Resolution 1991-08
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RESOLUTION NO. 91-8
RESOLUTION AUTHORIZING ISSUANCE OF BONDS
COUNTRY ESTATES - PHASE I ASSESSMENT DISTRICT
The City Council of the City of Gilroy resolves:
section 1. RECITALS. On December 17, 1990, the City Council
of the City of Gilroy adopted its resolution of intention to order
improvements in Cou!"'try Estates - Phase!.': Assessl'['l~mt ~i..strir.t, city 1Iilf
of Gilroy, Santa Clara County, California, under the provisions of
the Municipal Improvement Act of 1913 (the "Act"), as amended.
Proceedings taken under the Act led to the levy of a special
assessment by the City Council against parcels of land within the
assessment district in the total amount of $4,030,000.00. These
assessments were recorded in the office of the County Recorder of
the County of Santa Clara, and thereupon became a lien on each
parcel assessed. The period within which parcel owners might pay
their assessments in cash without interest has been waived.
section 2. ISSUANCE OF BONDS. The City Council hereby
authorizes the issuance of improvement bonds under the provisions
of the Improvement Bond Act of 1915 to represent unpaid assessments
in the amount of $4,030,000.00. Each bond shall be.designated,
"Limited Obligation Improvement Bond, City of Gilroy, Country
Estates - Phase I Assessment District, Series No. 91-1." Bonds
shall be dated March 13, 1991, and issued in denominations of $5000
or integral multiples thereof. Principal amounts of maturities and
interest rates on the bonds shall be as set forth in the bond
purchase agreement.
Section 3. APPOINTMENT OF PAYING AGENT, REGISTRAR AND
TRANSFER AGENT. The city Council hereby appoints the Bank of
America National Trust and savings Association as paying agent,
registrar and transfer agent for the bonds in accordance with an
agreement between the City of Gilroy and the Bank of America.
section 4. FORM AND EXECUTION. Bonds shall be issued as
fully registered bonds substantially in the form set forth as
Exhibit A to this resolution. The bonds shall be signed by the
City Treasurer and the City Clerk and the seal of the City shall be
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affixed. Both signatures and seal may be reproduced on the bonds
by facsimile, but upon its registration or reregistration each bond
shall be authenticated by the manual signature of the registrar.
The registrar 'shall assign to each bond authenticated and
registered by it a distinctive letter, or number, or letter and
number, and shall maintain a record thereof which shall be
available to the city for inspection.
section 5. ESTABLISHMENT OF SPECIAL FUNDS. For administering
the proceeds of the sale of bonds and payment of interest and
principal on the bonds, there are hereby es~ablished five funds to
be known as the improvement fund, the redemption fund, the special
reserve fund, the investment earnings fund and the arbitrage rebate
fund, respectively, for Country Estates - Phase I Assessment
District.
section 5.1. IMPROVEMENT FUND. Except as provided in section
5.3, proceeds of sale of the bonds, together with all amounts paid
on the assessments before bond issuance, shall be deposited in the
improvement fund to be maintained by the City Treasurer.
Disbursements from the improvement fund shall be made by the city
Treasurer in accordance with the budget of estimated costs and
expenses set forth in the engineer's report heretofore approved by
the City Council, which report and budget are subject to
modification by the City council from time to time as prescribed by
the Act.
Section 5.2. REDEMPTION FUND. The redemption fund shall be
maintained by the City Treasurer. All payments of principal and
interest installments on the assessments, together with penalties,
if any, shall be deposited in the redemption fund, which shall be a
trust fund for the benefit of the bondholders. Payment of the
bonds at maturity, or at redemption before maturity, and all
interest on the bonds shall be made from the redemption fund. The
City Treasurer shall deposit into the redemption fund, from the
proceeds of the sale of the bonds, the amount of $302,250.00, which
shall be applied to payment of the first payable interest on the
bonds until fully expended.
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section 5.3. SPECIAL RESERVE FUND. There shall be deposited
into the special reserve fund the amount of $342,550.00 from the
proceeds of the sale of bonds. That amount, less any amounts
transferred to the redemption fund pursuant to section 8884 of the
Streets and Highways Code, shall constitute the "Reserve
Requirement" for the bonds. The special reserve fund shall be
maintained by the City Treasurer.
A. During the term of the bonds, the amount in the special
reserve fund shall be available for transfer into the redemption
fund in accordance with section 8808 of the Streets and Highways
Code. The amount so advanced shall be reimbursed to the special
reserve fund from the proceeds of redemption or sale of the parcel
for which payment of delinquent assessment installments was made
from the special reserve fund.
B. If any assessment is prepaid before final maturity of the
bonds, the amount of principal which the assessee is required to
prepay shall be reduced by an amount which is in the same ratio to
the original amount of the special reserve fund as the original
amount of the prepaid assessment bears to the total amount of
unpaid assessments originally securing the Bonds. This reduction
in the amount of principal prepaid shall be balanced by a transfer
from the special reserve fund to the redemption fund in the same
amount.
C. The amount maintained in the special reserve fund will
never exceed the Reserve Requirement. Proceeds of investment of
the special reserve fund shall be deposited in the investment
earnings fund.
D. When the amount in the special reserve fund equals or
exceeds the amount required to retire the remaining unmatured bonds
(whether by advance retirement or otherwise), the amount of the
special reserve fund shall be transferred to the redemption fund,
and the remaining installments of principal and interest not yet
due from assessed property owners shall be cancelled without
payment.
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section 5.4. INVESTMENT EARNINGS FUND. Proceeds of the
investment of amounts in the improvement fund and the special
reserve fund will be deposited in the investment earnings fund. As
of September 2 of each year during the term of the bonds, the City
Treasurer shall determine whether any portion of investment
earnings must be rebated to the united States pursuant to section
148 of the unitp-d States Internal Revenue Code and regulations
adopted thereund~r. Any amounts required to be rebated will be
transferred to the arbitrage rebate fund, and the balance will be
transferred as follows:
(a) To the extent that the balance in the special reserve fund
is less than the Reserve Requirement, a transfer will be made from
the investment earnings fund to the special reserve fund.
(b) The remaining balance in the investment earnings fund, if
any, will be transferred to the improvement fund until the
improvement is completed and the improvement fund is closed;
thereafter the balance in the investment earnings fund will be
transferred to the redemption fund to be used, in the discretion of
the City Treasurer, as a credit upon the annual installments of
assessment or for the advance retirement of bonds.
The City Treasurer is authorized to retain independent
attorneys, accountants and other consultants to assist in complying
with Federal requirements.
section 5.5. ARBITRAGE REBATE FUND. Amounts in the arbitrage
rebate fund shall be invested in the same manner as amounts in the
other funds and shall be held in trust for rebate to the United
States at the times required by section 148 of the united States
Internal Revenue Code and regulations adopted thereunder.
section 6. PAYMENT ON BONDS. The principal and interest on
the bonds shall be payable at the office of the Bank of America
National Trust and Savings Association, P. O. Box 37000, San
Francisco, California 94137. Principal and interest shall be paid
by check, draft or warrant mailed to the registered owner of each
bond at the owner's address appearing on the register maintained by
the registrar on the 15th day preceding the date of payment.
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Section 7. ADVANCE RETIREMENT OF BONDS. Any Bond or any
portion thereof in the amount of $5,000 or any integral multiple
thereof, may be redeemed and paid in advance of maturity upon the
second day of March or September in any year by giving at least 30
days' notice by registered or certified mail or by personal service
to the registered owner thereof at such owner's address as it
appears on the registration books of th~ Bank and by paying
principal and accrued interest together with a premium equal tq
three percentum of the principal.
Section 8. REREGISTRATION. Any bond may be registered to a
new owner by completing the assignment certificate on the reverse
of the bond and delivering the bond to the registrar. Upon
reregistration, any bond may be replaced by one or more bonds of
the same maturity and aggregate amount in denominations of $5000 or
any integral multiple thereof.
section 9. COVENANTS. In the event of a default in the
payment of any bond or any installment of interest thereon,
bondholders shall have the remedies set forth in the Improvement
Bond Act of 1915. In addition, the City Council makes the
following covenants, which shall constitute a contract with the
bondholders:
section 9.1. FORECLOSURE OF LIENS. Not later than October 1
in any year, the City of Gilroy shall file an action in the
superior Court to foreclose the lien of each delinquent assessment
if the sum of uncured assessment delinquencies for the preceding
fiscal year exceeds five percent (5%) of the assessment
installments posted to the tax roll for that fiscal year, and if
the amount of the special reserve fund is less than the Reserve
Requirement.
section 9.2. ARBITRAGE. During the term of the bonds, the
City will make no use of bond proceeds which, if such use had been
reasonably expected at the date the bonds are issued, could have
caused the bonds to be "arbitrage bonds" within the meaning of
Section 148 of the united States Internal Revenue Code of 1986, and
regulations of the Internal Revenue Service adopted thereunder, and
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further shall rebate to the united states any amounts actually
earned as arbitrage in accordance with the provisions of that Code
and those regulations.
section 9.3. MAINTENANCE OF TAX EXEMPTION. The City will take
all reasonable actions required to maintain the status of interest
on the bonds as excludable from gross income for federal income tax
purposes and as exempt from the State of California personal income
taxes.
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I hereby certify that the foregoing resolution was duly and
regularly adopted and passed by the City Council of the City of
Gilroy, California, at a regular meeting thereof held on the 19th
day of February, 1991, by the following vote of the members
thereof:
AYES, and in favor, thereof, Councilmembers: GAGE, HALE,
MUSSALLEM, NELSON, VALDEZ and HUGHAN.
NOES, Councilmembers: None
ABSENT, Councilmembers: KLOECKER
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United states of America
state of California
County of Santa Clara
REGISTERED
Number
REGISTERED
LIMITED OBLIGATION IMPROVEMENT BOND
CITY OF GILROY
COUNTRY ESTATES - PHASE I ASSESSMENT DISTRICT
SERIES NO. 91-1
INTEREST RATE
MATURITY DATE
BOND DATE
CUSIP NUMBER
REGISTERED OWNER:
PRINCIPAL SUM:
DOLLARS
Under and by virtue of the Improvement Bond Act of 1915,
Division 10 (commencing with Section 8500), of the Streets and
Highways Code, (the "Act"), the City of Gilroy, County of Santa
Clara, State of California, (the "City"), will, out of the
redemption fund for the payment of the bonds issued upon the unpaid
portion of assessments made for the acquisition, work and
improvements more fully described in proceedings taken pursuant to
Resolution of Intention No. 90-79, adopted by the City Council of
the City of Gilroy on the 17th day of December, 1990, pay to the
registered owner stated above or registered assigns, on the
maturity date stated above, the principal sum stated above, in
lawful money of the United States of America and in like manner
will pay interest from the interest payment date next preceding the
date on which this Bond is authenticated, unless this Bond is
authenticated and registered as of an interest payment date, in
which event it shall bear interest from such interest payment date,
or unless this Bond is authenticated and registered prior to
September 2, 1991, in which event it shall bear interest from its
date, until payment of such principal sum shall have been
discharged, at the rate per annum stated above, payable
semiannually on March 2 and September 2 in each year commencing on
September 2, 1991. Both the principal hereof and redemption
premium hereon are payable at the principal corporate trust office
of the Bank of America National Trust and Savings Association, or
its successor, as Transfer Agent, Registrar and Paying Agent, in
San Francisco, California, and the interest hereon is payable by
check or draft mailed on each interest payment date to the owner
hereof at the owner's address as it appears on the registration
books of the Bank, or at such address as may have been filed with
the Bank for that purpose, as of the fifteenth day immediately
preceding each interest payment date.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH IN THE REVERSE SIDE HEREOF WHICH SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH HEREIN.
This Bond will continue to bear interest after maturity
at the rate above stated, provided, it is presented at maturity and
payment thereof is refused upon the sole ground that there are not
sufficient moneys in said redemption fund with which to pay same.
If it is not presented at maturity, interest thereon will run until
maturity.
This Bond shall not be entitled to any benefit under the
Act or the Resolution Authorizing Issuance of Bonds (the
"Resolution of Issuance"), or become valid or obligatory for any
purpose, until the certificate of authentication and registration
hereon endorsed shall have been dated and signed by the Bank.
EXHIBIT A
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IN WITNESS WHEREOF, said city of Gilroy has caused this
Bond to be signed in facsimile by the City Treasurer of said city
and by its Clerk, and has caused its corporate seal to be
reproduced in facsimile hereon all as of the 13th day of March,
1991.
CITY OF GILROY
Clerk
Treasurer
(SEAL)
CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This is one of the Bonds described in the within mentioned
Resolution of Issuance, which has been authenticated and registered
on
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as paying agent, transfer agent and registrar
By
Authorized Officer
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(REVERSE OF BOND)
LIMITED OBLIGATION IMPROVEMENT BOND
CITY OF GILROY
COUNTRY ESTATES - PHASE I ASSESSMENT DISTRICT
SERIES NO. 91-1
ADDITIONAL PROVISIONS OF THE BOND
This Bond is one of several annual series of bonds of
like date, tenor and effect, but differing in amounts, maturities
and interest rates, issued by the City of Gilroy under the Act and
the k9soJution of Issuancs, for the purpose of provid;.ng means for
paying for the improvements described in said proceedjngs, and is
secured by the moneys in said redemption fund and by the unpaid
portion of said assessments made for the payment of said
improvements, and, including principal and interest, is payable
exclusively put of said fund.
This Bond is transferable by the registered owner hereof,
in person or by the owner's attorney duly authorized in writing, at
said office of the Bank, subject to the terms and conditions
provided in the Resolution of Issuance, including the payment of
certain charges, if any, upon surrender and cancellation of this
Bond. Upon such transfer, a new registered Bond or Bonds, of any
authorized denomination or denominations, of the same maturity, for
the same aggregate principal amount, will be issued to the
transferee in exchange therefor.
Bonds shall be registered only in the name of an
individual (including joint owners), a corporation, a partnership
or a trust.
Neither the City nor the Bank shall be required to make
such exchange or registration of transfer of bonds during the
fifteen (15) days immediately preceding any interest payment date.
The city will not obligate itself to advance available
funds from the City treasury to cure any deficiency which may occur
in the bond redemption fund. A determination not to obligate
itself shall not prevent the City from, in its sole discretion, so
advancing funds.
The city and the Bank may treat the registered owner
hereof as the absolute owner for all purposes, and the City and the
Bank shall not be affected by any notice to the contrary.
This Bond or any portion of it in the amount of $5,000 or
any integral multiple thereof, may be redeemed and paid in advance
of maturity upon the second day of March or September in any year
by giving at least 30 days' notice by registered or certified mail
or by personal service to the registered owner hereof at such
owner's address as it appears on the registration books of the Bank
and by paying principal and accrued interest together with a
premium equal to three percentum of the principal.
I hereby certify that the following is a correct copy of
the signed legal opinion of STURGIS, NESS, BRUNSELL & SPERRY a
professional corporation, Emeryville, California, on file in my
office.
City Clerk
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