Resolution 1994-07
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RESOLUTION NO. 94 - 7
RESOLUTION AUTHORIZING ISSUANCE OF BONDS
NORTH FOREST STREET ASSESSMENT DISTRICT
CITY OF GILROY
The City Council of the City of Gilroy resolves:
Section 1. RECITALS. On December 21, 1992, the City Council of the City of
Gilroy adopted its resolution of intention, as later amended, to order improvements in
North Forest Street Assessment District, City of Gilroy, County of Santa Clara, State of
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 Council against parcels of land within the assessment district in the total amount of
$2,311,492.00. 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 expired on or about January 14, 1994.
Section 2. ISSUANCE OF BONDS. The 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 $2,311,492.00. Each bond shall be
designated, "limited Obligation Improvement Bond, City of Gilroy, North Forest Street
Assessment District, Series No. 1994-A." Bonds shall be dated approximately the date of
delivery and issued in denominations of $5000 or integral multiples thereof, except for
Bond No.1, which may be an odd amount, and may be issued as serial bonds, term
bonds, or any combination thereof. Bonds shall mature in the principal amounts set
forth in the table attached as Exhibit A (or, for term bonds, shall be subject to
mandatory sinking fund redemption at par in accordance with the table). The bond
date 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 Council hereby appoints the Bank of America National Trust and Savings
Association (the "Bank") as paying agent, registrar and transfer agent for the bonds in
accordance with an agreement between the City of Gilroy and the Bank.
RESOLUTION NO. 94 - 7
ORIGINAL
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Section 4. FORM AND EXECUTION. Bonds shall be issued as fully registered
bonds substantially in the form set forth as Exhibit B to this resolution. The bonds
shall be signed by the City Treasurer and the City Clerk and the seal of the City shall
be 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 Bank.
The Bank 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 established 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 North Forest Street 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 amended engineer's report heretofore approved by the Council, which report and
budget are subject to modification by the 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, and any capitalized interest included as a
cost incident to the issuance of the bonds, 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 shall deposit into the redemption fund, from the
proceeds of the sale of the bonds, the amount of $92,057.80, which shall be applied to
payment of the first payable interest on the bonds until fully expended.
RESOLUTION NO. 94 - 7
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Section 5.3. SPECIAL RESERVE FUND. There shall be deposited into the special
reserve fund the amount of $161,804.44 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 8883 and
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.
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 United States
Internal Revenue Code and regulations adopted thereunder. Any amounts required to
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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 5.6 RETURN OF UNCLAIMED FUNDS. Other provisions of this
resolution to the contrary notwithstanding, the Bank shall return to the City any funds
held by it hereunder not later than twelve (12) months before those funds would
escheat to the State of California under any law now or hereafter enacted.
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,
Glendale, California. Principal and interest shall be paid by check, mailed to the
registered owner of each bond at the owner's address appearing on the register
maintained by the Bank on the 15th day of the month preceding the date of payment.
Upon the payment and cancellation of any bond, the bond shall be destroyed and
the Bank shall furnish the City a certificate of destruction.
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
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the registered owner thereof 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 a percentage of the principal amount of the redeemed bond, as
follows:
Redemption Date
Redemption Premium
March 2, 1995 through September 2, 2002
March 2, 2003 and September 2, 2003
March 2, 2004 and September 2, 2004
March 2, 2005 and thereafter
3%
2%
1%
0%
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 Bank. 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 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 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 further shall rebate
to the United States any amounts required to be rebated on account of 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
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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 TIIAT 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 18th day of January, 1994, by the following vote of the
members thereof:
AYES, and in favor, thereof, Councilmembers: GILROY, KLOECKER, MORALES,
ROGERS, ROWLISON, VALDEZ and GAGE.
NOES, Councilmembers:
None
ABSENT, Councilmembers: None
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, City Clerk of the City of Gilroy ~d-
APll::JJ j, [}r
Mayor
RESOLUTION NO. 94 - 7
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MATURITY SCHEDULE OF BONDS
GILROY
North Forest Street Assessment District
Bonds mature on September 2 in the years
and amounts, and bear interest at the annual
rates, set forth below.
YEAR FACE AMOUNT RATE(%)
1995 41,492.00 4.250
1996 45,000.00 4.750
1997 45,000.00 5.000
1998 50,000.00 5.250
1999 50,000.00 5.500
2000 55,000.00 5.650
2001 55,000.00 5.800
2002 60,000.00 6.000
2003 65,000.00 6.100
2004 70,000.00 6.250
2005 70,000.00 6.400
2006 75,000.00 6.500
2007 80,000.00 6.800
2008 85,000.00 6.800
2009 95,000.00 6.800
2010 100,000.00 6.800
2011 105,000.00 6.800
2012 115,000.00 6.800
2013 120,000.00 6.800
2014 130,000.00 6.800
2015 140,000.00 6.800
2016 150,000.00 6.800
2017 160,000.00 6.800
2018 170,000.00 6.800
2019 180,000.00 6.800
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TOTAL: 2,311,492.00
TERM BOND
(maturity)
EXHIBIT A
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United States of America
State of California
County of Santa Clara
REGISTERED
Number
REGISTERED
$
LIMITED OBLIGATION IMPROVEMENT BOND
CIlY OF GILROY
NORTH FOREST STREET ASSESSMENT DISTRICT
SERIES NO. 1994-A
INTEREST RATE
MATURIlY 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. 92-91, adopted by the City
Council of the City of Gilroy on the 21st day of December, 1992, as later amended, 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, 1994, 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, 1994, based on a 30-day month, 360-day year. Both the principal hereof
and redemption premium hereon are payable at the principal corporate trust office of
Bank of America National Trust and Savings Association, or its successor, as Paying
Agent, Registrar and Transfer Agent, in Glendale, California (the "Bank"), and the interest
hereon is payable by check by first-class mail, postage prepaid mailed on each interest
payment date to the owner hereof at the owner's address as it appears on the records
of the Bank, or at an address that has been filed with the Bank for that purpose, as of
the fifteenth day of the calendar month immediately preceding each interest payment
date (the "record date").
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH ON 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.
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IN WITNESS WHEREOF, the City has caused this Bond to be signed in
facsimile by the Treasurer of said City and by its Clerk, and has caused its corporate
seal to be reproduced in facsimile hereon all as of the 21st day of January, 1994.
CI1Y 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 & SAVINGS ASSOCIATION
as paying agent, registrar and transfer agent
By
Authorized Officer
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(REVERSE OF BOND)
liMITED OBliGATION IMPROVEMENT BOND
CI1Y OF GILROY
NORTH FOREST STREET ASSESSMENT DISTRICT
Series No. 1994-A
ADDITIONAL PROVISIONS OF THE BOND
Except for the term bond maturing in the year 2019, each bond of this
Series No. 1994-A is one of several annual series of bonds of like date, tenor and effect,
but differing in amounts, maturities and interest rates. The Series No. 1994-A bonds
have been issued by the City under the Act and the Resolution of Issuance, for the
purpose of providing means for paying for the improvements described in said
proceedings, and are secured by the moneys in the redemption fund and by the unpaid
portion of assessments made for the payment of those improvements, and, including
principal and interest, are payable exclusively out of the redemption fund.
This Bond is transferable by the registered owner hereof, in person or by
the owner's attorney duly authorized in writing, at the 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 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 exchange or to
register the transfer of bonds during the period commencing with the fifteenth day of
the month immediately preceding any interest payment date and ending on said interest
payment date (the "record 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 Five Thousand Dollars
($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 the 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 a
percentage of the principal amount of the redeemed bond, as follows:
Redemption Date
Redemption Premium
March 2, 1995 through September 2, 2002
March 2, 2003 and September 2, 2003
March 2, 2004 and September 2, 2004
March 2, 2005 and thereafter
3%
2%
1%
0%
Th~ term bond maturing in the year 2019 is subject to mandatory advance
redemption, by lot, without premium, on September 2 in accordance with the schedule
set forth in the Resolution of Issuance, on or after September 2, 2007.
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I hereby certify that the following is a correct copy of the signed legal
opinion of STURGIS, NESS, BRUNSELL & ASSAF a professional corporation, Emeryville,
California, on file in my office.
City Clerk
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