantity as the Underwriter shall request. The District hereby approves of the use and distribution by the Underwriter of the Official Statement in connection with the offer and sale of the Notes . 3 . Conditions to the Obligations of the Underwrite The Underwriter hereby enters into this Purchase Contract in reliance upon the representations and warranties of the District contained herein and the representations and warranties to be 5 DTF:601 contained in the documents and instruments to be delivered at the Closing and upon the performance by the District, and the Paying Agent of their obligations both on and as of the date hereof and as of the Closing Date. Accordingly, the Underwriter ' s obligations under this Purchase Contract to purchase, to accept delivery of and to pay for the Notes shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties of the District 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 District made in any certificate or other document furnished pursuant to the provisions hereof, to the performance by the District of its obligations to be performed hereunder and under the Resolution at or prior to the Closing Date, and also shall be subject to the following additional conditions : (a) The representations and warranties of the District contained herein shall be true and correct on the date hereof and on the Closing Date, as if made on and at the Closing; (b) At the Closing, the Notes and the Purchase Contract shall have been duly authorized, executed and delivered by the respective parties thereto, and the Official Statement shall have been duly authorized, executed and delivered by the District, all in substantially the forms heretofore submitted to the Underwriter, with only such changes as shall have been agreed to in writing by the Underwriter, and shall be in full force and effect; and there shall be in full force and effect such resolution or resolutions of the Board of Directors of the District as, in the opinion of Orrick, Herrington & Sutcliffe ( "Note Counsel" ) , shall be necessary or appropriate in connection with the transactions contemplated hereby; (c) The Underwriter shall have received, within seven ( 7 ) business days of the date hereof, copies of the final Official Statement relating to the Notes (including all information previously permitted to have been omitted by Rule 15c2-12 and any amendments or supplements as have been approved by the District and the Underwriter) , in such quantity as the Underwriter shall have requested; (d) Between the date hereof and the Closing Date, the market price or marketability, at the initial offering price set forth in the Official Statement, of the Notes shall not have been materially adversely affected, in the reasonable judgment of the Underwriter (evidenced by a written notice 6 DTF:601 to the District terminating the obligation of the Underwriter to accept delivery of and make any payment for the Notes) , by reason of any of the following: ( 1) legislation enacted (or resolution passed) by or introduced or pending legislation amended in the Congress or recommended for passage by the President of the United States, the Speaker of the House of Representatives, the President Pro Tempore of the Senate, the Chairman or ranking minority member of the Committee of Ways and Means of the House of Representatives or the Chairman or ranking minority member of the Committee on Finance of the Senate, or a decision rendered by a court established under Article III of the Constitution of the United States or by the Tax Court of the United States, or an order, ruling, regulation ( final, temporary or proposed) or press release issued or made by or on behalf of the Treasury Department of the United States or the Internal Revenue Service, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon moneys that would be received by the District or upon such interest as would be received by the Note Owners; (2 ) the declaration of war or engagement in major military hostilities by the United States or the occurrences of any other national emergency or calamity relating to the effective operation of the government of or the financial community in the United States; (3) the declaration of a general banking moratorium by federal, New York or California authorities, or the general suspension of trading on any national securities exchange; (4) the imposition by the New York Stock Exchange or other national securities exchange, or any governmental authority, of any material restrictions not now in force with respect to the Notes or obligation of the general character of the Notes 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 Underwriter; (5) legislation enacted (or resolution passed) by or introduced or pending legislation amended in the Congress or recommended for passage by the President of the United States, or an order, decree or injunction issued by any court of competent jurisdiction, or an 7 DTF:601 order, ruling, regulation ( final, temporary or proposed) or press release issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Notes, or the Notes, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Resolution is not exempt from qualification under the Trust Indenture Act of 1939, as amended, or that the execution, offering or sale of obligations of the general character of the Notes, or of the Notes, including any or all underlying arrangements, as contemplated hereby or by the Official Statement, otherwise is or would be in violation of the federal securities laws as amended and then in effect; ( 6 ) the withdrawal or downgrading of any rating of the Notes by a national rating agency; or ( 7 ) any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Official Statement, or has the effect that the Official Statement contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (e) At or prior to the Closing Date, the Underwriter shall have received the following documents, in each case satisfactory in form and substance to the Underwriter: ( 1) Two certified copies of the Resolution; (2) The approving opinion, dated the Closing Date and addressed to the District, of Note Counsel in substantially the form attached to the Official Statement as Appendix C, and a letter of such counsel, dated the Closing Date and addressed to the Underwriter to the effect that such opinion may be relied upon by the Underwriter to the same extent as if such opinion were addressed to it; ( 3) The supplemental opinion, dated the Closing Date and addressed to the Underwriter, of Note Counsel, substantially to the effect that (i) this Purchase Contract has been duly authorized, executed and 8 DTF:601 delivered by the District and (assuming due authorization, execution and delivery by and validity with respect to the Underwriter) constitutes a valid, legal and binding obligation of the District enforceable in accordance with its terms, except as such enforceability (A) may be limited by bankruptcy or other laws affecting creditors , rights, and (B) may be subject to the application of equitable principles if equitable remedies are sought; (ii) the Notes may be offered and sold without registration under the Securities Act of 1933, as amended, and the Resolution is not required to be qualified under the Trust Indenture Act of 1939, as amended; (iii) the Notes are payable on a parity with the District ' s outstanding 1988 Promissory Notes, 1987 Promissory Notes, 1990 Promisory Notes and certain land acquisition contracts (collectively, the "Parity Notes " ) ; (iv) the obligation of the District to make payments on the District ' s 1990 Certificates of Participation is subject to the prior obligation of the District to apply the Limited Taxes to the payment of the Notes, the Parity Notes and any parity debt issued in accordance with the Resolution; and (v) the statements contained in the Official Statement under the captions "INTRODUCTION" , "THE 1992 NOTES" , "SECURITY AND SOURCE OF PAYMENT" , "THE RESOLUTION" , "TAX MATTERS" , "LEGALITY FOR INVESTMENT" , and in APPENDIX C - "Form of Note Counsel Opinion" , insofar as such statements purport to summarize certain provisions of the Notes and the Resolution, certain matters of California or federal law and Note Counsel ' s opinion concerning certain federal and State tax matters relating to the Notes, are accurate in all material respects . (4) The opinion of the District Counsel for the District, dated the Closing Date and addressed to the Underwriter, to the effect that (i) the District is a regional open space district of the State of California; (ii) the Resolution and the resolution of the District approving and authorizing the execution and delivery by the District of the Purchase Contract and the Official Statement (the "Approving Resolutions " ) were duly adopted at meetings of the Board of Directors of the District 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 throughout; ( iii) there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or threatened against or affecting the District, to 9 DTF:601 restrain or enjoin payment of the taxes from which the Notes are payable, or in any way contesting or affecting the validity of the Notes, the Resolution, the Approving Resolutions or the Purchase Contract; ( iv) the issuance of the Notes and the adoption of the Resolution and execution and delivery of the Purchase Contract and the Official Statement, the adoption of the Approving Resolutions, and compliance by the District with the provisions of the foregoing, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute on the part of the District a breach or default under any agreement or other instrument to which the District is a party (and of which such counsel is aware after reasonable investigation) or by which it is bound (and of which such counsel is aware after reasonable investigation) or any existing law, regulation, court order or consent decree to which the District is subject; (v) the Official Statement has been duly authorized, executed and delivered, and the Notes and the Purchase Contract have been duly authorized, executed and delivered by the District and, assuming due authorization, execution and delivery by the other parties thereto, when applicable, constitute legal, valid and binding agreements of the District enforceable in accordance with their respective terms, subject 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 of California or any other governmental authority or agency within the State of California having jurisdiction over the District is required for the valid authorization, execution, delivery and performance by the District of the Notes, the Official Statement or the Purchase Contract or for the adoption of the Resolution or the Approving Resolutions which has not been obtained; and (vii) the information contained in the Official Statement (excluding therefrom financial statements and statistical data, as to which no opinion need be expressed) does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstance under which they were made, not misleading; 10 DTF:601 (5) The opinion, dated the Closing Date and addressed to the Underwriter, of Nossaman, Guthner, Knox & Elliott, San Francisco, California, counsel for the Underwriter ( "Underwriter' s Counsel" ) to the effect that (a) the Notes are exempt from registration under the Securities Act of 1933, as amended, and the Resolution is exempt from qualification under the Trust Indenture Act of 1939, as amended; and (b) without passing upon or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement and making no representation that they have independently verified the accuracy, completeness or fairness of any such Statements, based upon the information made available to them in the course of their participation in the preparation of the Official Statement as counsel for the Underwriter, nothing has come to their attention which would lead them to believe that the Official Statement (excluding therefrom financial statements and the statistical data included in the Official Statement, as to which no opinion need be expressed) contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; ( 6 ) A certificate or certificates, dated the Closing Date, signed by a duly authorized official of the District satisfactory to the Underwriter, in form and substance satisfactory to the Underwriter, to the effect that (a) the representations and warranties of the District contained in the Purchase Contract 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; (b) no litigation is pending or threatened (i) to restrain or enjoin the execution, sale or delivery of any of the Notes, (ii) in any way contesting or affecting the validity of the Notes, the Purchase Contract, the Resolution, or the Approving Resolutions or (iii) in any way contesting the existence or powers of the District; and (c) no event affecting the District has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the Closing Date any statement or information contained in the Official Statement relating to the District or is not reflected in the Official Statement but should be 11 DTF:601 reflected therein in an order to make the statements and information therein relating to the District not misleading in any material respect; ( 7 ) Two copies of the Official Statement, executed on behalf of the District by an authorized representative of the District; ( 8) Two certified copies of the Approving Resolutions; (9) Evidence that any ratings described in the Official Statement are in full force and effect as of the Closing Date; and ( 10 ) Such additional legal opinions, certificates, proceedings,instruments and other documents as the Underwriter, Underwriter' s Counsel or Note Counsel may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the representations of the District herein and of the statements and information contained in the Official Statement, and the due performance or satisfaction by the Paying Agent at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by any of them in connection with the transactions contemplated hereby and by the Resolution and Official Statement. If the District shall be unable to satisfy the conditions to the Underwriter ' s obligations contained in this Purchase Contract or if the Underwriter ' s obligations shall be terminated for any reason permitted herein, all obligations of the Underwriter hereunder may be terminated by the Underwriter at, or at any time prior to, the Closing Date by written notice to the District and neither the Underwriter nor the District shall have any further obligations hereunder. In the event that the Underwriter fails (other than for a reason permitted by this Purchase Contract) to accept and pay for the Notes at the Closing, the amount of one percent ( 1%) of the aggregate principal amount of the Notes shall be payable by as and for full liquidated damages for such failure and for any and all defaults hereunder on the part of the Underwriter and the acceptance of such amount shall constitute a full release and discharge of all claims and rights of the District against the Underwriter. 4 . Expenses . All expenses and costs incident to the authorization, execution, delivery and sale of the Notes to the Underwriter, including the costs of printing of the Preliminary Official 12 DTF:601 Statement, the Official Statement, the cost of duplicating the Resolution, fees for obtaining CUSIP numbers, expenses relating to the qualification or sale of the Notes under any state blue sky law, the fees of accountants, consultants and rating agencies , the initial fee of the Paying Agent and its counsel in connection with the issuance of the Notes and the fees and expenses of Note Counsel shall be paid from the proceeds of the Notes . In the event that the Notes for any reason are not issued, or to the extent proceeds of the Notes are insufficient or unavailable therefore, any fees, costs and expenses owed by the District to the Paying Agent, which otherwise would have been paid from the proceeds of the Notes, shall be paid by the District. All out-of-pocket expenses of the Underwriter, including traveling and other expenses, including those associated with the California Debt Advisory Commission fee and the fees and expenses of Underwriter' s Counsel (except as otherwise provided above) , shall be paid by the Underwriter. 5 . Obliaation to Provide Updated Information. After the Closing, the District will (a) not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, the Underwriter shall reasonably object in writing or which shall be disapproved by Note Counsel and (b) for so long as the Underwriter is obligated by Rule 15c2-12 to deliver final Official Statements to prospective purchasers if any event relating to or affecting the District shall occur as a result of which it is necessary, in the opinion of counsel for the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to a prospective purchaser, forthwith prepare and furnish to the Underwriter (at the expense of the District for 90 days from the date of Closing, and thereafter at the expense of the Underwriter) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to counsel for the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time the Official Statement is delivered to a prospective purchaser, not misleading. For the purposes of this subsection, the District will furnish such information with respect to itself as the Underwriter may from time to time reasonably request. 13 DTF:601 6 . Notices . Any notice or other communication to be given to the District under this Purchase Contractor may be given by delivering the same in writing in care of the District at the address set forth below and any notice or other communication to be given to the Underwriter may be given by delivering the same in writing to the Underwriter at the address set forth below: District: Midpeninsula Regional Open Space District 330 Distel Circle Los Altos, California 94022 Underwriter: Prudential Securities Incorporated One Embarcadero Center, Suite 3860 San Francisco, California 94111 7 . Survival of Representations and Warranties . The representations and warranties of the District set forth in or made pursuant to this Purchase Contract shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Purchase Contract and regardless of any investigations or statements as to the results thereof made by or on behalf of the Underwriter and regardless of delivery of and payment for the Notes . 8 . Effectiveness . This Purchase Contract shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the duly authorized officer of the District and shall be valid and enforceable as of the time of such acceptance. Very truly yours, PRUDENTIAL SECURITIES INCORPORATED By: ACCEPTED• MIDPENINSULA REGIONAL OPEN SPACE DISTRICT By: General Manager 14 DTF:601 QRRICK, HERRINGTON & SUTCLIFFE November 10, 1992 Direct Dial (415) 773-5674 Board of Directors Midpeninsula Regional Open Space District 330 Distel Circle Los Altos, California 94022 Re: Public Finance Legal Services for Midpeninsula Regional Open Space District 1992 Promissory Note Financing Dear Boardmembers: This is an agreement to provide services to the Midpeninsula Regional Open Space District in connection with its proposed 1992 Promissory Note financing. Our services to the District would include the rendering of all legal services required in the conduct of the proceedings for the issuance of the Notes, including: (1) Consultation with the District, its counsel and its underwriter (hereinafter called the "Underwriter") concerning the Notes, and the timing, terms and structure of the offering thereof. (2) Preparation of the proceedings for the authorization, issuance and sale of the Notes, including the resolution setting forth the terms and conditions of the Notes, their form, date, denominations, and maturity, and providing for the establishment of a fund as security for the Notes to ensure compliance with applicable law. (3) Review, as to those matters related to the issuance and sale of the Notes, of the Official Statement describing the Notes, but we would not be responsible for the preparation or content of such documents. (4) Assistance in connection with securing investment ratings for the Notes, including attendance at and participation in meetings with bond rating agencies, if requested. SF2-8901.1 Old Federal Reserve Bank Building • 400 Sansome Street • San Francisco,California 94111 Telephone 415 392 1122 • Facsimile 415 773 5759 Los Angeles 213 629 2020 • New York 212 326 8800 • Sacramento 916 447 9200 RRICK, HERR I NGTON & SUTCLIFFE Board of Directors Midpeninsula Regional Open Space District November 10, 1992 Page 2 (5) Examination of the proofs of the Notes, the preparation of final closing papers, the organization and conducting of the Note closing. (6) The rendering of a final approving legal opinion on the validity of the Notes and the tax-exempt status of interest represented thereon, and the rendering of such other legal opinions as may be appropriate in connection with the delivery of and receipt for payment for the Notes. (7) Such other legal services as may be incidental to the foregoing. Our services will not include representation of the District in any legal action challenging the validity of the financing. In the event any such services shall become necessary, we would be pleased to perform them on such terms as might be mutually agreed to at that time. Our fee for the legal services described above shall be twenty-five thousand dollars ($25, 000) . If the proposed financing is abandoned for any reason and the District does not sell the Notes, our fee shall be based upon the legal services provided to the date of the abandonment of the financing at our standard hourly rates for the personnel serving the District. In addition to the foregoing, we shall be reimbursed for out-of-pocket expenses, which include long distance telephone call charges, reproduction of documents, facsimile charges, filing fees, secretarial overtime requested by the District or the Underwriter, mailing costs, travel expenses (to the extent requested by the District) , and like expenditures. Reimbursement shall be paid following receipt of the proceedings from the sale of the Notes; provided, however, should the proposed financing be abandoned or discontinued for any reason and the Notes not be sold, the District agrees to reimburse us for all out-of-pocket expenses upon submission of an itemized statement therefor. Expenses such as the costs of printing the necessary legal documents and the Notes themselves shall be incurred directly for the account of the District and shall be paid directly by the District. M-8901A QRRICK, HEIMNGTON & SUTCLIFFE Board of Directors Midpeninsula Regional Open Space District November 10, 1992 Page 3 If the foregoing is satisfactory, kingly have an authorized officer of the District execute a copy of this letter and return it to me. Very truly yours, ORRICK, HERRINGTON & SUTCLIFFE By Antonia Dolar CONFIRMED AND ACCEPTED; MIDPENINSULA REGIONAL OPEN SPACE DISTRICT By General Manager Date: November 1992 . SF2-3901.1 QRRICK, HERRINGTON & SUTCLIFFE November 10, 1992 Direct Dial (4 15) 7 7 3-5 67 4 Board of Directors Midpeninsula Regional Open Space District 330 Distel circle Los Altos, California 94022 Re: Public Finance Legal Services for Midpeninsula Regional Open Space District 1992 Promissory Note Financing Dear Boardmembers: This is an agreement to provide services to the Midpeninsula Regional Open Space District in connection with its proposed 1992 Promissory Note financing. Our services to the District would include the rendering of all legal services required in the conduct of the proceedings for the issuance of the Notes, including: (1) Consultation with the District, its counsel and its underwriter (hereinafter called the "Underwriter") concerning the Notes, and the timing, terms and structure of the offering thereof. (2) Preparation of the proceedings for the authorization, issuance and sale of the Notes, including the resolution setting forth the terms and conditions of the Notes, their form, date, denominations, and maturity, and providing for the establishment of a fund as security for the Notes to ensure compliance with applicable law. (3) Review, as to those matters related to the issuance and sale of the Notes, of the Official Statement describing the Notes, but we would not be responsible for the preparation or content of such documents. (4) Assistance in connection with securing investment ratings for the Notes, including attendance at and participation in meetings with bond rating agencies, if requested. SF2-8901.1 Old Federal Reserve Bank Building • 400 Sansome Street • San Francisco,California 94111 Telephone 415 392 1122 • Facsimile 415 773 5759 Los Angeles 213 629 2020 • New York 212 326 8800 • Sacramento 916 447 9200 PRICK, H ERRINGTON & SUTCLIFFE Board of Directors Midpeninsula Regional Open Space District November 10, 1992 Page 2 (5) Examination of the proofs of the Notes, the preparation of final closing papers, the organization and conducting of the Note closing. (6) The rendering of a final approving legal opinion on the validity of the Notes and the tax-exempt status of interest represented thereon, and the rendering of such other legal opinions as may be appropriate in connection with the delivery of and receipt for payment for the Notes. (7) Such other legal services as may be incidental to the foregoing. Our services will not include representation of the District in any legal action challenging the validity of the financing. In the event any such services shall become necessary, we would be pleased to perform them on such terms as might be mutually agreed to at that time. Our fee for the legal services described above shall be twenty-five thousand dollars ($25, 000) . If the proposed financing is abandoned for any reason and the District does not sell the Notes, our fee shall be based upon the legal services provided to the date of the abandonment of the financing at our standard hourly rates for the personnel serving the District. In addition to the foregoing, we shall be reimbursed for out-of-pocket expenses, which include long distance telephone call charges, reproduction of documents, facsimile charges, filing fees, secretarial overtime requested by the District or the Underwriter, mailing costs, travel expenses (to the extent requested by the District) , and like expenditures. Reimbursement shall be paid following receipt of the proceedings from the sale of the Notes; provided, however, should the proposed financing be abandoned or discontinued for any reason and the Notes not be sold, the District agrees to reimburse us for all out-of-pocket expenses upon submission of an itemized statement therefor. Expenses such as the costs of printing the necessary legal documents and the Notes themselves shall be incurred directly for the account of the District and shall be paid directly by the District. SF2-8901.1 r MRR1CK, HERRINGTON & SUTCLIFFE Board of Directors Midpeninsula Regional Open Space District November 10, 1992 Page 3 If the foregoing is satisfactory, kingly have an authorized officer of the District execute a copy of this letter and return it to me. Very truly yours, ORRICK, �HERRINGTON & SUTCLIFFE By Antonia Dolar CONFIRMED AND ACCEPTED; MIDPENINSULA REGIONAL OPEN SPACE DISTRICT By General Manager Date: November , 1992 . SF2-8901.1 0 0 pen pen Space MIDPENINSULA REGIONAL OPEN SPACE DISTRICT R-92-120 Meeting tin" g 92-30 November 18, 1992 AGENDA ITEM Monterey Peninsula Regional Park District's 20th Anniversary GENERAL MANAGER'S RECOMMENDATION -41 N Adopt the resolution commending the Monterey Peninsula Regional Park District on its 20th anniversary. Discussion: In recognition of Monterey Peninsula Regional Park District's 20th anniversary, a resolution of commendation is being prepared for adoption at your November 18 Special Meeting. The resolution will be presented at the seventh "Not-So-Annuall, Regional Park and Open Space District Conference, hosted by the Monterey Peninsula Regional Park District on November 21 and 22, 1992 . Prepared by: Jean H. Fiddes, District Clerk Contact person: Same as above Open Space . . . for room to breathe 20th Anniversary - 1972.1992 330 Distel Circle - Los Altos, California 94022-1404 Phone: 415-691-1200 - FAX:415-691-0485 e General Manager:Herbert Gren(h Board of Directors:Katherine Duffy,Robert M(Kibbin,Teena Henshaw,Ginny Babbitt,Nonelle Hanko,Betsy Crowder,Richard Bishop L Resolution of Commendation RESOLUTION NO. 92-59 RESOLUTION OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT COMMENDING THE MONTEREY PENINSULA REGIONAL PARK DISTRICT ON ITS 20TH ANNIVERSARY WHEREAS, the Monterey Peninsula Regional Park District was founded by the voters in 1972 to preserve the spectacular and unique Monterey Peninsula park and open space lands; and WHEREAS, since 1972, the District has acquired and permanently preserved nearly 6,500 acres of irreplaceable open space, and has assisted local communities in the preservation of an additional 800 acres; and WHEREAS, the District has established strong, cooperative and mutually beneficial relationships with the cities and other agencies within its jurisdiction, and has been extremely successful in the securing of state bond monies for open space and park land acquisition; and WHEREAS, the District purchased 2.3 miles of railroad right-of-way which now functions as a bike trail along the beautiful and historic Monterey and Pacific Grove coastline; and WHEREAS, the Monterey Peninsula Regional Park District is this year celebrating its 20th Anniversary. NOW, THEREFORE, BE IT RESOLVED that the Board of Directors of the Midpeninsula Regional Open Space District does hereby congratulate and commend the Monterey Peninsula Regional Park District for its achievements, ,accomplishments and exceptional public service over the last 20 years, and extend great wishes for continued success in the preservation. of open space. 6 Open Space ---------------- MIDPENINSULA REGIONAL OPEN SPACE DISTRICT TO: Board of Directors FROM: H. Grench, General Manager DATE: November 13 , 1992 SUBJECT: F. Y. I . Open Space . . . for room to breathe 20th Anniversary 1972-1992 330 Distel Circle Los Altos, California 94022-1404 m Phone: 415-691-1200 FAX: 415-691-0485 ftj General Manager:Herbert Grench Hoard of Directors:Katherine Duffy,Robert M(Kibbin,Teena Henshaw,Ginny Babbitt,Nonette Han ko,Betsy Crowder,Richard Bishop POV 0 4 1992 November 2, 1992 Herbert A. Drench Mid Peninsula Open Space District 330 Distel Circle Los Altos, CA 94022-1402 Dear Herb, I regret that I cannot attend your 20th anniversary dinner this Saturday and so am taking this means to say congratulations and thanks from San Mateo County where the accomplishments of the District have been noteablel Whenever the opportunity comes up, I like to remind people that a very important part of the good financial climate on the Peninsula is due to those persons and organizations that have preserved our open spaces and provided us with our splendid system of parks. The Open Space District and all of you associated with it deserve much credit! With best wishes, I am Si rely, Nita R. Spangler Commissioner, San Mateo County Parks Recreation 970 Edgewood Road Redwood City, CA 94062 Open Space MIDPENINSULA REGIONAL OPEN SPACE DISTRICT November 5, 1992 Congresswoman-elect Anna Eshoo 525 Alma Street Palo Alto, CA 94301 Dear Anna : Congratulations on your sweeping victory! You ran a great campaign and I am proud to be one of your supporters . I was sorry to be unable to attend your victory party Tuesday night . On behalf of the Midpeninsula Regional Open Space District , we all look forward to working with you in the future. I know you will continue to be a strong advocate for environmental issues . I hope the small gathering at my house and the many local contacts I made on your behalf contributed to your success . I wish you well in your exciting new job! Sincerely, Betsy Crolader Director, Ward 6 BC/dmz cc: MROSD Board of Directors Open Space . . . for room to breathe - 20th Anniversary • 1972-1992 330 Distel Circle • Los Altos, California 94022-1404 • Phone:415-691-1200 • FAX: 415-691-0485 e Genera!Manager.Herbert Grench Board of Directors:Katherine Duffy,Robert McKibbin,Teena Henshaw,Gin ny Babbitt,Nonette Hanko,Betsy Crowder,Richard Bishop Open Space MIDPENINSULA REGIONAL OPEN SPACE DISTRICT November 5, 1992 Congresswoman-elect Anna Eshoo 525 Alma Street Palo Alto, CA 94301 Dear Anna : Congratulations on your sweeping victory! You ran a great campaign and I am proud to be one of your supporters . I was sorry to be unable to attend your victory party Tuesday night . On behalf of the Midpeninsula Regional Open Space District , we all look forward to working with you in the future. I know you will continue to be a strong advocate for environmental issues . I hope the small gathering at my house and the many local contacts I made on your behalf contributed to your success . I wish you well in your exciting new job! Sincerely, Betsy Crolder Director, Ward 6 BC/dmz cc: MROSD Board of Directors Open Space . . . for room to breathe - 20th Anniversary - 1972-1992 330 Distel Circle - Los Altos, California 94022-1404 - Phone:415-691-1200 - FAX:415-691-0485 General Manager:Herbert Grench Board of Directors:Katherine Duffy,Robert McKibbin,Teena Henshaw,Ginny Babbitt,Nonette H a nko,Betsy Crowder,Richard Bishop Open Space MIDPENINSULA REGIONAL OPEN SPACE DISTRICT -November 6, 1992 Honorable Henry Mello California State Senate State Capitol Sacramento, CA 95814 Dear Senator Mello: I want to thank you on behalf of the Board of Directors of the Midpeninsula Regional Open Space District for authoring legislation to create the Santa Clara County Open Space Authority. You have a lot of stick-to-itiveness! I have offered our help as they set up their new organization and pursue funding. I was fortunate in being our District 's first general manager and helping get us going, so this is deja vul time. We're looking forward to working with them to preserve as much as possible of remaining quality open space in the county. Let me also reiterate our appreciation of your keeping us informed and your support during the recent budget crisis. You've been a real champion of parks and open space. I 've enjoyed my meetings with you and look forward to working with you in the future. Sincerely yours, Herbert Grench General Manager HG:ej cc: MROSD Board of Directors Ralph Heim Open Space . . . for room to breathe - 20th Anniversary - 1972-1992 330 Distel Circle - Los Altos, California 94022-1404 - Phone:415-691-1200 - FAX: 415-691-0485 General Manager:Herbert Grench Board of Directors:Katherine Duffy,Robert McKibbin,Teena Henshaw,Ginny Babbitt,Nanette Han ko,Betsy Cro N der,Richard Bishop Open Space MIDPENINSULA REGIONAL OPEN SPACE DISTRICT November 9 , 1992 Mr. Ruben Barrales 1116 Foothill Rd, Redwood Citv, CA 94062 Dear Ruben: Congratulations on your election to the San Mateo County Board of Supervisors . Although I have not vet met vou , I supported your campaign because of the favorable recommendation given by several conservationist friends . The Midpeninsula Regional Open Space District has many preserves in San Mateo Countv and we have worked closely with the Supervisors and Park and Recreation Commission . We look forward to continued close contact . We hope you will soon become acquainted with our District , and we will hope to assist you in this orientation . When you have time during the many new duties of your position, Director-elect Wim deWit from Redwood City or I will be delighted to meet with vou . .Again , congratulations and best wishes . Sincerelv, Betsv Crowder Director, Ward 6 BC/dmz cc: MROSD Board of Directors Open Space . . . for room to breathe - 20th Anniversary - 1972-1992 330 Distel Circle - Los Altos, California 94022-1404 - Phone: 415-691-1200 - FAX:415-691-0485 General Manage(:Herbert Grench Board of Directors:Katherine Duffy,Robert McKibbin,Teena Henshaw,Ginny Babbitt,Nonette Han ko,Betsy Crowder,Richard Bishop MUNICIFL -iL FINANCL REPORT Vol. 92-3 October 1992 CONTENTS NEW CALIFORNIA BUDGET IMPACTS LOCAL GOVERNMENTS SEVERELY NEW CALIFORNIA BUDGET IMPACTS LOCAL GOVERNMENTS SEVERELY . . . . .1 As most of our readers know, the State of California experienced an unprecedented budget gridlock in the summer of 1992, as the Legislature and the Governor INTEGRATED FINANCING DISTRICT sought to resolve a gap of$7.9 billion between resources ACT SURVIVES CONSTITUTIONAL and program needs. Much of this amount was needed to CHALLENGE . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 pay off accumulated budget deficits of more than$3 bil- lion incurred since the start of the 1990-91 fiscal year, THE CALIFORNIA BALLOT. . . . . . . . . . . . . .6 which not coincidentally was also the start of California's most severe economic recession since the 1930's.This ar- ticle will briefly summarize the major impacts of the final LEGISLATURE'S 1992 SESSION COMES 1992-93 Budget package on cities, counties, special dis- TO AN END . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 tricts,redevelopment agencies,and school districts. SELECTED CALIFORNIA PUBLIC General Background FINANCE LEGISLATION . . . . . . . . . . . . . . . .9 The State's $7.9 billion budget gap was eventually closed through a combination of expenditure reductions, I. ENACTED LESISLATION one-time transfers and fiscal arrangements,including,in effect, bringing in certain revenues from the future. A A. State Bonds and Notes . . . . . . . . . . . . .9 key element of the budget compromise is a plan to B. State Fiscal Affairs . . . . . . . . . . . . . .10 reduce the State's financial assistance to local govern- C. Special Taxes & Assessments . . . . . .10 ments by$1.3 billion,of which$1.1 billion is intended as D. Local Fiscal Affairs . . . . . . . . . . . . . . .10 a permanent reduction. E. Housing . . . . . . . . . . . . . . . . . . . . . . .12 To understand what the Legislature did,we have to F. Schools . . . . . . . . . . . . . . . . . . . . . . . . .12 go back to the enactment of Proposition 13 in 1978,which drastically cut property taxes, which were, of course, at G. Redevelopment . . . . . . . . . . . . . . . . . .13 that time the major source of funding for most local H. Transportation . . . . . . . . . . . . . . . . . . .13 government agencies. In order to mitigate the impact of I. Miscellaneous . . . . . . . . . . . . . . . . . . .15 Orrick Ranked Number One 11. UNSUCCESSFUL LEGISLATION Bond Counsel Firm A. State Bonds and Notes . . . . . . . . . . . .15 During First Three Quarters of 1992 B. State Fiscal Affairs . . . . . . . . . . . . . .16 Orrick, Herrington & Sutcliffe served as bond C. Special Taxes & Assessments . . . . . .16 counsel for 216 issues totalling $10.5 billion in long D. Local Fiscal Affairs . . . . . . . . . . . . . .16 term municipal new issues during the first three E. Housing . . . . . . . . . . . . . . . . . . . . . . . .17 quarters of 1992, maintaining its ranking as the E Schools . . . . . . . . . . . . . . . . . . . . . . . . .17 number one bond counsel in the nation. Orrick has G. Redevelopment . . . . . . . . . . . . . . . . . . 18 enjoyed this position since 1988. Orrick continues to be ranked number one in California,a position it has H. Transportation . . . . . . . . . . . . . . . . . .18 held for decades. 1. Miscellaneous . . . . . . . . . . . . . . . . . . .19 1 ERRICK, HERRINGTON & SUTCLIFFE Proposition 13,the State provided a o ie block grant In recognition e fiscal difficulties that local of some$835 million to local governn, in 1978-79. In governments will vith the loss of property tax the following year, the Legislature and the Governor revenues, the Legislature enacted several measures that agreed to a permanent mechanism to "bailout" local reduce service mandates at the local level. These governments from the effects of Proposition 13. This measures include certain reduced public hearing require- local assistance program is referred to as "AB 8" (after ments, modified maintenance of effort requirements for the bill enacting the program). health programs, reduced county data reporting The AB 8 program transferred a significant portion demands, and authorization to counties to reduce pay- of the property tax revenues which school districts had ment standards in General Assistance (welfare) received prior to 1978 to cities,counties,and special dis- tricts on a permanent basis. The State,in turn,increased State mandate reductions provide sufficient flexibility to General Fund support to schools to make up for their local governments to absorb the reductions in State assis- loss of property tax revenues. This General Fund sup- tance. port was strengthened (or so its sponsors hoped) by enactment of Proposition 98 in 1988,guaranteeing a min- Special Districts imum percentage of General Fund revenues to schools. SB 617 and SB 844 effect a permanent shift of$375 As a result of the significant growth in assessed valua- million per year of property tax revenues from special tions over the past 14 years,it is estimated that State as- sistance to local governments under the AB 8 program districts to the Educational Revenue Augmentation reached$2.8 billion in 1991-92. Fund. Multicounty districts, hospital districts and dis- tricts governed by a city council or whose governing board has the same membership as a city council were 1992 Budget Act Reductions not included in the legislation. As a major part of the budget compromise to close For each affected special district, the property tax the $7.9 billion gap, "the Legislature and the Governor revenues deemed allocated to such special district in the prior fiscal year, other than those property tax revenues agreed that local government entities would have to bear pledged to debt service (defined in AB3027 to include part of the burden, by the reversal of a part of the AB 8 "only those amounts required to pay debt service in the program. The details for accomplishing the reductions 1991/92 fiscal year on debt instruments issued by a spe- were set out in two of the so-called budget "trailer"bills, cial district for the acquisition of capital assets"), is SB 617 (Chapter 699) and SB 844 (Chapter 700). The reduced by the lesser of 35-40% or 10�70 of that district's basic mechanism used is to shift a set portion of property total annual revenues, from whatever source, as shown tax receipts from different local government agencies to in the most recent State Controller's Report on Financial school districts. This offsets required support for schools Transactions Concerning Special Districts. The specific from the State General Fund,freeing the money for other amount between 35 and 40 percent is to be set by the uses to close the budget gap. Director of Finance at the level necessary to generate the The budget agreement creates in each county an required$375 million. Special rules apply to countywide "Educational Revenue Augmentation Fund" or "ERAF" water districts which do not sell water retail and fire dis- into which is deposited the shifted property taxes from tricts. The legislation also provides for making formal local governments.The ERAF will distribute these funds, recommendations to the County Board of Supervisors first,to K-12 school districts on a proportional basis until with respect to the allocation of the Special District Aug- all districts in the county receive their Proposition 98 mentation Fund by a committee of independent special minimum funding. Money remaining in the ERAF districts. would then be distributed to community college dis- Special districts overall will lose some 2217� of their tricts. property tax revenues, a much larger percentage than cities and counties, but it was felt these districts could more readily make up the difference by raising fees and Cities and Counties charges. The approach taken in the bills differs from that Cities are required to contribute to the ERAF 9% of proposed in AB 3214(Isenberg)which was defeated ear- their property tax revenues, or about $200 million lier in the session. AB 3214 would have stripped each statewide. Counties are required to contribute to the enterprise special district of all property tax revenues at- ERAF a total of $525 million, representing a little less tributable to the district's enterprise activities and would than 9%, of their overall property tax revenues. The im- have left nonenterprise districts unaffected. plementing legislation, however, provides a special al- lowance for local governments impacted by Redevelopment Agencies federally-declared disasters (i.e., earthquake-impacted areas,or Los Angeles)softening somewhat the amount of The budget compromise included a provision for the the reduction. transfer of $205 million from redevelopment agencies -2- around the State to the Education' enue Augmenta- School Dish tion Funds to assist in K-14 school nding. The legisla- tion accomplishes this transfer by requiring all agencies The result of the 1992-93 budget for K-12 schools was to pay their pro-rata share of $205 million to this fund mixed. While the fiction of continued compliance with (the "School Payment"). It allows agencies to use some Proposition 98 was maintained, schools again lost Housing Set-Aside funds to make the School Payment ground in real terms. On the other hand,they did better under certain circumstances,provides limited protection than most other programs funded by the State.Addition- for"existing indebtedness,"and requires that cities make al property taxes were given to schools, and total State and local funding for schools was reported to have in- the an deficiencyin h a g p School Payments b agencies due to p y y y g creased about 4.5% over 1991-92. the inability of the agency to make the School Payment. Although the bill seeks only a one-time School Payment To understand what went on in this year's budget,it on or before May 10, 1993 (for the 1992-93 fiscal year), is necessary to revisit the budget battle of the previous and is less harsh than some expected,many believe that year. In the 1990-91 Fiscal Year, K-14 schools were allo- this bill may become a blueprint for future attempts by cated their Proposition 98 funding based on the original the State to require redevelopment agencies to help pay budget projections of State revenues. When the reces- for schools. sion caused revenues to fall far below these projections, the Governor asserted that schools had received$1.3 bil- Agencies may borrow up to 50% of the amount lion more than their Proposition 98 entitlement would which would otherwise be required to be paid into the have been if the correct revenue had been known at the Low&Moderate Income Housing Fund(the"20%hous- start of the year. To handle this problem,the 1990-91 ap- ing set aside") to make the School Payment, unless ex- ecuted contracts exist which would be impaired by a reduction in the housing set-aside. Agencies may not use or borrow moneys which were in the Housing Fund as of July 1, 1992 to make the School Payment. The Agency may, however, use any other legally available funds to Countdown For make the School Payment, including bond proceeds, Orriek's 1992 land sale proceeds, lease revenues, reserve fund amounts, interest income and other income; provided, MUNICIPAL FINANCE that such amounts are not otherwise legally obligated for other uses. Agencies should consult bond counsel prior REPORT Mailing List to using tax-exempt bond proceeds to make the School Payment. Clean-up Section 33682, added by SB 844, provides a limited degree of protection for "Existing Indebtedness" in the event that agencies would not have funds available in Continuing with this issue of the 1992-93 fiscal year to pay both the School Payment and their other obligations. The law spells out in detail the MUNICIPAL FINANCE what "Existing Indebtedness" qualifies for this ex- REPORT, only those sub- elusion. Generally, Existing Indebtedness must be in- curred prior to the effective date of SB 844(September 2, scribers who specifically indi- 1992). cate an interest in receiving To reduce the School Payment to protect existing in- debtedness, an agency (and the legislative body) must the publication will remain on adopt a resolution making certain findings after a our mailing list. Please take the noticed public hearing no later than December 31,1992. An Agency must enter into a written loan agreement time nozv to fill out and return from the City or County no later than February 15,1993, the enclosed business reply card to obtain funds to make up any deficiency in the School p Payment. Obligations under this agreement are an in- to let us kno7v that you ZUant to debtedness of the redevelopment project area(s). If the School Payment is not made for any reason (including continue to receive the court order), the County Auditor is required, no later MUNICIPAL FINANCE REPORT. than May 15,1993,to reduce the City or County property tax allocation by the amount of the deficiency in the School Payment and is required to make the payment on behalf of the Agency. -3- propriation for Proposition 98 was re by $1.3 bil- sisted on a so-called ;on pill" provision in the im- lion. To avoid harming schools wh.__. had already plementing act, whi, ill provide that if any court budgeted and received this amount, it was treated for strikes down part of the funding arrangements,Proposi- budgetary purposes as a "loan" from the forthcoming tion 98 will be deemed to have been suspended for 1992- 1991-92 Budget Act appropriation for support of K-14 93, so that schools would get the same amount of education . This allowed the State to take$1.3 billion of funding as the compromise legislation intended. the 1991-92 Proposition 98 appropriation and treat it on A final and almost bizarre footnote to this story is the books as"repayment"of the prior year loan. The real that it has been discovered that the legislation designed world result was that schools got$1.3 billion less in 1991- to carry out the $1.1 billion Proposition 98 "loan" be- 92,but everyone could claim that Proposition 98 had not tween the 1991-92 and 1992-93 fiscal years had a techni- been violated or suspended. (The $1.3 billion was used cal error, so no loan actually exists at present. While for other State programs as part of the balancing of the there is reason to believe the Legislature will pass a cor- huge budget gap for the year.) receive measure, since the leadership had agreed to the When 1991-92 came to a close, the exact same prob- compromise formula,if the issue bogs down again there lem occurred. The weak economy depressed revenues to is the possibility that schools could receive extra funding the point where schools once again had received more this year. It is clear the Administration would resist such funding than the minimum Proposition 98 guarantee an outcome, perhaps even going to court, as it would would require,this time by about$1.1 billion.The Cover- throw the 1992-93 budget out of balance by up to$1.1 bil- nor proposed to make a similar"loan",but this and other lion. This question will have to be taken up in January. disagreements about school funding were central to the The import of all of these various machinations is delay in approving the budget until more than two that,in terms of Proposition 98 funds,K-12 schools have t months into the new fiscal year. Much of the dispute in- barely kept up with enrollment growth (thus losing volved not just the dollars in this year,but how the fund- ground to all other cost increases),and will probably not ing base for Proposition 98 would be handled in future see any real improvement for several years. The situa- years. In the end, the Governor got most of what he tion could get even worse. It now looks very likely that wanted, as legislation was adopted to use $1.1 billion the State will run under its revenue estimates for the from 1992-93 funding to "repay" the overappropriation third year in a row. The Commission on State Finance in 1991-92,and other legislation reduced the Proposition ("COSF") estimates this will result in about a $200 mil- 98 base calculation to take account of the transfer of$1.3 lion"overpayment" in 1992-93 compared to the Proposi- billion in property taxes from cities,counties and special tion 98 minimum guarantee. However,since the 1992-93 districts to schools. Budget Act attempts to guarantee K-12 schools the$4,185 Legislative Democrats achieved one victory in the per pupil funding,there may not be—as there was in the budget battle by providing additional funding to schools past two years—an effort to shift the overpayment into so that the per-pupil money was the same as in 1991-92 a loan from the next year, especially as 1993-94 has al- (about $4,185). This money, amounting to about $732 ready"loaned"schools some$325 million. million, was "borrowed" from Proposition 98 entitle- Amore serious problem identified by the COSF is meats for the next two fiscal years,and must be"repaid" that the State's 1993-94 Budget will likely, for the first half in each of the next two years,but only if the funding time in memory,be based on revenues which are below remaining after the "loan repayment" gives schools at those of the prior year (1992-93) in absolute terms. If least the same$4,185 per pupil.Otherwise,the loan con- such a scenario materializes, the Proposition 98 funding tinues into future years. guarantee would automatically be reduced by an es- As the drama came to a close, it became apparent timated$200 million from 1992-93,resulting in per pupil that some of the fancy legislative footwork involved funding of around $4,020. This would mean, for one might be challenged in court. The Governor therefore in- thing, that there would be no "loan repayment" next year,thus extending the time for repayment even further CALIFORNIA SCHOOL FINANCE out into future years. It is possible the Legislature and Governor will attempt to keep at least the$4,185 funding Members of Orrick's School Finance/General floor in 1993-94, but that would require additional Obligation Bond Practice Group have completed a resources to be taken from other State programs, which pamphlet entitled "California School District Bond will be difficult. Elections: Carnhaign Finance and Political Coruiuct Is- The prospect is that until the economy improves sues", which is intended to assist California school enough to push State revenues up significantly, and al- districts that are planning a general obligation bond lows all these "loans from the future" to be "repaid", election. To obtain a copy of this publication, con- Proposition 98 funding will be stuck at$4,185 per pupil, tact Gina Gornick, Public Finance Department Ad- with no allowance for inflation. In real terms,therefore, miiiistrator, in our San Francisco offices at (415) schools will probably be slowly slipping backward for 773-5729. the next two or three years,at least insofar as State fund- -4- ing is concerned. Still,as noted at the 1--ginning of this cause the assessments require a determination of special article, schools are doing better than i and welfare benefit,it might be c' ined that agricultural property recipients, and they should receive a., offset to these would not benefit i. the scheduled improvements, Proposition 98 woes from increased property tax and the property would therefore escape assessment. receipts. Yet,at some later point in time,the agricultural property might be upzoned for development,perhaps as commer- cial or industrial property but, because the assessments More Information were locked in at an earlier moment,the property would For additional information on the 1992-93 State remain unassessed — and the property owner might Budget or its impact on local governments, please call thereby reap a windfall. With contingent assessments James W.Bruner,Jr.or Lyle Defenbangh of our Governmen- under the IFD Act, however, such an upzoning might tal Affairs Department (916) 447-9200, Robert Feyer (415) trigger an assessment — resulting in a more equitable 773-5886,John Knox regarding Redevelopment Agencies distribution of the costs. (415) 773-5626 or Steven Spitz regarding Special Districts The IFD Act also authorizes local agencies to use its (415)773-5721. provisions "instead of" or "in conjunction with" other methods of financing the costs of capital facilities. Gov't Code § 53175.5. The IFD Act also excuses compliance With the Special Assessment Investigation, Limitation INTEGRATED FINANCING and Majority Protest Act of 1931 (the "Majority Protest DISTRICT ACT SURVIVES Act"). Gov't Code§53178. CONSTITUTIONAL CHALLENGE Challenge to the Financing The Court of Appeal of the State of California(Third Starting 1985, Sacramento County started proceed- Appellate District) has upheld the Integrated Financing ings to establish an assessment district in the Bradshaw District Act (the "IFD Act") in conjunction with an as- Road/U.S.50 corridor,ultimately using the IFD Act. The sessment district financing in Sacramento County. Or- final ordinance was adopted in 1988. The County's ac- rick, Herrington & Sutcliffe successfully defended the tions immediately fell under attack. A property owner, County in Southern Pacific Pipe Lines v.Sacramento County Southern Pacific Pipe Lines,filed an action seeking to in- Board of Supervisors, in which the court rejected validate the assessments. SPPL contended that the numerous challenges to both the IFD Act and to County had (1)erred in making its special benefit deter- Sacramento County's proceedings under that act. minations, (2) failed to comply with the relevant ena- Among other things, the court (1) confirmed that the bling statutes, and (3) violated various constitutional scope of review in judicial proceedings that challenge the provisions, including the provisions of Article XVI, sec- establishment of assessment districts is sharply limited, tion 19, of the California Constitution, which explicitly (2) upheld the County's finding of special benefit, not- subjects chartered counties to majority protest proce tial property from the district, and (3) ruled that the withstanding the County's decision to exclude residen- dares,such as those set forth in the Majority Protest Act. SPPL asked the Court to declare the relevant County Majority Protest Act does not apply in proceedings resolution and ordinance invalid. under the IFD Act. The court's decision establishes the viability of using In the trial court, the County moved for summary the IFD Act in conjunction with establishing assessment judgment, and the motion was granted. The court districts under traditional assessment laws. entered judgment in the County's favor, and SPPL then appealed. The Integrated Financing District Act 1. The Determination of Special Benefit —A The Legislature enacted the IFD Act in 1986. (The act fundamental prerequisite to the validity of a special as- is codified at Government Code sections 53175-53199.) A sessment is that the improvement financed by the as- novel feature of the IFD Act is its authorization of "con- sessment must confer some "special benefit," i.e., enhanced economic benefit, on the assessed property. tingent assessments," i.e.,assessments that become pay- In the Sacramento County case, SPPL challenged the able if a property owner applies for and receives an County's special benefit determination on several increase in land use entitlements. Gov't Code 53187. grounds,including the exclusion of residential property For example, in developing areas, scheduled road- and the County's decision not to contribute to the Dis- way improvements might abut industrial, commercial, trict from the County's general funds for the anticipated u residential,and agricultural property. Under traditional general public benefit to be derived from the scheduled assessment district financings,the assessments are fixed improvements. The court,however,rejected these chal- when the determination of special benefit is made. Be- lenges. -5- R4ALIFORNIA ember Services Division ®P.O. Box 942704 ^ 1992 Sacramento, CA 94229-2704 Telecommunications Device For The Deaf - (916) 326-3240 J (916) 326-3499 C25 -� +/1 A,:) 0970 09/30/92=-- JEAN H. FIDDES �� ADMIN. SERVICES MANAGER MIDPENINSULA REGIONAL OPEN SPACE DIST. 201 SAN ANTONIO CIRCLE, C-135 MOUNTAIN VIEW CA 94040 Our records i date your agency has a Surplus Asset Account for fiscal year 92/93) for the category or categories listed below in the amounts own, based--upon-the__actuarial valuation for 1991. Please note, any balance you may have from the previous years1 Surplus Asset Account is not reflected in the account balance(s) stated below. Please read the enclosed circular letter for instructions on how this surplus can be used. Miscellaneous Category $ 41, 877 . 00 n/ Safety Category $ 0. 00 �q,� The amounts) shown above should equal the NEW SURPLUS amou_n s s own at the bottomof_your "Actuarial Balance Sheet(s) for June 30, 19910 which was sent to you with Circular Letter No.--200-375 dated-April_--17 _1992 . If the amounts do-not-agree, you should send copies of this form and your Actuarial Balance Sheet to PERS, Actuarial Office, P.O. Box 942715, Sacramento, CA 94229-2715 for resolution. A letter will be sent to you in late October providing you with the total funds available for your use, including interest. GARY M. JONES, CHIEF MEMBER SERVICES DIVISION California Public Employees' Retirement System Lincoln Plaza - 400 P Street - Sacramento, CA 95814 MUNICIFiL FINANCL REPORT Vol. 92-3 October 1992 CONTENTS NEW CALIFORNIA BUDGET IMPACTS LOCAL GOVERNMENTS SEVERELY NEW CALIFORNIA BUDGET IMPACTS LOCAL GOVERNMENTS SEVERELY . . . . .1 As most of our readers know, the State of California experienced an unprecedented budget gridlock in the summer of 1992, as the Legislature and the Governor INTEGRATED FINANCING DISTRICT sought to resolve a gap of$7.9 billion between resources ACT SURVIVES CONSTITUTIONAL and program needs. Much of this amount was needed to CHALLENGE . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 pay off accumulated budget deficits of more than$3 bil- lion incurred since the start of the 1990-91 fiscal year, THE CALIFORNIA BALLOT. . . . . . . . . . . . . .6 which not coincidentally was also the start of California's most severe economic recession since the 1930's.This ar- ticle will briefly summarize the major impacts of the final LEGISLATURE'S 1992 SESSION COMES 1992-93 Budget package on cities, counties, special dis- TO AN END . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 tricts,redevelopment agencies,and school districts. SELECTED CALIFORNIA PUBLIC General Background FINANCE LEGISLATION . . . . . . . . . . . . . . . .9 The State's $7.9 billion budget gap was eventually closed through a combination of expenditure reductions, one-time transfers and fiscal arrangements,including,in I. ENACTED LESISLATION 0 effect, bringing in certain revenues from the future. A 0 A. State Bonds and Notes . . . . . . . . . . . . .9 key element of the budget compromise is a plan to B. State Fiscal Affairs . . . . . . . . . . . . . . .10 reduce the State's financial assistance to local govern- C. Special Taxes & Assessments . . . . . .10 ments by$1.3 billion,of which$1.1 billion is intended as D. Local Fiscal Affairs . . . . . . . . . . . . . . .10 a permanent reduction. E. Housing . . . . . . . . . . . . . . . . . . . . . . . .12 To understand what the Legislature did,we have to F. Schools . . . . . . . . . . . . . . . . . . . . . . . . .12 go back to the enactment of Proposition 13 in 1978,which drastically cut property taxes, which were, of course, at G. Redevelopment . . . . . . . . . . . . . . . . . .13 that time the major source of funding for most local H. Transportation . . . . . . . . . . . . . . . . . . .13 government agencies. In order to mitigate the impact of I. Miscellaneous . . . . . . . . . . . . . . . . . . .15 11. UNSUCCESSFUL LEGISLATION Orrick Ranked Number One Bond Counsel Firm A. State Bonds and Notes . . . . . . . . . . . .15 During First Three Quarters of 1992 B. State Fiscal Affairs . . . . . . . . . . . . . . .16 Orrick, Herrington & Sutcliffe served as bond C. Special Taxes & Assessments . . . . . .16 counsel for 216 issues totalling $10.5 billion in long D. Local Fiscal Affairs . . . . . . . . . . . . . . .16 term municipal new issues during the first three E. Housing . . . . . . . . . . . . . . . . . . . . . . . .17 quarters of 1992, maintaining its ranking as the F. Schools . . . . . . . . . . . . . . . . . . . . . . . . .17 number one bond counsel in the nation. Orrick has G. Redevelopment . . . . . . . . . . . . . . . . . .IS enjoyed this position since 1988. Orrick continues to be ranked number one in California,a position it has H. Transportation . . . . . . . . . . . . . . . . . . .18 held for decades. 1. Miscellaneous . . . . . . . . . . . . . . . . . . .19 QRRICK, HERRINGTON & SUTCLIFFE Proposition 13,the State provided a one-time block grant In recognition of the fiscal difficulties that local of some$835 million to local govern- in 1978-79. In governments will with the loss of property tax- the following year, the Legislature the Governor revenues, the Legi reenacted several measures that agreed to a permanent mechanism to "bailout" local reduce service mandates at the local level. These governments from the effects of Proposition 13. This measures include certain reduced public hearing require- local assistance program is referred to as "AB 8" (after ments, modified maintenance of effort requirements for the bill enacting the program). health programs, reduced county data reporting The AB 8 program transferred a significant portion demands, and authorization to counties to reduce pay- of the property tax revenues which school districts had ment standards in General Assistance (welfare) received prior to 1978 to cities,counties,and special dis- programs. It is very uncertain whether these and other tricts on a permanent basis. The State,in turn,increased State mandate reductions provide sufficient flexibility to General Fund support to schools to make up for their local governments to absorb the reductions in State assis- loss of property tax revenues. This General Fund sup- tance. port was strengthened (or so its sponsors hoped) by enactment of Proposition 98 in 1988,guaranteeing a min- Special Districts imum percentage of General Fund revenues to schools. As a result of the significant growth in assessed valua_ SB 617 and 5B 844 effect a permanent shift of$375 million per year of property tax revenues from special lions over the past 14 years,it is estimated that State as- sistance to local governments under the AB 8 program districts to the Educational Revenue Augmentation reached$2.8 billion in 1991-92. Fund. Multicounty districts, hospital districts and dis- tricts governed by a city council or whose governing board has the same membership as a city council were 1992 Budget Act Reductions not included in the legislation. For each affected special district, the property tax As a major part of the budget compromise to close revenues deemed allocated to such special district in the the $7.9 billion gap, "the Legislature and the Governor prior fiscal year, other than those property tax revenues agreed that local government entities would have to bear pledged to debt service (defined in AB3027 to include part of the burden, by the reversal of a part of the AB 8 only those amounts required to pay debt service in the program. The details for accomplishing the reductions 1991/92 fiscal year on debt instruments issued by a spe- were set out in two of the so-called budget"trailer"bills, cial district for the acquisition of capital assets"), is SB 617 (Chapter 699) and SB 844 (Chapter 700). The reduced by the lesser of 35-40% or 10% of that district's basic mechanism used is to shift a set portion of property total annual revenues, from whatever source, as shown tax receipts from different local government agencies to in the most recent State Controller's Report on Financial school districts. This offsets required support for schools Transactions Concerning Special Districts. The specific from the State General Fund,freeing the money for other amount between 35 and 40 percent is to be set by the uses to close the budget gap. Director of Finance at the level necessary to generate the The budget agreement creates in each county an required$375 million. Special rules apply to countywide "Educational Revenue Augmentation Fund" or"ERAF" water districts which do not sell water retail and fire dis- into which is deposited the shifted property taxes from tricts. The legislation also provides for making formal local governments.The ERAF will distribute these funds, recommendations to the County Board of Supervisors first, to K-12 school districts on a proportional basis until with respect to the allocation of the Special District Aug- all districts in the county receive their Proposition 98 mentation Fund by a committee of independent special minimum funding. Money remaining in the ERAF districts. would then be distributed to community college dis- Special districts overall will lose some 22% of their tricts. property tax revenues, a much larger percentage than cities and counties, but it was felt these districts could more readily make up the difference by raising fees and Cities and Counties charges. The approach taken in the bills differs from that Cities are required to contribute to the ERAF 9% of proposed in AB 3214(Isenberg)which was defeated ear- their property tax revenues, or about $200 million lier in the session. AB 3214 would have stripped each statewide. Counties are required to contribute to the enterprise special district of all property tax revenues at- ERAF a total of $525 million, representing a little less tributable to the district's enterprise activities and would than 9% of their overall property tax revenues. The im- have left nonenterprise districts unaffected. plementing legislation, however, provides a special al- lowance for local governments impacted by Redevelopment Agencies federally-declared disasters (i.e., earthquake-impacted areas,or Los Angeles)softening somewhat the amount of The budget compromise included a provision for the the reduction. transfer of $205 million from redevelopment agencies -2- around the State to the Education venue Augmenta- School Dist s tion Funds to assist in K-14 schoo0nding. The legisla- tion accomplishes this transfer by requiring all agencies The result of the 1992-93 budget for K-12 schools was to pay their pro-rata share of $205 million to this fund mixed. While the fiction of continued compliance with (the "School Payment"). It allows agencies to use some Proposition 98 was maintained, schools again lost Housing Set-Aside funds to make the School Payment ground in real terms. On the other hand,they did better under certain circumstances,provides limited protection than most other programs funded by the State.Addition- for"existing indebtedness,"and requires that cities make al property taxes were given to schools, and total State up any deficiency in School Payments by agencies due to and local funding for schools was reported to have in- the inability of the agency to make the School Payment. creased about 4.5% over 1991-92. Although the bill seeks only a one-time School Payment To understand what went on in this year's budget,it on or before May 10, 1993 (for the 1992-93 fiscal year), is necessary to revisit the budget battle of the previous and is less harsh than some expected,many believe that year. In the 1990-91 Fiscal Year, K-14 schools were allo- this bill may become a blueprint for future attempts by cated their Proposition 98 funding based on the original the State to require redevelopment agencies to help pay budget projections of State revenues. When the reces- for schools. sion caused revenues to fall far below these projections, the Governor asserted that schools had received$1.3 bil- Agencies may borrow up to 50% of the amount lion more than their Proposition 98 entitlement would which would otherwise be required to be paid into the have been if the correct revenue had been known at the Low&Moderate Income Housing Fund(the"20%hous- start of the year. To handle this problem,the 1990-91 ap- ing set aside") to make the School Payment, unless ex- ecuted contracts exist which would be impaired by a reduction in the housing set-aside. Agencies may not use or borrow moneys which were in the Housing Fund as of July 1, 1992 to make the School Payment. The Agency may, however, use any other legally available funds to Countdown For make the School Payment, including bond proceeds, land sale proceeds, lease revenues, reserve fund Orrick's 1992 amounts, interest income and other income; provided, that such amounts are not otherwise legally obligated for MUNICIPAL FINANCE other uses. Agencies should consult bond counsel prior REPORT Mailing List to using tax-exempt bond proceeds to make the School Payment. Clean-up Section 33682, added by SB 844, provides a limited degree of protection for "Existing Indebtedness" in the event that agencies would not have funds available in Continuing with this issue of the 1992-93 fiscal year to pay both the School Payment and their other obligations. The law spells out in detail the MUNICIPAL FINANCE what "Existing Indebtedness" qualifies for this ex- REPORT, only those Sub- clusion. Generally, Existing Indebtedness must be in- curred prior to the effective date of SB 844 (September 2, scribers who specifically indi- 1992). To reduce the School Payment to protect existing in- cate an interest in receiving debtedness, an agency (and the legislative body) must the publication will remain on adopt a resolution making certain findings after a our mailing list. Please take the noticed public hearing no later than December 31,1992. An Agency must enter into a written loan agreement time now to fill out and return from the City or County no later than February 15,1993, the enclosed business reply card to obtain funds to make up any deficiency in the School Payment. Obligations under this agreement are an in- to let its knozv that you ivant to debtedness of the redevelopment project area(s). If the School Payment is not made for any reason (including continue to receive the court order), the County Auditor is required, no later MUNICIPAL FINANCE REPORT. than May 15,1993,to reduce the City or County property tax allocation by the amount of the deficiency in the School Payment and is required to make the payment on behalf of the Agency. -3- propriation for Proposition 98 was reiliced by $1.3 bil- sisted on a so-called "poison pill" provision in the im- lion. To avoid harming schools i had already plementing act, w will provide that if any court budgeted and received this amount, ,vas treated for strikes down part< funding arrangements,Proposi- budgetary purposes as a "loan" from the forthcoming tion 98 will be deemed to have been suspended for 1992- 1991-92 Budget Act appropriation for support of K-14 93, so that schools would get the same amount of �` 4 education. This allowed the State to take$1.3 billion of funding as the compromise legislation intended. 1 the 1991-92 Proposition 98 appropriation and treat it on A final and almost bizarre footnote to this story is !!!! the books as"repayment"of the prior year loan. The real that it has been discovered that the legislation designed world result was that schools got$1.3 billion less in 1991- to carry out the $1.1 billion Proposition 98 "loan" be- 92,but everyone could claim that Proposition 98 had not tween the 1991-92 and 1992-93 fiscal years had a techni- been violated or suspended. (The $1.3 billion was used cal error, so no loan actually exists at present. While ! for other State programs as part of the balancing of the there is reason to believe the Legislature will pass a cor- huge budget gap for the year.) rective measure, since the leadership had agreed to the When 1991-92 came to a close, the exact same prob- compromise formula,if the issue bogs down again there lem occurred. The weak economy depressed revenues to is the possibility that schools could receive extra funding the point where schools once again had received more this year. It is clear the Administration would resist such funding than the minimum Proposition 98 guarantee an outcome, perhaps even going to court, as it would would require,this time by about$1.1 billion.The Gover- throw the 1992-93 budget out of balance by up to$1.1 bil- nor proposed to make a similar"loan",but this and other lion. This question will have to be taken up in January. disagreements about school funding were central to the The import of all of these various machinations is delay in approving the budget until more than two that,in terms of Proposition 98 funds,K-12 schools have { months into the new fiscal year. Much of the dispute in- barely kept up with enrollment growth (thus losing volved not just the dollars in this year,but how the fund- ground to all other cost increases),and will probably not ing base for Proposition 98 would be handled in future see any real improvement for several years. The situa- years. In the end, the Governor got most of what he tion could get even worse. It now looks very likely that wanted, as legislation was adopted to use $1.1 billion the State will run under its revenue estimates for the from 1992-93 funding to "repay" the overappropriation third year in a row. The Commission on State Finance in 1991-92,and other legislation reduced the Proposition ("COSF") estimates this will result in about a $200 mil- 98 base calculation to take account of the transfer of$1.3 lion "overpayment"in 1992-93 compared to the Proposi- billion in property taxes from cities,counties and special tion 98 minimum guarantee. However,since the 1992-93 districts to schools. Budget Act attempts to guarantee K-12 schools the$4,185 Legislative Democrats achieved one victory in the per pupil funding,there may not be—as there was in the budget battle by providing additional funding to schools past two years—an effort to shift the overpayment into so that the per-pupil money was the same as in 1991-92 a loan from the next year, especially as 1993-94 has al- (about $4,185). This money, amounting to about $732 ready"loaned"schools some$325 million. million, was "borrowed" from Proposition 98 entitle- A more serious problem identified by the COSF is ments for the next two fiscal years,and must be"repaid" that the State's 1993-94 Budget will likely, for the first half in each of the next two years,but only if the funding time in memory,be based on revenues which are below remaining after the "loan repayment" gives schools at those of the prior year (1992-93) in absolute terms. If least the same$4,185 per pupil.Otherwise,the loan con- such a scenario materializes, the Proposition 98 funding tinues into future years. guarantee would automatically be reduced by an es- As the drama came to a close, it became apparent timated$200 million from 1992-93,resulting in per pupil that some of the fancy legislative footwork involved funding of around $4,020. This would mean, for one might be challenged in court. The Governor therefore in- thing, that there would be no "loan repayment" next year,thus extending the time for repayment even further CALIFORNIA SCHOOL FINANCE out into future years. It is possible the Legislature and Governor will attempt to keep at least the$4,185 funding Members of Orrick's School Finance/General floor in 1993-94, but that would require additional Obligation Bond Practice Group have completed a resources to be taken from other State programs, which pamphlet entitled "California School District Bond will be difficult. Elections: Campaign Finance and Political Conduct Is- The prospect is that until the economy improves sues", which is intended to assist California school enough to push State revenues up significantly, and al- districts that are planning a general obligation bond election. To obtain a copy of this publication, con- lows all these "loans from the future" to be "repaid", tact Gina Gornick, Ptiblic Finance Department Ad- Proposition 98 funding will be stuck at$4,185 per pupil, ministrator, in our San Francisco offices at (415) with no allowance for inflation. In real terms,therefore, 773-5729. schools will probably be slowly slipping backward for the next two or three years,at least insofar as State fund- -4- ing is concerned. Still, as noted at the',-ginning of this cause the assessments require a determination of special article, schools are doing better than h and welfare benefit,it might be pined that agricultural property recipients, and they should receive offset to these would not benefit . _t the scheduled improvements, Proposition 98 woes from increased property tax and the property would therefore escape assessment. receipts. Yet,at some later point in time,the agricultural property might be upzoned for development,perhaps as commer- cial or industrial property but, because the assessments More Information were locked in at an earlier moment,the property would For additional information on the 1992-93 State remain unassessed — and the property owner might Budget or its impact on local governments, please call thereby reap a windfall. With contingent assessments James W Bruner,Jr.or Lyle Defenbangh of our Governmen- under the IFD Act, however, such an upzoning might tal Affairs Department (916) 447-9200, Robert Feyer (415) trigger an assessment — resulting in a more equitable 773-5886,John Knox regarding Redevelopment Agencies distribution of the costs. (415) 773-5626 or Steven Spitz regarding Special Districts The IFD Act also authorizes local agencies to use its (415) 773-5721. provisions "instead of" or "in conjunction with" other methods of financing the costs of capital facilities. Gov't Code § 53175.5. The IFD Act also excuses compliance INTEGRATED FINANCING With the Special Assessment Investigation, Limitation and Majority Protest Act of 1931 (the "Majority Protest DISTRICT ACT SURVIVES Act"). Gov't Code§53178. CONSTITUTIONAL CHALLENGE Challenge to the Financing The Court of Appeal of the State of California(Third Starting 1985, Sacramento County started proceed- Appellate District) has upheld the Integrated Financing ings to establish an assessment district in the Bradshaw District Act (the "IFD Act") in conjunction with an as- Road/U.S.50 corridor,ultimately using the IFD Act. The sessment district financing in Sacramento County. Or- final ordinance was adopted in 1988. The County's ac- rick, Herrington & Sutcliffe successfully defended the tions immediately fell under attack. A property owner, County in Southern Pacific Pipe Lines v.Sacramento County Southern Pacific Pipe Lines,filed an action seeking to in- Board of Supervisors, in which the court rejected validate the assessments. SPPL contended that the numerous challenges to both the IFD Act and to Sacramento County's proceedings under that act. County had (1)erred in making its special benefit deter- Among other things, the court (1) confirmed that the minations, (2) failed to comply with the relevant ena- bling statutes, and (3) violated various constitutional scope of review in judicial proceedings that challenge the provisions, including the provisions of Article XVI, sec- establishment of assessment districts is sharply limited, tion 19, of the California Constitution, which explicitly (2) upheld the County's finding of special benefit, not- subjects chartered counties to majority protest proce- withstanding the County's decision to exclude residen- dures,such as those set forth in the Majority Protest Act. tial property from the district, and (3) ruled that the SPPL asked the Court to declare the relevant County Majority Protest Act does not apply in proceedings resolution and ordinance invalid. under the IFD Act. The court's decision establishes the viability of using In the trial court, the County moved for summary the IFD Act in conjunction with establishing assessment judgment, and the motion was granted. The court districts under traditional assessment laws. entered judgment in the County's favor, and SPPL then appealed. The Integrated Financing District Act 1. The Determination of Special Benefit —A The Legislature enacted the IFD Act in 1986. (The act fundamental prerequisite to the validity of a special as- iscodified at Government Code sections 53175-53199.) A sessment must confer some "special benefit," i.e., sessment is that the improvement financed by the as- novel feature of the IFD Act is its authorization of"con- tingent assessments;' i.e.,assessments that become pay- enhanced economic benefit, on the assessed property. In the Sacramento County case, SPPL challenged the able if a property owner applies for and receives an County's special benefit determination on several increase in land use entitlements. Gov't Code§53187. grounds,including the exclusion of residential property For example, in developing areas, scheduled road- and the County's decision not to contribute to the Dis- way improvements might abut industrial, commercial, trict from the County's general funds for the anticipated 01) residential,and agricultural property. Under traditional general public benefit to be derived from the scheduled assessment district financings, the assessments are fixed improvements. The court,however,rejected these chal- when the determination of special benefit is made. Be- lenges. -5-